Generosity in difficult times
Senate President Juan Miguel Zubiri last week filed Senate Bill No. 2002, or the Across-the-Board Wage Increase Act of 2023, seeking to raise wages in the private sector nationwide by P150. “A decent life costs a decent wage,” Zubiri said. “If workers are putting in hours and hours of labor, day after day, and yet are still unable to afford their rent, bills, and basic necessities, then there is a problem.” Currently, the National Capital Region has the highest daily wage at P570, with the Bangsamoro Autonomous Region in Muslim Mindanao getting the lowest minimum wage at P306.
Wage hikes have always been a touchy issue. The COVID-19 pandemic has made it difficult for government to source funds needed to pay minimum wage earners in the public sector. Employers, on the other hand, have always opposed wage increase proposals for being inflationary and for being an additional burden on them.
But the need to adjust wages has never been more urgent than today due to high inflation. In January, the Philippines saw its highest inflation rate in 14 years at 8.7 percent, which slightly eased to 8.6 percent in February. Inflation is projected to remain elevated this year due to shortages in food supplies and expensive fuel imports. Consider as well that every year when the minimum wage is not raised, its value is reduced in inflation-adjusted terms. This means wage earners need more money to access the same quantity of food and basic utilities they need today.
There is no doubt that inflation affects minimum wage earners the most. A recent report by the International Labor Organization (ILO) noted that inflation has been reducing the purchasing power of the middle class and hitting low-income households particularly hard. In its “Global Wage Report 2022-2023: The Impact of Inflation and COVID-19 on Wages and Purchasing Power,” the ILO said that global monthly wages fell in real terms to minus 0.9 percent in the first half of 2022; this was the first time in this century that real global wage growth has been negative.
“The multiple global crises we are facing have led to a decline in real wages. It has placed tens of millions of workers in a dire situation as they face increasing uncertainties,” ILO director general Gilbert Houngbo said in a statement. The report highlighted that inflation has a greater impact on low-wage earners. It added that the cost-of-living crisis is on top of significant wage losses for workers and their families during the COVID-19 crisis that had the greatest impact on low-income groups in many countries.
Opposition to wage hikes among employers is understandable as it entails additional expense on their part. But this may be true only for micro, small, and medium enterprises (MSMEs), and not for big conglomerates for whom a P150 wage hike seems quite affordable. The country’s business titans have all reported huge earnings in 2022 despite the pandemic.
The Sy family-led BDO Unibank Inc. posted a net income of P57.1 billion last year, the highest annual earnings ever attained by a local bank, and a 33-percent growth from its P42.8 billion earnings in 2021. It also surpassed its prepandemic bottom line of P44.19 billion in 2019. Ayala Corp.’s profits slipped by 1.4 percent to P27.4 billion, but its subsidiary Ayala Land Inc. saw net income jump by 52 percent to P18.6 billion, while Bank of the Philippine Islands recorded a net income of P39.6 billion, up 66 percent from the previous year. Aboitiz Power Corp. ended the year with a record-high P27.5 billion in net income, up by 32 percent. San Miguel Corp. disclosed that its net income dropped 44 percent to P26.8 billion, but its units San Miguel Food and Beverage recorded a 10-percent net income growth to earn P34.7 billion, while San Miguel Brewery Inc. saw a 6-percent profit increase to P21.9 billion. Taipan Lucio Tan-led conglomerate LT Group Inc. eclipsed full-year earnings in 2021 as profits in the first nine months of 2022 reached P20.4 billion.
Expectedly, these companies will counter that a big part of their earnings goes to capital expenditures to grow their business—and profitability. However, these highly profitable companies need to include in their growth plans the goal of improving the welfare of lowly paid workers by adjusting their pay. Wage hikes may be a debatable topic, especially since there are tens of thousands of MSMEs yet to recover from the impact of the pandemic that is now in its fourth year. But there is no doubt that highly profitable conglomerates can more than afford this. Consider a company that made P30 billion in 2022. Assuming it has a workforce of 20,000 minimum wage earners, an increase of P150 a day will translate to a total annual additional expense of P1.08 billion, or just 3.6 percent of its net earnings.
With difficult times calling for sacrifices from all of us, would it be too much to ask big corporations and employers to share their wealth and profit with those who are truly in need?
