Low Wages Shows the Sorry State of the Nation

In an era of double-digit inflation and weekly oil price increases, a yearly wage increase of measly amounts (that cannot even buy a kilo of NFA rice) will simply never do, said KMU (Kilusang Mayo Uno or May 1st Movement). Year on year, the minimum wage rate hardly creeps near to touching distance with living wage levels.

Vol. VIII, No. 25, July 27-August 2, 2008

If there is one thing that draws intense reactions from both employers and workers, it is a wage hike. Every time the regional wage boards releases its decisions regarding a wage hike, employers and workers would cry out loudly in bitter complaint, but for opposing reasons. “We’ll likely lose (our profits),” cry the employers. The labor organizations, meanwhile, would cry out in disgust, “a pittance!” or, an “insult!”

But considering that the Department of Labor and Employment (DOLE) itself is admitting that the minimum wage is only half of the “living wage”, the workers’ disgust at the amount of wage hikes emanating from the wage boards is patently more understandable. A pittance won’t do when large companies such as San Miguel Corporation are reporting a 200 percent jump in profits this early in 2008.
In an era of double-digit inflation and weekly oil price increases, a yearly wage increase of measly amounts (that cannot even buy a kilo of NFA rice) will simply never do, said KMU (Kilusang Mayo Uno or May 1st Movement). Year on year, the minimum wage rate hardly creeps near to touching distance with living wage levels.

Worse, according to Elmer Labog, chairman of KMU, data from the DOLE itself show that from the late eighties up to now, the real value of Filipino workers’ wage levels has been dropping precipitously and consistently. This, Labog explained, has prompted the KMU to reject the regional wage boards for being “inutile.” But of course Labog is representing a labor organization. The regional wage boards’ almost two-decade record of handing out paltry wage hikes despite runaway prices of goods and increased profit-taking by companies will likely be evaluated differently by employers.

Wage rationalization: lowering what’s already low, limiting what’s already limited

Exactly how many employed workers have benefited from the fourteen wage orders granted by the Regional Tripartite Wages and Productivity Board over the years? The answer is as hard to determine as substantial wage hikes are hard to wrestle from the wage boards. But what is certain is that not all employees get to enjoy it in the end.

According to Attorney Remigio Saladero, lawyer from PLACE (Pro-Labor Assistance Center) and columnist of Pinoy Weekly, wage orders come down to expectant workers peppered with exemptions and loopholes. From his discussion of labor laws and regulations pertaining to wages, the paltry amounts of wage hikes being granted by regional wage boards is just one of the many problems barring ordinary workers from catching a trickle of the wage hikes.

First, most increases granted by wage boards benefit only minimum wage earners. This shuts out employees who are getting above minimum wage rates, even if they’re in establishments that are most likely in a position to grant wage increases, and even if they’re also in dire need of wage adjustments. The excuse given by DOLE (and the wage boards) is that unions can demand for increases via collective bargaining agreements (CBA). But only about 10 percent of the employed are unionized, said Elmer Labog, and of this, not all have managed to hammer out a good CBA with their employers. Intensified trade union repression plays a huge role in pushing back the number of organized and cutting back the organized workers’ gains, but that’s for another story.

According to Saladero, another reason that can explain why wage rates fail to take off meaningfully with wage orders is that there are numerous low minimum wage levels in the country. This means that the minimum you think of as the definitive lowest of all wages is actually being lowered further to another minimum level in different settings (say, regions or even municipalities) or in different job types (agricultural or non-agricultural).

Now, considering that the wage orders have shut out the non-minimum wage earners (who usually come from large, profitable companies), how do low-paying workers fare? Employers used to cry their hearts out for the small and medium establishments (SMEs) every time a wage hike is demanded.

In 2002, the Philippine government decided to forgo altogether the minimum wage law compliance among selected establishments, namely the SMEs. They exempted the establishments registered as barangay micro-businesses (BMBEs) from complying with the minimum wage law, thus allowing for the further free-fall of what’s supposed to be already the minimum.

Furthermore, the DOLE issued an order stating that if wage boards decide on a wage hike for SMEs, those registered as BMBE’s will not be obliged to implement it.

What constitute the BMBEs and SMEs? Reports said they comprise 99 percent of the registered establishments in the Philippines. Some of them may indeed be legitimate Filipino small business that rightly needs incentives, but unfortunately some are not. The National Federation of Labor Unions or NAFLU-KMU for instance had encountered an export-oriented enterprise in Rizal that is not paying its 300 employees the mandated minimum wages. They filed a case in behalf of the workers but lost because the enterprise was registered as a BMBE. How this exporting enterprise with a 300-strong workforce was able to register as a BMBE speaks a lot about how companies are able to circumvent labor and wage laws.

Militant labor unions whose members frequently receive higher than minimum wages (as a result of past collective actions and because their employers can easily afford it) usually press their employers to apply the increases granted by wage boards to their salaries. At times, it also means bargaining with their employers as the latter slice the paltry amount further to avoid wage distortions. (Wage distortion happens when a relatively new employee who is receiving the minimum wage suddenly gets an equivalent or even higher wage rate compared to co-employees who have been with the company for a longer period when wage increases granted by wage boards or through legislation are applied.)

Thus, for the paltry wage orders to take effect on non-minimum wage earners, workers have to fight for it first. Unorganized workers such as the increasing number of contractuals, agency-hired and other flexibly hired workers are at a disadvantage. Either they depend on their employers’ “social responsibility,” or risk their jobs by collectively demanding for the wage order’s implementation on them.
The simplest way to give workers some kind of relief from years of eroded wages and rising prices is to legislate a nationwide, across-the-board P125 ($2.826 at an exchange rate of $1-P44.23) wage increase, said Elmer Labog. This will cover everybody, he explained, and would not result in wage distortions.

But for a nationwide wage hike to be legislated, Labog says, hundreds of thousands of workers and employees from all unions regardless of affiliation should take part in campaigning for it. “Obviously, wage rationalization exists not for the workers’ benefit but for the employers. If we want to junk the regional wage boards once and for all and to compel the Arroyo administration to see the obvious that a substantial wage hike offers a slightly better relief than band-aid dole-outs, then we have to work together,” said Labog. He enjoins all employees to join or form Unions for P125 in their respective towns and barangays.

“For a fake president who is isolated and out-of-touch,” Labog says “we all need to shout together to be heard.” Bulatlat


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