The Employers Confederation of the Philippines (ECOP) stands pat on its strong opposition to a legislated wage adjustment being pursued in Congress by party-list representatives.

ECOP has voiced grave concern to lawmakers during the public hearing over the “disastrous” impact on business and labor of a legislated P125 across-the-board wage increase for private sector workers – as proposed under House Bill No. (HB) 375.

“With this massive across-the-board daily wage increase which is not productivity-based, cost of production of goods and services would rocket sky-high. Enterprises could not just simply pass on the increased cost of goods to the market primarily because of the competition offered by low-cost imports and smuggled goods,” ECOP warned.

“In the process, companies which are unable to recover the increased cost of production would have no other choice but either to retrench or worse, close shop, or simply go underground, rather than risk severe penal sanctions,” ECOP pointed out.

ECOP stressed that the biggest casualty of such magnitude of legislated wage hike would be micro and small establishments. Latest data available indicate that micro and small establishments employ 3,596,110 wage and salary workers or 63% of the total number of 5,691,110 wage employment in the formal sector. From, 1991 after the Asian financial crisis up to 2009, micro and small and medium enterprises (SMEs) lost more than 46,000 enterprises and over 558,000 jobs. Using the labor cost methodology of the Department of Labor and Employment (DOLE) statistics, total labor cost of the P125 pay adjustment to micro and SMEs would reach a staggering amount of over P188 billion and over P109 billion to large enterprises. “Unquestionably, micro and small establishments will be the first ones to fall, considering that most of them could even barely cope with the periodic wage increases granted by the regional wage boards,” ECOP argued.

At the same time, ECOP noted that the proposed pay adjustment via legislation would undermine unionism and collective bargaining. It cited that the P125 across-the-board daily wage increase is equivalent to 31% of the highest prevailing regional minimum wage of P404 a day. But the increase, though, is not limited to the minimum but is multiplied across-the-board. In effect, this would also render the functions of the regional wage boards inutile as the various wage boards are mandated under Republic Act 6727, otherwise known as the Wage Rationalization Act, to set wages per region, sector or industry.

In addition, ECOP said a legislated wage increase would aggravate the discrimination and inequity between the protected sector and the rest of the labor force in as much as only 15% of wage and salary workers in the formal sector stand to benefit.