ABOUT 23,000 Filipinos have already lost their jobs as Cebu-based exporters continue to battle against the negative effects of the rising value of the peso.
If companies are made to pay higher wages, more workers will lose their jobs, said the Confederation of Philippine Exporters (Philexport)- Cebu.
The approval of House Bill 345, which provides for a P125 legislated wage increase, “is like putting a nail on the coffin,” said Philexport Cebu president Jay Yuvallos.
Cebu-based exporters are appealing for a 12-month exemption from any across-the-board wage increase to prevent the export industry from sliding further.
Philexport Cebu submitted to the Regional Tripartite Wages and Productivity Board (RTWPB) last Monday a letter of appeal and support to the proposed exemption to allow the sector time to gain stability after recent setbacks.
“We are asking them (RTWPB) for a one-year leeway in the form of moratorium or exemption from ATB (across-the-board) wage increase,” said Philexport Cebu executive director Fred Escalona.
Daily displacement
Under the proposal, Escalona said only exporters who are earning at least 50 percent of their normal operating revenues from the sale of products or services abroad which are paid in foreign currency are qualified to avail themselves of the exemption.
He told Sun.Star Cebu that an across-the-board wage increase would result in daily displacement of workers.
This means that while companies may not immediately close shop, many will have to retrench workers due to an increase in the labor component cost.
“This (retrenchment) is the only way for exporters to survive and be competitive,” Escalona said.
He said the “almighty peso” has already caused the closure of 38 furniture companies to date, which led to the displacement of 6,000 workers.
Exporters have been asking the government to prevent the further rise of the peso’s value against the dollar, a development that has made Philippine export products more costly and less competitive in the international market.
Escalona said the gifts, toys and house ware manufacturing sector as well as furniture and accessories industries have not been accepting orders as they could not anticipate the volatility of the local currency.
In a separate interview with Sun.Star Cebu, Benson Dakay, president of the Seaweed Industry Association of the Philippines and chief executive officer of Cebu-based Shemberg Corp., said about 10,000 to 20,000 factory workers of small and medium enterprises in the seaweed processing industry have lost their jobs.
Dakay said five companies in the industry sector have already shut down.
“The wage increase will be very bad timing. Hapit na gani mi dili ka ginhawa ani,” he lamented. (We’re barely breathing.)
Environmental concerns
Dakay said that apart from the strong peso and stiff competition, the seaweed processing industry is affected by environmental occurrences, such as global warming, that caused a decline in the supply of raw materials.
Philexport-Cebu, in its petition letter, stated that even multinational export companies in processing zones will not be spared from the adverse effects of any wage hike.
A Danao-based multinational company, for example, has downsized their workforce by 37 percent or 7,000 workers, the Philexport-Cebu letter said.
Mactan Export Processing Zone Chamber of Exporters and Manufacturers (Mepzcem) secretary and board member Porferio Montesclaros Jr. earlier said the continued appreciation of the peso against the dollar may cause existing multinational companies at Mactan Economic Zone to shift production capacities to other countries, such as China, where production costs are lower.
“The strong appreciation of the peso, stemming mainly from the strong influx of dollars, has slowly contributed to the slow demise of the manufacturing sector,” said Philexport-Cebu.
“The labor requirement in the booming sector (services sector) has increased tremendously at the expense of the lagging sector (manufacturing and export). This looks like the onset of de-industrialization. If this situation is not addressed immediately, the Philippine economy will eventually slide into an early recession,” it added. (MMM)
