Dilemma on wage hike

Employees rejoice on salary increase, labor groups claim it is insufficient, employers say closure of businesses looming if gov’t insists on further pay raise
A laborer carries a sack of rice to his employer’s store, as more sacks of rice are waiting to be transferred and arranged in a stall at a public market in Davao City. The RTWPB-Davao approved an increase of P38 per day to the minimum wage workers in the region to be given in two tranches, the first tranche of which amount to P19 per day took effect on March 6, 2024.
A laborer carries a sack of rice to his employer’s store, as more sacks of rice are waiting to be transferred and arranged in a stall at a public market in Davao City. The RTWPB-Davao approved an increase of P38 per day to the minimum wage workers in the region to be given in two tranches, the first tranche of which amount to P19 per day took effect on March 6, 2024.Macky Lim/SunStar File Photo

"KUNG diria ka sa Davao [City] wala kay trabaho, kutoy gyud imong tiyan (If you are living in Davao City and you are not employed, you end up starving),” Larry Ongpao, who has been working as a security guard for three years now, said.

Patrolling and monitoring the premises of a business company at the same time controlling the entrance and exit of employees, visitors, and vehicles, has been part of his job.

It's not an easy job, he admitted, as they also evict trespassers and violators and monitor surveillance cameras to watch out for any disruptions or unlawful activities.

It's risky, he said, but at the end of the day, he still gets to provide food on the table.

For eight years working in Davao, he has worked various jobs, including in a poultry farm and as a delivery boy for a water-refilling station.

He also used to work as a construction worker, but a terrible accident happened that made him decide to be a security guard.

Scouting for a job in the city is exhausting, he admitted. In fact, his current job was a blessing in disguise as he was able to get paid with a minimum wage of P10,000, a huge increase from his previous job.

"Bisan gamay nga trabaho unya gamay imong sweldo, basta at least naa kay trabaho," Ongpao expressed in gratitude.

However, he feared that his salary may not be enough in the long run as he is a father of four children. He revealed that a huge amount of his salary goes to his children’s tuition and other school expenses, aside from their daily food consumption.

"Halos wala na gani mabilin sa akong sweldo," he said.

The good thing is he has a small portion of land in their province that is planted with various crops. His wife also has a sideline job that contributes to their daily earnings.

"Kung wala kay panginabuhian na lain, ma-short gyud ka. Maong kailangan mag-additional income," Ongpao said.

No guarantee

Michelle Ang, a 28-year-old single mom of two, is working at a business process outsourcing company (BPO), which means the pay is way higher than the minimum wage.

As a former government employee, working for the BPO industry was her saving grace due to the accumulating expenses she endured. Not to mention that her two daughters are also entering pre-school.

For more than two years, she has been enjoying a P25,000 monthly salary, plus additional incentives depending on her work performance.

It was all smooth sailing until one time, she was hospitalized for nearly a month due to her kidney problem, resulting in a pileup of stress from family, work, and other personal problems

What's worse was that her account was dissolved, resulting in her being under floating status for nearly two months. She was uncompensated for a month.

It was a nightmare for Ang as her hospital bills piled up, reaching up to P100,000.

"Before kay enough siya, but since nagka-health emergency ko, maka-ingon gyud ko na wala gyuy security of tenure sa BPO. Dili guaranteed pag ma-dissolve imo account is kuhaon ka pa. Bisan unsa pa ka kadugay sa kompanya," she shared.

Luckily, she was rehired, but still, the fear of possibly losing her job remains intact.

Aside from the hospital bills, she also cited rent, transportation, and other personal expenses as a huge chunk of her earnings outflow every month.

‘Diskarte’

Based on the Davao Region Inflation Report for April 2024 of the Philippine Statistics Authority (PSA), the inflation rate in Davao Region for April 2024 was 5.1 percent. This is higher than the March 2024 inflation rate of 4.8 percent. But this is lower than the inflation rate of the same period last year which was at 7.5 percent.

