Danny Arao logo Danny Arao online

HOME > Selected Writings > Investigative Report on Labor


Labor Sector: Working Hard for What?
(First of two parts)

Published by The Journal, May 1999

One peso is now worth only 69 centavos, and prices of some commodities as of April 1999 have increased by as much as 36% compared to the same period last year.

As if these were not enough, oil firms hiked pump prices by as much as 50 centavos towards end-April, and another round of oil price hike is in the offing by the middle of May.

How serious are the woes of toiling workers and how valid is their demand for a P100 wage hike and just working conditions?

At present, the daily minimum wage rate in the National Capital Region (NCR) is P198. In other regions, the minimum wage ranges from P131 (ARMM and CARAGA) to P188 (Southern Tagalog).

IBON computations of cost of living as of December 1998 show that a family of six in the NCR needs at least P441.06 to meet basic needs in one day. In areas outside the NCR, IBON pegs the daily cost of living for a family of six at P334.55 (agriculture) and P355.27 (non-agriculture). (See Table 1)

This simply means that at present, the daily minimum wage rate is not enough to meet basic needs. In the NCR, an ordinary worker’s take-home pay only fulfills 45% of cost of living requirement. It is even worse in ARMM and CARAGA, as the minimum wage meets only 39% of basic needs as computed by IBON.

Table 1
Minimum Wage vs Daily Cost of Living for a Family of Six

 

Minimum Wage /a

Cost of Living /b

% share of wage to COL

Philippines

180.48

369.87

49%

NCR

198.00

441.06

45%

Outside NCR

162.96

355.27

46%

Notes:
/a Comparative Labor Statistics, DOLE
/b IBON Computation based on NSO and NWC data; figures as of December 1998
Data for non-agricultural workers only.

 

IBON findings show that the peso has already been eroded by about 31% in just five years. Based on the consumer price index (CPI) as of March 1999, one peso is now only worth 69 centavos compared to prices five years ago. (This real value of one peso is called the purchasing power of the peso.)

In the context of wages in the NCR, the P198 minimum wage is now worth only P136.62 in real terms. The situation is worse in the ARMM as the real value of the P131 minimum wage has been pegged at only P87.77. (See Table 2)

Table 2
Daily Minimum Wage Rates (non-agricultural)
Purchasing Power of the Peso and Real Wage by Region

 

Nominal Wage

Purchasing Power

Real Wage

NCR

198.00

0.69

136.62

CAR

155.00

0.72

111.60

Reg. I (Ilocos)

166.00

0.69

114.54

Reg. II (Cag. Valley)

160.00

0.67

107.20

Reg. III (C. Luzon)

175.50

0.69

121.10

Reg. IV (S. Tagalog)

188.00

0.69

129.72

Reg. V (Bicol)

163.00

0.67

109.21

Reg. VI (W. Visayas)

136.85

0.72

98.53

Reg. VII (C. Visayas)

155.00

0.68

105.40

Reg. VIII (E. Visayas)

153.00

0.67

102.51

Reg. IX (W. Mindanao)

132.00

0.68

89.76

Reg. X (N. Mindanao)

149.00

0.70

104.30

Reg. XI (S. Mindanao)

145.00

0.71

102.95

Reg. XII (C. Mindanao)

141.00

0.71

100.11

ARMM

131.00

0.67

87.77

CARAGA

131.00

0.68

89.08

IBON Computation based on NSO and DOLE data
Note: Purchasing power of the peso based on March 1999 CPI

 

The National Statistics Office (NSO) comes up with the CPI every month to measure fluctuations in the prices of selected food and nonfood items nationwide. At present, it uses 1994 as the base year.

Obviously, low purchasing power means increased hardship for poor people, especially in a situation where wages remain low. For those in the upper social strata, purchasing power is a non-issue since they have high income and savings, among others.

As if adding insult to injury, the real value of workers’ wages also gets even lower as prices continue to increase.

