EDITORIAL
Proposed P350 minimum wage increase:
A death warrant for MSMEs?
The Senate has recently approved the bill increasing the minimum wage across the country by P100 per day.
The proposal was met with opposition from the business group fueled by the apprehension that the legislated wage increase would cause a steeper increase in prices, thus, pushing the inflation rate upwards.
While the Senate version of the proposed law has already sounded the alarm bells, the House version proposed an even higher legislated wage increase of P350 per day. The business group fears that the proposed increase would eventually force Philippine investors to close shop and transfer their operations to other countries.
The employers’ group sees the proposed legislation would lead to the closure of many micro, small and medium enterprises (MSMEs) since many would be unable to cope with the additional expenses that an increase of such magnitude would cause. MSMEs comprise 90 percent of the total economy.
There is no question that the proposal has a noble purpose of protecting workers against unduly low pay, and securing for them a just and equitable share of the fruits of progress to all. According to the International Labor Organization, minimum wages can also be one element of a policy to overcome poverty and reduce inequality, including those between men and women, by promoting the right to equal remuneration for work of equal value. No employer would question the well-meaning intention of Congress to improve the plight of the workers.
But as they say, the road to hell is paved with good intentions. A P350 legislated minimum wage hike is not simply how Congress dismissed the opposition by saying that the proposal would only lead to less profits for businesses. This may be true to large and few medium-sized entities which have the financial resources to cushion the impact of the increase in labor cost. To the micro and small enterprises, a P350 increase plus the current minimum wage already implemented per region may leave them with no other option.
As the proposed legislation will impact the entire economy, Congress should carefully study the impact of the proposal. For several years, the national legislature has left the task of determining the appropriate minimum wage to the regional wage boards.
Interestingly, with just a little more than a year before the midterm elections, our lawmakers are rushing to pass this piece of social legislation. For now, we can only assume that the proposal has well-meaning intentions.