Ongpao said he doesn't feel the economy improved throughout the months, especially for minimum wage earners like him. So adjustments have to be made to survive by ensuring all expenses and outflows are budgeted properly.

He said this means one must stop their vices, such as smoking and drinking.

Since the passage of Republic Act (RA) No. 10351 or the Sin Tax Reform Act of 2012 – the law that imposes higher taxes on tobacco products, leading to higher prices – a pack of cigarettes has reached more than P150 as of April 2024.

In 2021, the Department of Health survey showed that an estimated 40 percent of Filipino adults reported drinking alcohol in the previous month (up from 38 percent in 2019) including 33 percent who engaged in heavy drinking sessions (up from 12 percent in 2016). 

Packworks’ business intelligence tool Sari IQ, which analyzed the spending habits of Filipinos, reported that an average of P800 is allocated for beverages and hygiene products, with alcohol and tobacco taking the bulk of the money spent per month on sari-sari stores in 2022.

"Base kini sa experience sako mga igsoon ug ig-agaw nga grabe ka-gastador pag-abot sa inom. Kanang gibisyo nimo, gidungag pa na nimo pangkonsumo matag adlaw, dako na kayo ka'g pondo sa matag adlaw," he said.

Poverty threshold

The number of poor families and individuals in Davao Region has decreased, with poverty incidence lower in 2021 compared to 2018 and 2015, according to PSA’s report for 2021.

The latest poverty statistics of PSA showed that the poverty incidence among families in the Davao Region is 11.9 percent for the year 2021 which equates to around 165,420 families considered poor or earning below the region’s poverty threshold of P11,709.

“This means that about 119 out of 1,000 families in the region had incomes below the amount needed to buy basic food and non-food needs,” said Randolph Gales, officer-in-charge of PSA-Davao.

However, this is already a drastic improvement to the poverty incidence in the region for 2018 and 2015 which was 13.6 percent and 18 percent respectively. In 2018, there were 174,740 poor families and 212,030 in 2015.

“This is 9,000 families lower than the estimate in 2018 and about 47,000 families lower than the estimate in 2015,” Gales added.

Compared to other regions in the country, the Davao Region is the 11th region with the highest poverty incidence among the population, just slightly below the national figure.

In the entire country, poverty incidence among the population is 18.1 percent or 19,992,250 poor individuals while the poverty incidence among families is 13.2 percent or 3,496,460 poor families.

P38 increase

The Regional Tripartite Wages and Productivity Board-Davao Region(RTWPB-Davao), approved an increase of P38 per day to the minimum wage workers in the region to be given in two tranches.

RTWPB-Davao said the first tranche of wage increase is under Wage Order No. RBXI-22 in the amount of P19 per day that took effect on March 6, 2024. 

The new minimum wage rate for workers in the Non-Agriculture sector shall be P462 per day and for the Agriculture sector workers, it shall be P457 per day. 

The second tranche, still P19, will take effect on September 1, 2024. The new minimum wage rate for workers in the Non-Agriculture sector by that time shall be P481 per day and for the Agriculture sector workers, it shall be P476 per day.

The Department of Labor and Employment (Dole) said that 316,558 full-time wage and salary workers earning above the minimum wage may also indirectly benefit as a result of the upward adjustments at the enterprise level arising from the correction of wage distortion.

RTWPB–Davao conducted a public hearing on February 7, and a wage deliberation on February 13.

“The increases considered the various wage determination criteria provided under Republic Act No. 6727, or the Wage Rationalization Act,” Dole said.

The last wage orders for workers in private establishments and domestic workers in the region were both issued in May 2022 and became effective in June 2022. 

Last to adopt

Atty. Randolf Pensoy, Dole-Davao regional director, revealed the region was the last in the Philippines to implement the minimum wage adjustment.

According to Pensoy, the delay was due to the final tranche of the previous adjustment in April 2023. He explained that the adjustment, though relatively new, had been effective since 2022. The implementation was done gradually in tranches to avoid sudden shocks for employers and employees.

How is minimum wage determined?

