The minimum wage vs. the living wage: Will the twain ever meet?
According to Ibon Foundation, a Filipino family needs P1,216 a day for a decent life; Metro Manila’s minimum wage is P645. The huge disparity should prompt our economic planners to worry and do something posthaste about it! Leaving its resolution to the wage boards is predictably frustrating. Labor groups instinctively pound on hapless employers demanding pay increases. But as they say, “you cannot squeeze blood out of a turnip.”
The wage boards try their best to balance the wage demands with the prevailing tenuous situation of business. Some labor groups do not realize that 99.63 percent of firms in the country are micro, small, and medium-scale enterprises (MSMEs) mostly in the domestic market, providing 60 percent of the country’s employment and 40 percent of the gross domestic product, which are not themselves out of the woods.
Many of them are unable to comply with the minimum wage. We are between a rock and a hard place!
Many countries have overcome these clashing concerns between the employers and the labor sector by joining hands to break the impasse. Some progressive countries set minimum wages only as hiring policies to maintain their living wages, and have graduated to the next level where the workers are becoming shareholders of their companies. In our country, we are still struggling with a minimum wage, still way below survival level.
The new Labor Secretary, Francis Tolentino, can consider the possibility of modifying the minimum wage law, so that instead of imposing it on financially distraught MSMEs, a compromise agreement between employers and workers is worked out to set aside the minimum wage requirement and move forward with profit sharing on increased revenues.
A percentage of incremental revenues, after deducting applicable direct cost, will be distributed to the workers as team productivity bonuses, as nontaxable take-home pay up to a certain amount, based on an equitable and acceptable formula. A win-win situation!
MARVEL K. TAN, CPA.,
captbeloytan@gmail.com
