The Philippine Exporters Confederation Inc. (Philexport) has cautioned the government against granting an across-the-board wage increase, as this could lead to massive job losses and lost investment opportunities.
According to Philexport president Sergio Ortiz-Luis Jr., a wage increase is the last thing that companies, including the micro, small and medium enterprises (MSMEs) need, as this will undermine their ability to sustain operations and preserve the jobs of their workers.
High wages, Ortiz-Luis added, will discourage the entry of foreign direct investments (FDIs) and labor-intensive industries such as handicrafts and furniture operations.
“A further increase in the cost of doing business such as minimum wage will not help attract investors, be it domestic or foreign investors… Any wage increase could cripple the economy and make the country even more uncompetitive vis-a-vis its Asian neighbors,” Ortiz-Luis said.
Philexport instead, is urging the government to implement the two-tier wage adjustment system by the Department of Labor and Employment (DOLE). Under the system, the minimum wage is set close to the regional poverty threshold, while the second tier is an additional compensation linked to productivity.
“The solution on the two-tiered wage implementation comes as an appropriate measure therefore, as this provides the flexibility for employers to adjust wages based on their financial situation vis-a-vis the performance of their workers,” Ortiz-Luis said.
Last week, the Joint Foreign Chambers of the Philippines (JFC) also warned against an increase in minimum wage of workers in Metro Manila, stressing that it will result in more layoffs.
At the same time, an across-the-board wage hike is expected to imperil the increased interest in the Philippines as an investment destination, said the JFC in its letter to Alex V. Avila, chair of the Regional Tripartite Wages and Productivity Board for the National Capital Region.
The letter, dated Aug. 1, 2013, was signed by the heads of the American Chamber of Commerce of the Philippines Inc.; Australian-New Zealand Chamber of Commerce of the Philippines Inc.; Canadian Chamber of Commerce of the Philippines Inc.; European Chamber of Commerce of the Philippines Inc.; Japanese Chamber of Commerce and Industry of the Philippines Inc.; Korean Chamber of Commerce of the Philippines Inc.; and the Philippine Association of Multinational Companies Regional Headquarters Inc.
The Philippines is said to have the highest minimum wage in the Asean region.
Compared with Metro Manila’s minimum daily wage of $10.74, Myanmar has $0.52; Cambodia, $2.03; Vietnam, $3.15; Indonesia, $7.46; China, $8.08; Thailand, $9.75; and Malaysia, $9.75.