N.B. - This was published in Vol. VIII, No. 11 of Bulatlat (April 20-26, 2008), the full text of which may also be retrieved from http://www.bulatlat.com/2008/04/gov-t-data-prove-necessity-substantial-wage-hike-0.

One only needs to look at government data to see the basis for a substantial wage hike, and one only needs to do simple mathematical computations to prove the anti-poor character of the proposed 10-percent wage hike for government employees.

BY DANILO ARAÑA ARAO

Unlike in the past, the Macapagal-Arroyo administration and a segment of the business sector now support a wage hike for workers. They say that the current problem with rice supply (they are careful not to use the word “crisis”) warrant the provision of relief to the country’s labor force.

President Gloria Macapagal-Arroyo prefers another 10% across-the-board increase in the wages of government employees, similar to what happened in July 2007. Why are cause-oriented groups opposing this? Isn’t their objective to increase the wages of workers?

Analyzing the 1989 Salary Standardization Law’s (SSL) salary scale as of July 2001, the lowest-paid government employee covered by SSL had a basic monthly salary of P5,082 or $121.26 (Salary Grade or SG 1, Step 1). A utility worker or street sweeper who belongs to SG 1-1 got a measly P508.20 ($12.13) monthly when the 10% wage hike was granted last year.

On the surface, there seems to be nothing wrong with getting a little more than P500 ($11.93) monthly as it is better than nothing. However, the injustice in this kind of wage increase becomes apparent as one computes how much a government official who belongs to a higher SG got as additional income.

The highest-paid government employee covered by SSL is Gloria Macapagal-Arroyo who, as the country’s President, belongs to SG 33. She used to get a monthly salary of P57,750 ($1,377.95). A 10-percent increase in 2007 currently means P5,775 ($137.80) more in her monthly salary.

If another 10-percent wage hike were granted to government employees, those belonging to SG 1-1 who currently receives P5,590.20 ($133.38) monthly stand to earn an additional P559.02 ($13.34) while Macapagal-Arroyo who earns P63,525 ($1,515.75) will get an additional P6,352.50 ($151.57) monthly. Where is the justice there?

A 10-percent wage hike is inherently discriminatory against those who are earning less and those who are earning more stand to benefit from it. The administration’s proposal for another 10-percent wage hike therefore creates a situation once more where a wage increase becomes anti-poor.

That cause-oriented groups and progressive labor organizations and unions are demanding an increase in salaries in absolute terms is meant to remove any form of discrimination in the workplace. Unlike a percentage increase, workers, regardless of their position, stand to get equal amounts.

The workers’ campaign for a P125 ($2.98) increase in the basic pay of private sector workers was launched on August 25, 1999, immediately followed by the government employees’ campaign for a P3,000 ($71.58) increase in their monthly salaries. According to the 2002 book “Manggagawa: Noon at Ngayon (Workers: Then and Now),” the daily cost of living for a family of six was then pegged at around P460 ($10.98).

Nine years later, government would most likely argue that the Regional Tripartite Wages and Productivity Boards (RTWPBs) established in 1989 have provided “substantial” increases, citing the case of Metro Manila-based workers in the private sector whose current salaries are now P164 ($3.91) higher compared to when they started their campaign for a P125 ($2.98) wage hike.

It should be stressed, however, that it was only in Wage Order (WO) No. 13 on August 28, 2007 that the P50 ($1.19) cost of living allowance (COLA) was integrated to the basic pay. Aside from the COLA’s integration, WO 13 only provided a P12-increase ($0.29) in the basic pay, increasing the minimum wage to P362 ($8.64), the highest in the country.

Metro Manila-based private sector workers are therefore enjoying a cumulative wage hike in the basic pay which is greater than what organized labor has been demanding since 1999 for only about eight months as of this writing.

The situation proves to be worse in other regions. Comparing the August 1999 and April 2008 minimum wage levels (non-agriculture), the RTWPBs provided a cumulative increase ranging from P37 or $0.88 (MIMAROPA) to P111.50 or $2.66 (Central Luzon). (See Table 1)

Analyzing the current data on family living wage (FLW), it becomes apparent that wages are not enough to provide for the needs of a family.

In a study by the National Wages and Productivity Commission (NWPC) titled “Development of Methodology for Estimating the Living Wage (2001),” living wage refers to “the amount of family income needed to provide for the family’s food and non-food expenditures with sufficient allowance for savings/investments for social security so as to enable the family to live and maintain a decent standard of human existence beyond mere subsistence level, taking into account all of the family’s physiological, social and other needs.” The current assumption is that a family has an average of six members and that two of its members (usually the parents) are earning.

The FLW show that it is practically impossible for two members earning only the minimum wage to provide for their family’s needs. The difference between the minimum wage and the family living wage, on a monthly basis, ranges from P6,638 or $158.39 (Eastern Visayas) to P20,826 or $496.92 (Autonomous Region in Muslim Mindanao or ARMM).

Incidentally, ARMM still holds the distinction of having the lowest minimum wage rate nationwide and the highest family living wage. Not surprisingly, ARMM is in a situation where all six family members have to work and earn the minimum wage to provide for the entire family’s needs.

No amount of government rhetoric can deny the kind of deprivation and injustice the workers are experiencing. That they need a substantial wage hike is already obvious, using government data no less.

The question at this point is if the government can muster enough political will to do what is right, at least this time. Bulatlat

Table 1: Minimum Wage Rates
August 1999 and April 2008
(highest nominal wage for non-agriculture, in pesos)

If you watch 24 Oras or Saksi on GMA 7 tonight (April 16), you might see me explain my views on the wage hike debate.

I was just interviewed a few minutes ago by a GMA 7 reporter who, in the course of her research on the topic, came across an article I wrote in January 2007.

The article is titled “The Logic Behind a Legislated Wage Hike” published in Bulatlat Online Magazine. The reporter asked questions regarding the points I raised in this article.

I also provided updates on my computations with regard to how a wage increase could affect cost of production, at least in the manufacturing sector. If you would read my article, you would notice that I only used 2006 data, hence the need for updates. True enough, the effect on the overall cost of production is lower now than my estimates two years ago.

Just out of curiosity, I searched “legislated wage hike” in Google and, to my surprise, my January 2007 article currently ranks fifth.

I don’t think that this is a reflection of lack of more current research on a very important issue. Then again, I consider this a wake-up call to write once more about wages, especially in the wake of the current rice crisis.

Update (April 17, 1:25 pm): That’s me being interviewed by 24 Oras (GMA 7) last night (April 16, around 6:40 pm). I don’t know if I deserve to be called “political analyst,” but I agreed to it when it was suggested by the reporter. If you want to view the entire news cast, kindly click the image above. Thank you for reading.