Php750 minimum wage possible, non-inflationary and good for the economy–​IBON​

Contrary to government and big employers’ claims, research group IBON said that raising minimum wages nationwide to Php750 is doable, need not spike prices further, and will benefit millions of Filipino workers and the economy.

The group cited the following reasons:

  1. Raising minimum wages nationwide to Php750 is doable if owners of establishments allow a small portion of their profits to go to their workers instead.

    Firms and the economy as a whole have more than enough profits to support this.

    Data from the 2015 Annual Survey of Philippine Business and Industry (ASPBI) of the Philippine Statistics Authority (PSA) shows that the 34,740 establishments employing 20 or more have Php1.7 trillion in total profits and 4.5 million employees.

    Raising the average daily basic pay of wage and salary workers from the nationwide average of Php378.71 to Php750 transfers just Php473.2 billion to workers’ pockets, which is only a 28.3 percent decrease in profits.

    Workers will meanwhile get to take home an additional Php8,076 per month on average.

    This still falls short of the family living wage and does not necessarily bring everyone up to a decent standard of living but such an increase will provide immediate relief to millions of Filipino workers and their families.

  2. Raising minimum wages nationwide to Php750 will not necessarily hike inflation. Prices need not go up and workers need not be laid off if employers accept the slight cut in profits.

  3. As it is, wages are not even keeping up with the rising productivity of workers so their ever-growing contribution to the economy increases employer profits more than improves workers’ welfare. For instance, according to the Labor Productivity Statistics of the PSA, the contribution of each worker to total gross domestic product (GDP) increased from Php196,179 in 2015 to Php198,215 in 2016 (up by 2.2 percent). This means that the average daily contribution of each worker to the economy amounts to some Php759.44 per day, which is more than double the average daily basic pay and more than the proposed national minimum wage.

  4. The economy will also benefit by increasing workers’ purchasing power and aggregate demand which stimulates higher production and increases economic activity. Raising minimum wages nationwide also reduces inequality by transferring wealth overly concentrated in a few to millions of workers and their families.

According to IBON, the country’s largest corporations and the wealthiest families owning these can easily absorb the substantial wage hike.

Smaller producers in micro, small and medium enterprises (MSMEs) will also be able to afford the wage hike with government support such as immediately providing cheap and easy credit, giving marketing support, nurturing locally-integrated supply chains, and improving their scientific and technological capabilities.

MSMEs will also benefit from increased worker demand for their goods and services in the domestic market, said the group. #

Substantial wage hike urgent, gov’t told

Research group IBON said that the government’s recently announced plan to respond to labor’s clamor for an increase in the minimum wage is welcome but underscored that this move is urgent amid rising prices.

The group said that the hike should be meaningful enough to keep up with accelerating inflation and worsening poverty.

Amid the three-year-high first quarter inflation, widely perceived to be caused by the government’s Tax Reform for Acceleration and Inclusion (TRAIN) among other factors, and labor’s demand for a wage hike, the Department of Labor and Employment (DOLE) said that a wage increase is coming up within the month.

According to IBON, it is urgent for government to ensure the legislation of a minimum wage hike that is sufficient for the working people to cope with the rising cost of goods and services.

Recent price spikes have been brought about by government’s own market-oriented policies such as the oil deregulation and tax reform laws that press prices up while wages remain low.

The group however stressed that the wage increase should be substantial, as the recent inflation rate will only continue to erode a paltry increase.

IBON explained that despite the last increase of Php21 in October 2017, which raised the National Capital Region (NCR) minimum wage to Php512 from Php491 per day, the real value has eroded by Php16.25 from Php464.19 in October 2017 to Php447.94 as of April 2018.

IBON also noted that the TRAIN has inflicted a heavy blow on the workers’ purchasing power as the real value of the NCR minimum wage lost a significant Php18.79 since the Duterte administration took office in July 2016.

According to IBON, initially increasing the minimum wage nationwide to at least Php750 as recently proposed by progressive lawmakers is the more practical measure.

This will allow wage earners to cope with inflation and increase their purchasing capacity.

It will also help bridge the gap between the nominal minimum wage and the family living wage (FLW) of Php1,173.14 in the NCR, for instance, as of April 2018 computed by IBON.

