Militant think tank wants profit cuts for higher wages

Militant think tank IBON Foundation is urging employers in the Philippines to grant the P125 across-the-board wage hike because the total amount for the adjustment represents only 15.1 percent of the around P900-billion combined profits of small and large businesses in the country. "Government data show that establishments in the country with total employment of 20 and over had combined profits of P895.2 billion and 2.74 million employees, according to the preliminary results of the 2008 Annual Survey of Philippine Business and Industry (ASPBI) of the National Statistics Office (NSO)," IBON said in an article posted on its website. It said that granting an across-the-board wage hike of P125 means workers will receive an additional P3,802 each month, and that employers will spend an additional P49,427 per employee per year (assuming 13 months of pay). The total cost of the proposed wage hike will only be P135.6 billion, which, if subtracted from total profits, will still leave establishments with P759.6 billion in profits. "This is only a 15.1-percent cut in their profits," it said, adding that the P125 across-the-board wage hike will provide immediate relief, but not necessarily give workers a decent living. IBON added: Giving a P125 wage hike in Metro Manila will cost employers P61.0 billion and reduce their profits by only 17.3 percent, from P352.1 billion to P291.1 billion. Average profit per establishment in Metro Manila will only fall by P6.8 million and still leave them with an average of P32.2 million in profits each, it added. The group said the situation is even more straightforward for the country’s largest corporations. It said the Top-1000 corporations’ combined annual net income increased from P116.4 billion in 2001 to P756.0 billion just in 2009, with a cumulative P3,788.9 billion over the period 2001-2009. Such enterprise and big corporate profits starkly contrast with the conditions of workers, IBON said. It said the average daily basic pay that wage and salary workers in the country actually received – as opposed to merely mandated minimum wages that are not necessarily actually paid – increased from P222 in 2001 to P301 in 2010 (preliminary estimate). "The additional P79 amounts to a 36-percent increase but was not even enough to make up for the continuous increase in prices which soared some 56 percent over the same period – with inflation at an annual average of 5.2 percent over the 10-year period including a peak of 9.3 percent in 2008," it said. It added, “The net effect is that the wage increase was more than offset and workers instead saw a P28 drop in the real value of their wages." Also, IBON said a large wage hike will be beneficial not just for workers and their families but also the economy. The transfer of money from rich to poor households will increase aggregate demand and stimulate the economy. High-income households have a higher propensity to save and low-income households, so deprived even of basic necessities, a higher propensity to consume, it added. — LBG, GMA News