Following the series of increases in prices of petroleum products, electricity rates, basic commodities and the anticipated hike in jeepney fare, various labor groups have expressed the need for an increase in the minimum wage rate. The Trade Union of Congress of the Philippines (TUCP) and the Kilusang Mayo Uno (KMU) are asking for at least P78.00 and P125.00, respectively, across the board increase in the wages of private workers. Business employers on the one hand, are reportedly amenable to at most P30.00 increase in minimum wage.

In this connection, the President, in her speech during the celebration of Labor Day last May 1 before the leaders of Moderate Labor Groups belonging to the Labor Solidarity Movement, ordered the Regional Tripartite Wages and Productivity Boards (RTWPBs) through the Department of Labor and Employment, to review wage rates of the private sector within 30 days.

In order to assess the effects of the proposed wage increases to total cost of production, cost of personal consumption expenditures and to the prices of goods and services, the National Statistical Coordination Board (NSCB) conducted a Price Cost Analysis using the 1994 Input-Output (IO) model under the abovementioned scenarios. NSCB computations yielded the following results:

Under Scenario 1 where a P78.00 increase in the wage across-the-board filed at the RTWPBs, total cost of production will increase by 9.7 percent. Cost of trading and construction are expected to post the biggest increases of 1.0 percent and 0.6 percent, respectively. Meanwhile, prices of all goods and services will increase by an average of 9.4 percent while cost of personal consumption expenditures will increase by 9.5 percent, above the “normal” inflation. This would mean that in general, if a household member spends 100.00 pesos a day, it could be expected that he or she will now have to spend at least 109.50 pesos a day;

On the other hand, should a legislated P125.00 increase in the minimum wage be approved this would translate to a 15.5 percent increase in total cost of production with cost for trading products and doing construction likely to increase by 1.6 percent, and 0.9 percent, respectively. Price of goods and services are seen to increase by 15.1 percent, on the average while cost of personal consumption expenditures will increase by 15.2 percent; and

Finally, if the businessmen’s proposal of at most P30.00 increase in the minimum wage is to be followed, it will increase the total cost of production by only 3.7 percent. Prices of goods and services are to increase by an average of 3.6 percent while the cost of personal consumption expenditures will increase by a moderate 3.6 percent.

At this point, it should be noted, that based on the National Wages and Productivity Commission’s (NWPC) Comparative Wages of Selected Asian Countries¹, our present minimum wage for the National Capital Region (NCR) of $5.54 is actually higher than Vietnam ($0.93), China ($0.31 to $1.28), Indonesia ($1.36) and Thailand ($3.36 to $4.25). However, this daily minimum wage is lower than Malaysia ($4.24 to $9.10), South Korea ($20.04) and Singapore (14.25 to $44.80) who are considered to be economically more advanced.

For inquiries, please contact:

Ms. Vivian R. Ilarina, Ms. Eileen P. Capilit or Ms. Rhea-Ann F. Austria
Tel. No. (632) 896-5372
E-mail addresses vr.ilarina@nscb.gov.ph, ep.capilit@nscb.gov.ph and raf.austria@nscb.gov.ph

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¹ Foreign exchange rates used by the NWPC to convert local currency to USD: Peso-54.171, Dong-15,845, Yuan Renminbi-8.2865, Rupiah-9,530.5, Baht-39.554, Ringgit-3.8006, Won-1,002 and Singapore Dollar-1.6369.
(Source: www.nwpc.dole.gov.ph/pages/statistics/stat_comparative.html)