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In 1951, Republic Act 602 fixed the national minimum wage rate for the first time at P4.00 daily. Almost every year after that, the government never failed to raise the minimum wage to protect the worker?s interest against the ravage of inflation. After many rounds of annual increases, in July 1989, under RA 6727, the minimum wage stood at P89.00 daily. That was the last time the minimum wage was fixed nationally.
RA 6727 created the Regional Tripartite Wage and Productivity Board (RTWPB) to rationalize the determination of the minimum wage rage by region. Under RA 6727, the regional wage boards are mandated to promote productivity-improvement and gain-sharing measures intended to ensure a decent standard of living for the workers and their families and guarantee the rights of labor to its just share in the fruits of production while at the same time meeting the need of business and industry of reasonable returns on investment to allow them to expand and grow.
In Central Visayas, the last time the wage board acted on the demand for a wage increase was in mid 2008, which places the minimum wage at P222 ? P267 in the non-agriculture sector, depending on the class or place where the workers are employed. In that year, the workers demanded an increase for two reasons. One was to share in the bonanza that came with the 7.1% increase in the GDP in 2007. The other was to catch up inflation which rose significantly with the oil and food crisis in late 2007 and early 2008.
Because of the global recession, labor was persuaded not to ask for a raise last year. It turned out that the economy was not as badly hit as our neighbours in Asia if we were to believe government pronouncements, which is also corroborated by the high profits rates reported by business last year. Car sales is booming beginning January this year. Who are buying? Meanwhile, inflation is again inching up. Thus, I am not surprised if the workers would now demand an increase in the minimum wage.
Business says the new demand is untimely as the global economic recovery is still fragile, adding that increasing the minimum wage would only increase the pressure for them to reduce their number of workers. What about the fate of the bulk of the workers whose income barely provides them with three square meals a day?
The national poverty threshold was placed by the government at P15,000 in 2006. With inflation, I project the threshold to be at P17,500 by January this year. Assume the worker has a family of five which is even very conservative if we consider the propensity of poor families to procreate. With this, and based on the existing wage rate, the region?s minimum wage earner will only take an annual equivalent of 73% to 88% of the poverty threshold by working 24 days a month and excluding the 13th month pay which is just enough to cover SSS, Pagibig, Philhealth and other deductions. If there are six in the family, the equivalents figures are 60% and 73%.
So, we wave a dilemma. The minimum wage could not even cover the basic needs of the workers. That is why we have widespread squalor and poverty even in the highly progressive Metro Cebu cities and towns. If we increase the minimum wage, the business sector will readily point out its impact on their cost, thus supposedly forcing them to reduce their number of workers instead. The ordinary workers, which comprise of the bulk of the consumers, can also point out, however, that with very little income, they would not have the power to support business even if they spend all their income, thus making business also bad.
Schooled in economics, I tend to favor the logic of business but as human being, I also feel the sufferings of the poor. What is the way out? To me to increase or not the minimum wage will not be debated anymore if we adopt a framework for wage setting. My method is simply this ? set the minimum wage at the level that will give the workers a chance to live a descent or socially acceptable life as called for under RA 6727. This, the government determines to be the poverty threshold that it computes every three years.
Seeing many of our people experiencing unwanted hunger is surely not socially acceptable. Neither is living in slums areas or right in the streets. I would not say that we should raise the minimum wage immediately to allow the poor workers to cross the poverty threshold this year. What I suggest only is for the wage board to have a target with which to aim for. An agreement, for example, to reach the poverty threshold in five or ten years is surely better than the annual heated debate that comes every time the workers would demand a wage increase.
Under the present setting, the minimum wage earner is usually given an increase but the increase may not even be enough to catch up with inflation, thus worsening his wretched life. Of course, there is always a promise for business to give more when the time is good. Some do, but others do not even bother to give the old rate. With an agreed framework, peace will be in the minds of all, especially the poor workers who will now have a sure hope of lifting his family out of poverty after a time. Give labor that hope and productivity will improve. Give them a vague promise and it will encourage them to do only what is necessary, not their best.