While the amount still falls short of the FLW, a Php750 minimum wage can be an initial important step towards increased economic activity and more vibrant economic growth that shall ensure a more stable price situation, said the group. #

One-fourth of increase: TRAIN aggravates oil price hikes–IBON

Government is wrong in downplaying the contribution of the Tax Reform for Acceleration and Inclusion (TRAIN) law on recent big-time oil price hikes, research group IBON said.

The price of fuel products combined with the TRAIN increased since year-end 2017 to Php10.20 per liter for diesel, Php11.41 for kerosene, and Php15.14 for gasoline as of last week.

These prices now include excise taxes and value-added tax (VAT), respectively, said IBON.

The price of diesel has increased to Php41.70/liter from Php31.50 at the start of the year, for instance, while the price of kerosene has increased to Php50.40/liter from Php38.99/liter as of year-end 2017.

The price of gasoline is now Php56.47/liter from Php41.33 as of year-end 2017.

The adjustment in the price of oil products has been attributed to the increase in the Mean of Platts Singapore (MOPS) prices and changes in the PH Peso–US Dollar exchange rate.

MOPS for gasoline prices has had a net increase of US$7.91/barrel and a net increase of US$5.92/barrel for diesel during the same period.

The exchange rate of the Philippine Peso to US Dollar did not help lessen oil prices as the peso depreciated against the US dollar by Php2.42 also in the same period.

One of the formulas by the Department of Energy (DOE) assumes a Php1.00/liter change in domestic oil price for every US$3.00/barrel change in MOPS.

IBON however observed that applying this formula does not reflect the steep hike in oil prices.

Moreover, according to IBON’s executive director Sonny Africa, TRAIN’s new and higher taxes aggravate and intensify the impact of these oil price hikes.

The TRAIN law adds new excise taxes on diesel and kerosene and raises excise taxes on gasoline.

TRAIN imposes a new Php2.50 liter excise tax on diesel and Php3.00 per liter on kerosene, while increasing that on gasoline by Php1.65-2.65 to Php7.00.

The final taxes imposed are even higher because the 12% VAT is also applied to them.

Thus, of the net increase in the prices of diesel, kerosene, and gasoline, TRAIN has added Php2.80, Php3.36, and Php1.85/2.97 to the price of every liter, respectively.

This means that TRAIN’s taxes accounted for one-fourth of the increase in the prices of diesel and gasoline.

TRAIN keeps increasing the excise tax on oil products and by 2020 they will have permanently added Php6.72/liter to the price of diesel, Php5.60/liter to the price of kerosene, and as much as Php6.33/liter to the price of gasoline.

“Real wages are stagnant at very low levels and TRAIN’s new taxes and inflationary impact are an unnecessary additional burden on the majority of Filipinos who are low-income earners,” said Africa. # (Image from Philippine Gas Price Watch through IBON)

Still no better jobs for Filipinos–IBON

First quarter economic growth this year did not translate to better jobs for Filipinos, research group IBON said.

This means that despite government claims that the groundwork for reforms has been laid, growth has remained essentially exclusionary, generating jobs that are insecure and low-paying, said the group.

Socio-Economic Planning Secretary Ernesto Pernia recently announced the 6.8 percent Philippine economic growth for the first quarter of 2018 to be among the fastest in Asia, second only to Vietnam’s 7.4 percent and at par with China’s.

According to Pernia, these indicate that infrastructure development is accelerating and “Build, Build, Build” is gaining ground.

NEDA even said that OFWs could thus consequently come home to more jobs.

IBON however underscored how at the same time, underemployment, part-time work and informal work swelled by over a million jobs each.

The group said that this implies how, amid supposedly growing capacity to produce goods and services, Filipinos were subjected to more insecure and low-paying jobs.

From January 2017 to January 2018, employment grew by 2.4 million especially in agriculture, services, manufacturing, and construction.

But the number of underemployed or persons looking for additional work grew from 6.4 to 7.5 million.

The number of part-time workers or those who worked below 40 hours a week increased by 1.2 million from 13.5 to 14.7 million.

