July 3rd, 2023
House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) said that Filipino workers now are receiving a smaller share as wages of the total economic output they produce than they did in 2000, adding that the country needs “to reorient our policies towards increasing the purchasing power of workers, so that they can buy houses, save for their old age, and secure their health.”
“Real wages have been declining, and wages as a share of total output per worker is also on decline. That is the sort of socioeconomic condition that creates unrest and widens the divide between workers and businesses,” Salceda said.
Salceda added that in 2000, minimum wage workers were receiving around 47% of their total economic output as wages, but by 2021, it had declined to 31.9%.
“The trend has been almost continuous since 2000, except during the pandemic, when output per person significantly dropped because of lockdowns even as workers got paid.”
“But with lockdowns now completely rolled back, and wage increases proceeding at a very cautious pace, the trend is set to return to its pre-pandemic pace.”
Before the pandemic, Salceda says, the minimum wage worker was earning P462,000 for the economy but was only getting P134,250 in annual wages.
“All that output tends to get concentrated in very few families, since we also have the highest business concentration in ASEAN. So, it is an argument for wealth and luxury taxes that we can redistribute towards labor-enhancing policies,” Salceda added.
“We should also use those taxes for lowering power costs, so that we can justify wage increases better while keeping the country competitive,” Salceda explained.
“I am hoping President Marcos announces worker-affirming policies in the State of the Nation Address next month. We need a New Deal between labor and business, and with his mandate, President Marcos is the president to do that,” Salceda said.
Capital market development act to boost workers
Salceda also hopes President Marcos will identify the Employee Pension and Retirement Income (EPRI) system, under the Capital Market Development Act (House Bill No. 576) as a priority of the administration.
“The CMDA is a priority of the Department of Finance, so I hope PBBM also takes it up during the SONA.”
“It basically establishes a corporate pension system where employers contribute 4% of a worker’s salary to their pension, while the worker contributes 1%. That will allow workers to gain more of what they produce for the company – setting it aside for their future,” Salceda said.
“We hope to pattern the system after Singapore’s Central Provident Fund, which sets aside as much as 27% of salaries to a fund that finances healthcare, housing, and eventually pension.”
“The SSS, Philhealth, and PAG-IBIG contributions are simply too low to finance a meaningful safety net. So, we need this. And it will be funded primarily by employers,” Salceda added.
“I talked to the National Treasurer, and they are pushing for this measure as part of reforms to also boost the country’s financial markets. We also discussed this with the International Monetary Fund and the World Bank during their joint mission here. CMDA will create a pool of investible funds that can boost the country’s financial markets and increase liquidity for investments.”
House Bill No. 576, which was approved on 3rd reading by the House during the 18th Congress, is currently pending in the Committee on Banks and Financial Intermediaries.