According to the Official Gazette, in 2012, the Dole, through the National Wages and Productivity Commission (NWPC), implemented the two-tiered wage system (2TWS).

The two-tiered wage, as a policy reform measure, is aimed at minimizing the unintended outcomes of mandated minimum wage, improving the coverage of the vulnerable sectors, and promoting productivity improvement and gain-sharing.

The 2TWS is a reform that maintains the mandatory minimum wage as the first tier, complemented by a voluntary productivity-based pay scheme as the second tier. It is under RA 6727 or the Wage Rationalization Act.

There are four factors that influence the fixing of minimum wage, namely the needs of workers and their families, capacity to pay, comparable wages and incomes, and requirements of economic and social development.

Based on these factors, the regional boards determine the minimum wage at least once a year.

The 2014 edition of the Handbook on Workers’ Statutory Monetary Benefits provides a comprehensive outline of minimum legal requirements and mandatory monetary and non-monetary benefits workers are entitled to receive under the Labor Code and other existing laws. 

Dole said the new rates for workers in the private sector translate to a nine percent increase from the prevailing daily minimum wage rates in the region and result in a comparable 23 percent increase in wage-related benefits covering 13th-month pay, service incentive leave (SIL), and social security benefits such as Social Security System, PhilHealth, and Pag-Ibig.

Retail or service establishments employing not more than 10 regular workers, and enterprises affected by natural calamities and/or human-induced disasters may apply to the RTWPB for exemption from the wage increase. Barangay Micro Business Enterprises (BMBEs), however, are not covered by the minimum wage law under RA No. 9178 of 2002.

Strict monitoring

Pensoy said they are strictly monitoring the compliance of establishments on the new minimum wage order.

Pensoy said they have labor inspection monitoring and visitorial power. Aside from visiting and regulating the establishments, they can act on reports of establishments not following the minimum wage adjustments.

“We are mandated to monitor, implement, and keep track of those establishments, considering that the mandate of Dole is to have visitorial regulatory power. We regulate those establishments that are and are not following [new wage order],” the official said.

P100 minimum wage hike

Prior to the approval of the adjusted minimum wage hike in the region, the Senate approved on the third and final reading on February 19, 2024, a measure seeking to increase the daily minimum wage of workers in the private sector by P100.

With 20 affirmative votes, zero negative votes and no abstention, the Senate passed Senate Bill 2534, or “An Act Providing for a 100 Pesos Daily Minimum Wage Increase for Employees and Workers in the Private Sector," which was authored by then-Senate President Juan Miguel Zubiri and sponsored by Senator Jinggoy Estrada.

The measure covers all minimum wage earners in the private sector in the entire country, whether agricultural or non-agricultural. Currently, there are 4.2 million minimum wage earners in the country.

Estrada said the measure is responsive to the needs of the Filipinos, especially amid the rising cost of living and soaring prices of basic commodities.

He noted that the last legislated wage hike that was implemented in the country dates back to 1989 with the enactment of RA 6727, or the Wage Rationalization Act.

Under RA 6727, wages would be set on a regional basis by the regional wage boards.

Estrada said that while he recognizes the concerns that the proposed law could adversely impact businesses and impede economic growth, “a flourishing economy relies on the vitality of its workforce, who are considered the lifeblood of enterprises.”

Ideal minimum wage

Based on a study conducted by Ibon Foundation, a non-profit research, education and information-development institution, which was published in January 2024, the ideal daily minimum wage for a family of five in Davao Region is P1,152, more than half of the P443 daily minimum wage at that time.

"Filipino’s wages and incomes are not enough to cope with costs of goods and services," Ibon said in a press release.

Romelito Pablo, Kilusang Mayo Uno-Southern Mindanao Region (KMU-SMR) spokesperson, lauded the measure approved by the Senate with regards to the senate measure.

However, Pablo also cited worries that there might be hindrances in signing the bill.

Meanwhile, with regards to the recently approved wage hike in Davao, he said that the increased amount is not ideal considering the continuous increase of food and other basic commodities such as gas and transportation, due to the continuous inflation.