Those in informal work, meanwhile, or in jobs that are uncertain or irregular with poor pay and benefits, increased by 1.4 million from 14.6 to 16 million.

According to IBON, poor quality work is growing because employers seek to peg wages at a low, minimize benefits and keep labor flexible to be able to increase their profits.

The government takes the side of employers and supports them with its policies of wage rationalization and labor flexibilization, which it justifies as needed to attract investments and drive growth, said the group.

It argued, however, that government’s vision for progress should instead include building a strong domestic economy that can generate regular, full-time and decent-paying jobs.

These can boost the Filipino working people’s purchasing power and yield higher returns for the Philippine economy, IBON said. # (IBON.org)

TRAIN-induced price increases are permanent—IBON

The inflation spike marks the start of increases​ driven by the Tax Reform for Acceleration and Inclusion (TRAIN)​ in the prices of basic goods and services for the next three years, research group IBON said.

Further inflationary surges are likely to happen in 2019 and 2020 when the next two rounds of additional taxes on oil products take effect.

The Duterte administration’s banner TRAIN is among the biggest factors driving the inflation rate to its highest in over six years, said the group.

IBON noted that the headline inflation rate of 4.5 percent year-on-year in April is the highest since late 2011, bringing the year-to-date average inflation rate to 4.1 percent.

This already breaches government’s inflation target for 2018.

As it is, food, vegetable and fuel prices are already higher from a year ago, IBON observed.

The price of regular milled rice has increased from Php35 to Php40 per kilo, of galunggong from P140 to Php160, of pork liempo from Php225 to Php240, sitao from Php60 to Php100 per bundle, and red onions from Php50 to Php80.

Just since January, the price in Metro Manila of diesel has gone up by over Php7 per liter to Php44.35 and of gasoline by some Php6.80 to Php55.37.

LPG is also already much more expensive at some Php650-750 for an 11-kg cylinder.

“The higher prices of basic commodities hit the country’s poorest 17.2 million families who do not get any personal income tax (PIT) benefits the worst. This burden belies the Department of Finance’s (DOF) fake news claim that ’99 percent of taxpayers’ will benefit from TRAIN,” IBON executive director Sonny Africa said.

Africa also said that government economic managers are being dishonest and insensitive when they downplay the impact on prices by saying that the inflation spike is only temporary.

“The price increases from TRAIN are very permanent and even if inflation rates moderate this does not mean that prices will be lower,” Africa said.

“It is grossly deceitful for economic managers to give the impression or claim otherwise. Prices will continue to rise for the poor from TRAIN’s new and higher taxes unless the government says that the inflation rate will turn negative, which is unlikely,” he added.

According to Africa, while there are many reasons for inflation the government only seeks to divert from its direct accountability for TRAIN-induced higher prices by exaggerating the effects of global oil price and the peso depreciation.

Dubai crude has been at US$62-66 per barrel and the peso at up to Php52.10 per US$1 since the start of the year.

However, even when the price of Dubai crude reached US$105 per barrel in 2013 inflation only averaged 2.6 percent.

Similarly, when the peso was at over Php54 per US$1 from late 2002 to mid-2004 inflation only averaged 2.5 percent , Africa explained.

Africa said that among all the major factors driving high prices, the government has the most control over the taxes it charges.

“If government wants to it can immediately lower inflation and prices for the people by suspending implementation and then repealing the grossly regressive TRAIN law,” he said.

Revenues can and should instead be raised with progressive tax reforms that increase the burden on the country’s super-rich and that relieve the poor majority while their incomes are still so low, Africa concluded.​# (IBON.org)

 

Working Filipino’s real wage, purchasing power weakening under Duterte

Research group IBON said that accelerating inflation is rapidly eroding the real wage and purchasing power of minimum wage earners in the National Capital Region (NCR).

Real wages show the actual value of wages after these are adjusted for inflation. After almost two years in power, the Duterte administration has only raised the minimum wage in the NCR once–in October last year–which increased this from Php491 in July 2016 to Php512 as of March 2018.

The nominal Php21 increase has however not been enough to keep up with rising prices.

Inflation has been steadily accelerating since the start of the Duterte administration to reach a six-year-high of 3.7 percent in 2017.

It is looking to become even higher this year at 4.8 percent already in the first quarter of 2018.

