Independent think tank says economy can support wage hike

By IBON (PR)

BAGUIO CITY — Contradicting the claims of the Malacañang Palace that wage hike in the country is not practical and will cause closure of businesses, the independent think tank Ibon Foundation Inc. stated in their website that employers in the Philippines can afford a substantial wage increase if only they accept a cut in their already considerable profits.

The Ibon release said that the economy can support a substantial raise on the workers’ wages as the country’s economy has more than enough profits. It added that the workers and their families’ welfare will have substantial improvement once there will be a wage hike.

Ibon issued the statement a day after the palace through Deputy Presidential Spokesperson Abigail Valte announced that President Benigno Aquino III is not supporting the proposed P125 wage hike bill pending in the house of congress. Valte said that the palace leave the decision to the regional wage boards and labor department to determine if there is any need for a wage increase.

According Ibon, based on the 2009 Annual Survey of Philippine Business and Industry (ASPBI) of the National Statistics Office (NSO), all the establishments in the country of all employment sizes in 2009 had combined profits of P1,629.5 billion and 3.94 million employees. Ibon added that granting a P125 across the board wage hike will mean that workers will receive an additional P3,802 a month and the employers will be spending an additional P49, 427 per employee a year (assuming 13 months of pay), the total cost of the proposed wage hike will only be P194.9 billion. When subtracted from total profits, this will still leave establishments with P1,434.6 billion in profits. This is only a 12% cut in their profits stressed Ibon.

The think tank also said that the situation is more straightforward for the country’s largest corporations.

“The Top 1,000 corporations in the country combined annual net income increased from P116.4 billion in 2001 to P804.1 billion just in 2010, with a cumulative P4,593 billion over the decade 2001-2010. Combined net income in 2010 was nearly double the P416 billion in 2008 despite the onset of the global crisis – affirming their ability to absorb a significant wage hike,” Ibon explained.

Ibon added that a large wake hike will not just benefit the workers and their families but will also help the economy. It explained that the transfer of money from the rich to the poor households will increase aggregate demand therefore will stimulate the Philippine economy.

According to Ibon, wage increase will be one of the most concrete ways for growth in the country to become more inclusive than benefiting just a handful of elite farmers and big corporations. “Opposition to a wage increase and alarmist scenarios of runaway inflation and massive job losses are unwarranted, and may just be justifications to preserve high profits at the expense of workers and other low-paid employees,” ended Ibon release. # nordis.net