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Wage hike necessary, overdue amid pandemic and high prices

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The Duterte administration gave least number of wage hikes and lowest wage increases of any administration in past 35 years.

by IBON Media & Communications

Research group IBON said that, amid rising prices of basic commodities, minimum wage earners are suffering from how the Duterte administration has been giving the least number of wage hikes and lowest wage increases of the past six administrations in the post-Marcos era. This only made working class families even more vulnerable to the economic shocks triggered by the pandemic. Multiple strategies are needed to arrest the economic distress of poor and low-income households especially since the onset of the pandemic.

IBON noted how the real minimum wage, or the value of wages after adjusting for inflation, is worth 7.2% less today than at the start of the Duterte administration. (See Table) This does not even yet fully include the recent surge in prices of pork, fish, chicken and vegetables. IBON estimates that the real value of the National Capital Region (NCR) minimum wage has fallen to Php434.47 from Php468.06 in June 2016. This is the lowest real wage in over eight-in-a-half years or 103 months.

The Duterte administration was sparing with its wage hikes even before the pandemic. The NCR minimum wage was only increased twice, in September 2017 and November 2018, and by such small amounts that they did not even make up for inflation. When the lockdowns started in March 2020 the real value of the minimum wage was already 3.6% less than in June 2016 – this only deteriorated further to being 7.2% less today.

IBON pointed out that other administrations hiked wages six or seven times and that even the Estrada administration hiked wages twice in its short 2 ½ years in power. These resulted in the real minimum wage increasing by 2.7% (Arroyo) to as much as 54% (Cory Aquino) compared to the more or less continuous decline under the Duterte administration.

It has been more than two years or 27 months since the Duterte administration’s last wage hike to Php537 in November 2018, said IBON. This is the longest period without an increase since July 2004 under the Arroyo administration when the wage increase came after a dry spell of 29 months.

IBON noted that the current minimum wage is even further away from meeting the basic needs of workers’ families. The Php537 minimum wage in NCR is Php520 or 49% short of the Php1,057 family living wage or the amount a family of five needs for a decent living as of December 2020.

As it is, the December 2020 inflation rate of 3.5% is the highest in 21 months, mainly due to higher inflation in food and non-alcoholic beverages, health and transport. The prices of pork, ampalaya, sitao, cabbage, carrots, habitchuelas, tomato, potato and eggplant significantly went up from anywhere between Php40 to Php120 per kilo since December last year. Price increases were even worse for the poorest 30% of households nationwide with a 4.3% inflation rate.

IBON said that the Duterte administration needs to give much greater attention to alleviating widespread economic distress among poor and low-income families. The most urgent measure are new cash subsidies of Php10,000 monthly for at least 2-3 months especially while record unemployment and falling household incomes are not resolved. Price controls are also needed on the food items whose prices are soaring especially amid reports of alleged exploitative pricing by wholesale and retail traders.

The Duterte administration however also needs to go beyond short-term damage control, stressed IBON. The long-term solution to rising food prices is for meaningful government support for farmers and fisherfolk to increase agricultural productivity and output. Yet, IBON pointed out, the share of the national government budget for agriculture has been falling from 3.6% in 2019 to just some 3.2% in 2021.

IBON moreover stressed that a substantial wage hike remains just and necessary even amid the pandemic economic shock. The group said that it is incumbent on the government to come up with schemes to enable a wage hike that increases incomes of low-income households and which will also stimulate aggregate demand in the economy. Among others, this can include mandating higher wages while giving wage subsidies to micro, small and medium enterprises (MSMEs). Wage hikes are long overdue and it is unfair for the working classes to always be made to bear the burden of adjustment to economic crises. #

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Kodao publishes IBON articles as part of a content-sharing agreement.

Gabriela kicks off International Women’s Day commemoration

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Gabriela and Gabriela Womens Party held a kick-off activity leading to the commemoration of International Women’s Day on March 8.

Dubbed “Womens March against Poverty and Repression,” women leaders from various regions marched from the Bustillos Church in Sampaloc, Manila to Mendiola Bridge Friday, January 19.

The groups assailed the continuous effect of rising prices of oil, utilities and other basic goods brought by the first and second tranches of the TRAIN Law as well as the Build, Build Build program of the Duterte government.

They also decried what they call the intensify state fascism and repression against the people that include rampant killings, illegal arrests and red tagging of different peoples organizations as well as another extension of martial law in Mindanao and Memorandum Order 32 in Negros, Bicol and Samar.

The protest also served as their contribution to the global women’s march happening on January 19 in the US and various part of the world. (Video by Joseph Cuevas/Kodao)

High prices still burden poor despite inflation slowdown

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On the release of the November 2018 inflation rate, research group IBON said that prices are still high and rising even with the reported slowdown.

This remains a burden on poor families trying to live off low and precarious incomes. Substantial and longer-term solutions are still needed, said the group.

Headline inflation slowed to 6.0 percent in November from 6.7 percent last month.

Inflation slowed in food and non-alcoholic beverages; housing, water, electricity, gas, and other fuels; and communication.

Inflation however worsened in the rest of the commodity groups. Additionally, year-on-year inflation is still double the 3.0 percent rate in November 2017.

IBON stressed that prices are still higher than before due to the inflationary impact of the Tax Reform for Acceleration and Inclusion’s (TRAIN) consumption taxes, rising global oil prices and the peso depreciation.

Rice, fish, meats, fruits, vegetables and other basic commodities are still more expensive now than a year ago.

The majority of Filipino families who have low incomes are burdened the most. Inflation has eroded the incomes of the poorest 60 percent households by a total of Php2,650 to as much as Php7,000 from January to November of this year.

The Php537 minimum wage in the National Capital Region is the highest nationwide but even this falls far short of the estimated family living wage of Php1,002 for a family of five.

Meanwhile, some 2.5 million of the target 10 million beneficiaries of TRAIN’s unconditional cash transfers (UCT) have still not received anything almost a year into TRAIN.

The Duterte administration’s economic managers said that slowing inflation “suggests” the effectiveness of government’s anti-inflationary measures such as Administrative Order No. 13 removing barriers to agricultural imports.

IBON executive director Sonny Africa disputes this: “The government is too quick to take credit and too dishonest to accept blame.”

“The inflation slowdown may even be due more to falling global oil prices since October than the Duterte administration’s half-hearted anti-inflation measures,” he said. “On the other hand, government refuses to accept how the higher taxes from TRAIN have driven prices up and will do so again in less than a month.”

Africa said that government’s decision to push through with the next tranche of fuel excise taxes next month in January 2019 shows its insensitivity to the plight of millions of poor Filipinos.

He said that real steps to curb inflation begin with stopping TRAIN, and giving meaningful support to domestic agriculture and Filipino industry. #