Minimum wage earners have actually already lost Php16.80 per day with the real value of their wages, measured at 2012 prices, falling from Php466.70 in July 2016 to just Php449.90 in March 2018.

The year 2012 is used as the reference period because this is the base year of the Philippine Statistics Authority (PSA) in computing the consumer price index (CPI) and inflation.

As it is, the NCR minimum wage of Php512 falls far short of the estimated Php973 family living wage (FLW) for a family of five, and even further short of the Php1,168 FLW for a family of six.

The eroding purchasing power of workers is resulting in even lower standards of living for minimum wage earners.

IBON said that the government should urgently address the grossly insufficient wages of workers, which is even being rapidly eroded by high inflation.

Immediate and concrete steps include implementing the Php750 national minimum wage demanded by workers’ groups and suspending implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Package One, which is driving prices up and amending this to become genuinely progressive; and enforcing price controls such as on staple food items. # (IBON.org)

Php750 national minimum wage a legitimate call

(IBON Facts & Figures excerpt)

The demand of progressive workers’ federations for the re-installation of a national minimum wage and pegged at Php750, along with the abolition of the regional wage boards, is an immediate, important and doable step towards making economic growth genuinely inclusive and addressing worsening inequality in the country.

Based on IBON estimates, raising the average daily basic pay from the nationwide average of some Php367.35 to the proposed Php750 national minimum wage transfers just Php448 billion to workers’ pockets – this is only 27.4 percent decrease in profits, which still leaves employers with a significant 72.6 percent (Php1.18 trillion) of their clean profits.

On the other hand, each worker will be able to take home, on average, an additional Php8,364.00 per month.

The amount of profits transferred to workers’ wages was computed based on data from the latest (2014) Annual Survey of Philippine Business and Industry (ASPBI) of the PSA. The census shows that 35,009 establishments with employment of over 20 or over had Php1.63 trillion in total profits and 4.13 million employees.

The country’s largest corporations and wealthiest families are the most able to absorb the wage hike. In fact, the total cost of proposed Php750 national minimum is only equivalent to 20 percent of the total net worth of the 10 richest Filipinos.

Meanwhile, the government can ensure special support for small producers of micro, small and medium enterprises (MSMEs) to help them cope with the proposed national minimum wage. This includes immediately providing cheap and easy credit, giving research, development and marketing support, nurturing locally integrated supply chains, and improving their scientific and technological capabilities. (Excerpt from Continuing Wage Depression, IBON Facts & Figures, April 2017.)

Amid price hikes: Minimum wage insufficient vs. rising family cost of living — IBON

The onslaught of price hikes since early this year has made the mandated minimum wage in the National Capital Region (NCR) even more inadequate for millions of Filipino workers to decently support their families, said research group IBON.

IBON computations show that the NCR nominal minimum wage still falls considerably short of the rising family living wage (FLW).

As of March 2018, Php1,168 is needed daily to support a family of six, while Php973 is needed for a family of five.

Worsening inflation has increased the FLW needed from the same period last year by Php57 for a family of six and by Php48 for a family of five–a 5.2 percent increase for both.

The minimum wage however has not kept up with the rising cost of living.

The NCR nominal minimum wage of Php512 is just 43.8 percent of the Php1,168 FLW in March this year.

This translates into a significant wage gap of Php656 or 56.2 percent, said the group.

For a family of five, the gap was nearly half (47.4 percent) of the FLW.

These wage gaps grew despite the regional wage board’s approval of a Php21 minimum wage increase from Php491 to Php512 last October 2017.

IBON said that the wage discrepancy is just as wide as the same period last year. In March 2017, the nominal minimum wage in the NCR of Php491 was 44.2 percent of the Php1,111 FLW for a family of six.

This was a wage gap of Php620 or 55.8 percent.

The group also noted that the average daily basic pay of wage and salary workers in NCR has declined under the Duterte administration. Latest official figures show that the NCR average daily basic pay fell from Php557.46 in July 2016 to Php542.16 in July 2017.

Workers’ minimum wages cannot cope with the higher prices that are driving up inflation and the cost of living, said the group.

