The Impact of a P100 Wage Hike on Filipinos’ Quality of Life

Employers Confederation of the Philippines (ECOP) vice president Ferdinand “Perry” Ferrer
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Increasing the minimum wage by P100 may seem like a straightforward solution to improve the quality of life for Filipinos. However, according to the Employers Confederation of the Philippines (ECOP), this move will only benefit a small percentage of the working population and have significant repercussions for the entire business community and consumers.

During an interview with ECOP Vice President Ferdinand “Perry” Ferrer, he expressed his concerns about the proposed legislated minimum wage hike. Ferrer pointed out that out of the 50 million working Filipinos, only 4 to 5 million would actually benefit from the wage increase. While this may seem like a positive change for those individuals, it represents a relatively small percentage of the total workforce.

Furthermore, Ferrer emphasized that the impact of the wage hike would extend beyond the direct beneficiaries. He explained that the P100 increase in wages is not just P100 for employers. In addition to the wage increase, employers are also required to provide mandatory government benefits, which amount to approximately 19 percent. This means that the actual cost to employers would be around P119.

Additionally, many companies offer retirement and other benefits ranging from 15 to 20 percent. Taking all these factors into account, Ferrer highlighted that the P100 minimum wage increase would impose a significant burden on companies. For instance, a company with 15,000 employees would face an additional cost of approximately P670 million per year.

It is important to consider the context in which this wage increase is being proposed. The Philippines, like many other countries, has experienced rising costs in various sectors due to the pandemic. Basic services such as electricity, logistics, and supply chain costs have seen significant increases. Moreover, several industries, including manufacturing, have not fully recovered from the impact of the pandemic.

Given these circumstances, Ferrer argued that the cost of doing business has already become a challenge for employers. They have already agreed to wage increases in the past year through negotiations with the Regional Tripartite Wage Board. Adding another substantial increase would further exacerbate the burden on businesses.

Ultimately, Ferrer warned that the increased costs would inevitably be passed on to consumers, resulting in higher prices for goods and services. Small and medium-sized businesses, in particular, may be forced to reduce their manpower as they struggle to absorb the additional costs.

While it is true that the purchasing power of the peso has decreased, Ferrer believes that focusing solely on increasing wages may not be the most effective solution. He suggests that addressing the root causes of the decline in purchasing power would benefit all Filipinos. By tackling issues such as inflation, economic stability, and job creation, the government can make a more significant impact on the overall welfare of the population.

In conclusion, the proposal to increase the minimum wage by P100 in the Philippines may seem like a step towards improving the lives of workers. However, it is essential to consider the broader implications of such a move. While a small percentage of the workforce may benefit, the burden on businesses and consumers could be significant. A comprehensive approach that addresses the underlying economic challenges and supports sustainable growth would likely have a more positive and lasting impact on the well-being of all Filipinos.

Source: The Manila Times

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