According to data from the Department of Trade and Industry (DTI), prices of some agricultural and basic commodities have increased in April 1999 compared to year-ago prices. Products like sugar and cooking oil increased by 23% and 36% respectively. Even the price of sardines, commonly consumed by the financially hard-up, increased by 17%. Laundry soap also increased by 20%, though there was a reduction in the price of detergent bar by as much as 23%. (See Table 3)

Table 3
Prices of Selected Agricultural and Basic Commodities
as of April 23, 1999

Items

Apr 1998

Apr 1999

Growth Rate

Fancy Rice

28.00

30.00

7.14%

Premium Rice

24.00

25.00

4.17%

Special Rice

20.00

20.00

0.00%

Ordinary Rice

18.00

18.00

0.00%

Dressed Chicken

80.00

85.00

6.25%

Pork Liempo

100.00

110.00

10.00%

Refined Sugar (w/ VAT)

22.00

27.00

22.73%

Brown Sugar (VAT exempt)

18.00

22.00

22.22%

Cooking Oil (Lapad)

11.00

15.00

36.36%

Cooking Oil (Long Neck)

22.00

30.00

36.36%

Canned Fish (Ligo 155 g.)

7.50

8.75

16.67%

Condensada (Alaska 370 ml)

21.50

21.50

0.00%

Evaporada (Alaska 370 ml)

17.50

17.50

0.00%

Powdered (Bear Brand 200 g)

26.50

27.00

1.89%

Coffee (Nescafe 25g)

13.00

13.00

0.00%

Laundry Soap (Wheel 480 g)

17.50

21.00

20.00%

Detergent Bar (Ajax 480 g)

22.00

17.00

(22.73%)

Source of basic data: Department of Trade and Industry

Interestingly, the same DTI data also proved that there were increases in the prices of some basic commodities as a result of the oil price hike last April 22.

Just barely a day after the oil companies hiked pump prices, there were notable increases in prices of selected brands of sardines, milk, and detergent bars. Government assertions that the effects on prices of consumer goods are "minimal" must therefore be seen in this light. (See Table 4)

 

Table 4
Prices of Commodities that Increased due to April 1999 oil price hike

 

Before Apr 22 OPH

As of Apr 23

Growth Rate

Canned Fish, 155 g

     

Youngstown

8.00

8.25

3.13%

Master

8.00

8.25

3.13%

Ligo

8.50

8.75

2.94%

Condensed Filled Milk, 300 ml

     

Liberty

19.25

19.50

1.30%

Detergent Bar, 480 g

     

Champion

13.75

14.50

5.45%

Source of basic data: Department of Trade and Industry

 

Based on these data, there is cogent reason to demand a wage hike, if only to make things better for the toiling workers. But then again, the call for a wage increase goes beyond such issues, since overall productivity must also be considered.

An employer’s capacity to pay decent wages, particularly for a pre-industrial country like the Philippines, would be affected by the productivity of his or her establishment. Indeed, not all establishments can provide salaries that approximate decent living standards in full.

For instance, there are small businesses that provide below minimum wage to workers owing to low productivity, as in the case of those that hire stay-in workers.

According to the 1993 Annual Survey of Establishments in Manufacturing (i.e., latest available data), the average monthly income for those working in small establishments only amount to P1,925.34. However, establishments that have less than 10 workers only employ 26% of total manufacturing workers.

This is the case even if small businesses constitute 88% of the total number of manufacturing establishments. In other words, small enterprises outnumber big foreign and local business establishments though the latter account for about three-fourths of total employed in mnaufacturing.

Big businesses prove to be more productive as their value added is 188 times more than those that employ less than 10 workers. The former also get more from their workers, considering that the value of output per employee amounts to around P873,000.

It is clear, therefore, that establishments employing more than 10 workers are generally productive enough to provide decent wages. With their value of output at P793.3 billion, these businesses have managed to make the most out of their almost one-million strong workforce.

Be that as it may, the KMU recognizes that not all establishments are productive enough to give hefty wage increases. Taking into consideration the low productivity of small enterprises, workers are only asking for a P100 wage hike as compared to an additional P243.06 which would help Manila-based workers realize current daily cost of living.

One hundred pesos may not fully meet decent living standards, but this may more or less provide some breathing space to the workers’ belt-tightening measures. Seen in this light, a P100 wage increase becomes a fair demand that both government and employers must heed.

However, the zest for more profits prevent big establishments from increasing the workers’ wages. They do not want to compromise their profitability in the manufacturing sector even if it means more suffering for their employees.

(next: Workers Woes Beyond Low Wages)


HOME > Selected Writings > Investigative Report on Labor

All rights reserved.
© 1999-2000 / Danilo A. Arao