The 5.2 percent inflation rate for the NCR in March 2018 is so far the highest in five years according to the Philippine Statistics Authority.

IBON said that there should be an immediate, substantial and across-the-board minimum wage increase against the high inflation.

The government should approve and mandate the Php750 national minimum wage that workers groups are calling for.

Implementation of TRAIN Package One which is among the drivers of inflation should also be suspended and the law reviewed towards being amended to become genuinely progressive.

It should also ensure job security, necessary benefits, better working conditions, as well as much-needed social services that will assist Filipino workers and their families in meeting their basic needs, said the group. #

 

What You Need to Know About Charter Change and its Possible Effects on the Education Sector

By Jose Lorenzo Lim

(In a series of articles, IBON tackles proposals to amend the 1987 Philippine Constitution*, focusing on social and economic provisions. These touch on agrarian reform for industrialization, and full foreign ownership and control of Philippine lands and natural resources including agricultural lands, public utilities, labor rights, educational institutions and mass media. This particular article features allowing full foreign ownership of educational institutions in the Philippines.)

Before you agree to amendments on the current 1987 Constitution of the Philippines for a Federal form of government, you might want to check out the current proposals for Charter change (Cha-cha) especially in the education sector.

Charter What?

Cha-cha or constitutional reform refers to amendments or revisions in the 1987 Philippine Constitution. The amendments may be on provisions on the term limit of a President, overhauling government structure, or even economic policies. Since the time of Martial Law, Cha-cha has been brought up by almost every administration but ultimately failed.

Now, there is a call to shift to a Federal type of government through different proposals. Thus, President Rodrigo Duterte set up 19-member consultative body to review the 1987 Constitution.

Three Documents to Remember

As of February, there were four proposals of Cha-cha in the Philippines stipulated in the following documents:

  • Resolution of Both Houses Number 8 (RBH 8) consolidated in House Concurrent Resolution Number 9 (HCR 9)
  • PDP-Laban Federalism Institute (FI) Proposed Constitution
  • House subcommittee version

Charter Change and Education Provisions

With all of these proposals happening, let’s take a look at the proposed changes across all four documents regarding the provisions on education.

Education has repeatedly been said to be a fundamental human right. This is written in the Universal Declaration of Human Rights that says education shall be directed to the full development of the human personality and to the strengthening of respect for human rights and fundamental freedoms.

Moreover, the 1987 Constitution stipulates that quality educational opportunities at all levels should be the right of all Filipino citizens. Throughout decades of neoliberal globalization, this principle has been replaced with a market-based logic that treats education as a commodity sold by businessmen for profit.

Looking back, since 1965, market-biased international financial institutions (IFIs) such as the World Bank, the United States Agency for International Development (USAID), and the Asian Development Bank (ADB) have played significant roles in commercializing Philippine education.

Now, the onset of Cha-cha threatens the education sector to the further gain of both local and foreign capitalists.

RBH 8 says that free education should be upheld in pre-school, primary, elementary, and in colleges and universities (see Table 1). The stipulation suggests that privately or foreign-owned educational institutions could receive government subsidy. The house subcommittee on the other hand grants each state the power to provide basic and secondary education without particularizing whether or not it should be free. Meanwhile, the PDP-Laban has no stance on whether to give free education to Filipino citizens.

Regarding foreign ownership rules in Article XII: National Economy and Patrimony, RBH 08 imposes the limitations on foreign ownership of corporations, public utilities, educational insitutions (a.k.a. “60-40 rule”), as well as of media and advertising entities, but inserts the phrase “unless otherwise provided by law” so that the stipulation could be overruled by new laws (see Table 2).

The PDP- Laban and House proposals removed the “60-40” rule and other provisions on foreign ownership.

The “unless otherwise provided by law“ clause in most of these provisions is an easy way for Congress to operationalize the foreign ownership of educational institutions and circumvent the Constitution without having to rewrite it. Take note that the Philippine Senate is already conducting hearings on the amendments to the Public Services Act, which would open public services to foreign ownership.

Foreign ownership of educational institutions can be a bad thing for the Philippines. It could worsen colonial backward education fostering uncritical and subservient thinking.