"Kining increase na gihatag sa Davao Region, di gyud ni paigo,” Pablo said.

He added, “Sinsilyo ra gyud ang gihatag sa gobyerno. Di paigo labi na nga nagataas ang atoang family living wage sa atong nasud.”

The labor union leader is urging the government to provide a decent wage to sustain the needs of the families of the workers.

Meanwhile, Union leader Rodel Abenoja said the P38 increase won’t suffice the region’s poverty threshold.

In his computation, the ideal increase should be P85, which would serve as a “wage recovery.”

The government’s ally is currently pushing for Charter change (Cha-cha), reasoning that this would further help the economy by allowing foreign investors to operate in the country. They said that this would further provide opportunities for workers.

But for Abenoja, Cha-cha it’s not the solution.

“Ang sagot ng manggagawa, hindi Charter change kundi taasan ‘yung sahod ng manggawa,” he said.

Private sector's reaction

In a previous report, former president and current chairman of Davao City Chamber of Commerce and Industry, Inc. (DCCCII) Antonio dela Cruz said that the wage increase being submitted by labor groups “is way higher than the National Capital Region."

Dela Cruz said that some members wanted the deferment of the wage increase.

In their collective position way back in 2022, they said they are not opposing the wage increase, but the amount, he said, they recommended was between P16 to P20.

Dela Cruz said the increase would be difficult for the micro, small, and medium enterprises (MSMEs) to shoulder considering that they are still adjusting to cope with the economic losses brought about by the Covid-19 restrictions, which was further by the ongoing conflict between Russia and Ukraine.

Davao City Councilor Bernie Al-ag, also a business owner, said the increase is justifiable considering the increasing prices of basic goods and commodities.

"Ang hangyo lang nako sa mga negosyante, kung kaya ninyo ihatag, or more than this mahatag nato, ihatag nato sa empleyado (My appeal to all businesses, if you can give more to your employees, then do it)," the councilor said.

Ken, a restaurant owner of 30 employees, said that while he is supportive of the proposed wage increase, he, however, feared that it might result in either laying off of employees or worse, closing his business.

"Di pud baya lalim na ilang ginaduso na wage increase. Dili baya all the time kusog atong halin. Usahay mamingaw pa gyud labi na og kusog-kusog ang ulan, especially ‘tong niaging January and February [2024]," he said, appealing to Dole to carefully study the wage increase that they are approving for the welfare of the business owners, especially those owning small business.

Pablo, in response, said that the government should also have programs and other measures that would help sustain the operation of small and medium enterprises.

But he clarified that they don’t want the businesses to be affected by these measures.

If these businesses would struggle to give a decent wage to their employees, he said the government should step up and subsidize.

“Dapat ang gobyerno mu-engage sa mga small businesses nato para ayudahan sila kay dako’g epekto kung adunay ing-ana nga madawat atong mga trabahante labi na sa pagpadagan sa ekonomiya,” Pablo said.

“Kung sakto ang suhulan sa atong mga trabahante, paspas ang pagtuyok sa kwarta, paspas pud mulambo ang atong ekonomiya kay naa man kapasidad na mupalit ang atong trabahante ug katawhan,” he added.

‘Sincere wage increase’

Ongpao said he is happy with the moves for a wage increase, which he said would help workers somehow.

However, he admitted that demanding a higher wage won’t be possible due to various factors.

As an employee, he said that all he can do is be grateful for the salary he is currently receiving.

“Di man nato sila mapugos. Kinasing-kasing baya nang pag-usbaw. Kung maayo ka’g performance as an employee, for sure makadawat gyud kag additional,” he said.

As for Ang, having a “livable wage” in the country would remain a dream.

If the economy doesn’t improve, she is thinking of working abroad to look for a greener pasture.

“Dako ka’g sweldo pero ang trabaho nagtapun-og, dili worth it bisan dako ka’g sweldo (If your salary is high but you tasks are higher, it’s not worth it). Might as well go somewhere else,” she said. RGL

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