Foreign ownership could lead to the further commercialization of education especially with the introduction of new competitors to the private education business. Already, commercialized Philippine education has seen decades of increasing tuition and school fees, the rise of oligarchs-run educational institutions against a weakening public education system, and a career-oriented curriculum instead of one that instills the value of social service and nation building.

During the last school year, more than 250 private colleges and universities increased tuition and other school fees by an average of 7.0%. Private educational institutions are not covered by the newly enacted free tuition law. Government has been spending public funds for private gain: For instance, from 2010-2016, a total of Php47.9 billion was alloted for the Government Assistance for Students and Teachers in Private Education (GASTPE).

One might say that the introduction of foreign ownership will lead to better curriculums and better opportunities for Filipinos abroad. But the first batch of K to 12 graduates are going out to the world and while they are ‘equipped’ to be hired already, they would become a source of cheap labor. The K to 12 program was designed to produce overseas Filipino workers (OFWs) for cheap labor, which in the first place Filipinos would not have to be if there were enough jobs in the country.

What we need is a nationalistic curriculum that is designed to address the needs of the Philippines. Take for example the curriculum in Lumad schools, designed by the indigenous people to develop and sustain their farming communities.

What do we do now?

The 1987 Constitution stated that ownership and control of educational institutions should be limited to Filipino citizens. Yet, Philippine governments have allowed the neoliberal policies that have commercialized education and geared the curriculum towards market-oriented globalization. Cha-cha will remove any remaining protection of the sector and may even make it more vulnerable to being treated further as a commodity and serve foreign interests by opening it up to foreign ownership.

Like the policies and policy-makers who crafted it, the current education system of the Philippines does not reflect the genuine aspirations of the Filipino people for development. Now, more than ever, Filipinos need to push for a curriculum that promotes genuine love of country, the use of scientific methods than pseudoscientific ones, and the advancement of the rights of marginalized groups in Philippine society. Simply put, the country needs a nationalist, scientific, and mass-oriented education.

Slow TRAIN cash transfers highlight govt’s insensitivity–IBON

“The poor will get relief about three months into suffering TRAIN-induced price increases with millions of others only getting it much later.”

 Research group IBON said that the slow implementation of the Duterte administration’s social mitigation measures including its cash subsidies highlights how these are just an afterthought to cover up how the Tax Reform for Acceleration and Inclusion’s (TRAIN) program is anti-poor and pro-rich. TRAIN was railroaded last year to already be able to raise revenues starting January 2018 even if the supposed mitigation measures were not yet clear.

This is in reaction to the Department of Finance (DOF) announcement about the looming implementation of the government’s unconditional cash transfer (UCT) to supposedly help the 10 million poorest Filipino families cope with the impact of TRAIN. The DOF said that the 4.4 million existing Pantawid Pamilyang Pilipino Program (4Ps) beneficiaries and three (3) million indigent senior citizens will start receiving the Php200 per month cash subsidy in March. The balance of 2.6 million households are supposed to start receiving theirs in August.

IBON executive director Sonny Africa noted that the DOF was last year quick to undertake the staff work for raising taxes on the poor and giving income tax relief to the rich. Yet, in contrast, it was grossly unprepared to implement any of the supposed social mitigation measures even nearly two months into the law’s effectivity. As it is, the poor will get relief about three months into suffering TRAIN-induced price increases with millions of others only getting it much later in August or after eight months.

Africa also said that the DOF was merely scrambling to report 10 million helped “no matter how sloppy the figures.” “The numbers don’t even add up,” he said, “because many of the 3.3 million poor elderly will likely already be among the 4.4 million CCT beneficiary households so double-counting is already happening, more so two or more elderly are in these poor households.”

Meanwhile, TRAIN’s promised fuel subsidies for public utility vehicles (PUVs), fare discounts for the poor and other social mitigation measures still remain unrealized, said Africa.

Lastly, Africa said, it is worth repeating that the cash subsidies are temporary and only from 2018 to 2020. “These are also the three years when oil taxes keep rising and prices keep getting pushed up higher and higher,” Africa noted. “The real TRAIN shock happens in 2021 when the UCT gimmick is gone but the prices that the poor pay for their basic goods and services will be immensely higher,” he said. (IBON News / February 27, 2018)