Price Hike Versus Minimum Wage: As of writing, the local currency has plummeted to an all-time low. The exchange rate (PHP to USD) is now at P58 (as of September 21). The price of fuel has also been unstable this year. As of January 2022, the average price of gasoline was at P62.10/L and diesel at P43/94/L. By July 2022, gasoline was at P85.47/L and diesel at P87.31/L, almost doubled in price.
Trading Economics even forecasted that the Philippine Peso would trade at P59.22 by the end of the quarter, according to global macro models and analysts. It is estimated to trade at P60.69 in 12 months’ time (Trading Economics).
Moreover, the current inflation rate is at 6.3%, after five consecutive months of acceleration (Philippine Statistics Authority). The average inflation from January to August stood at 4.9%. In layman’s terms, inflation is the increase in the level of prices of goods and services, measured as the rate of change in prices. A high inflation rate will inevitably reduce purchasing power, or the ability of consumers to afford.
Furthermore, the country’s current shortage of agricultural products has made a tremendous impact. Sugar, among others in shortage, has affected major businesses in the country – including Coca-Cola Beverages Philippines, Inc. The beverage company has ceased operation in several plants due to a lack of bottler-grade sugar. Other produce reportedly in shortage include salt, onions, garlic, corn, wheat, and rice (Bloomberg).
The country’s staple, rice is priced as follows, imported commercial rice: P38 for regular milled, P39.50 for well-milled, P45 for premium, and P50 for special; local commercial rice: P38 for regular milled, P42 for well-milled, P45 for premium, and P50 for special (Department of Agriculture). The country is ranked as the eighth top rice producer in the world (FAOSTAT) but remains to be the biggest importer of rice, with Vietnam as its primary supplier.
Power costs have also increased. In the Visayas area of the country, an average P5 increase per kilowatt hour is observed. Power companies have appended it to the increase in coal prices in the world market, along with the ongoing war between Russia and Ukraine (both countries are said to be top exporters of coal).
With the weakening currency, fuel price hike, high inflation rate, shortage of local produce, and the country being a major importer of basic commodities, it may be difficult to manage finances.
Price Hike: Minimum Wage
The minimum wage made effective June 2022, is P533 for agriculture and P570 for non-agriculture in the National Capital Region. Meanwhile, in provincial areas, the minimum wage ranges from P284.89 to P387.01 for the non-agricultural sector working. (Department of Labor and Employment).
“Bilang isa ka minimum wage earner ang mahambal ko lang sa padayon nga pag saka sang mga presyo sang balaklon subong, indi na gid enough ang sweldo para masustentuhan kinahanglanon sang amon pamilya, amo na nga tanan na lang nga paagi gina himo namon agud nga maka tipid kag mapaigo ang budget asta naman sa sunod nga sweldo,” states a minimum wage earner JR.
(As a minimum wage earner, all I can say with the constant price increase of commodities is that the salary is not enough to sustain the needs of the family. All measures are being done to make ends meet.)
A minimum wage earner in Region VI (P383.96 per day), working for 26 days in a month, (P9,982.96 – contributions) receives their salary in two pay periods (15th and 30th day of the month).
Moreover, Philippine registered companies are required to report employees to four government agencies, the Bureau of Internal Revenue (BIR), Social Security System (SSS), Philippine Health Insurance Corporation (PhilHealth), and Home Development Mutual Fund (Pag-Ibig Fund). The last three mentioned agencies/benefits are administered through a monthly contribution scheme requiring the employer to remit a portion of the employee’s salary to each agency.
For the modern-day self-employed individual, exploring other income streams is the solution.
“Create more income streams, especially with my kind of career path. Clients come and go, and I have a team to pay. Income is not enough, but I have laid out plans to grow my income in all possible ways,”states a self-employed individual based in Region VI.
Minimum Wage Dilemma
Had cries for help fallen on deaf ears? Apparently, officials are not oblivious to the matter. In a column published in the Inquirer, a statement by Labor Secretary Bienvenido Laguesma was quoted: “This [wage hike] is something we are studying. We are not disregarding recent events. That’s why our Regional Tripartite Wages and Productivity Boards (RTWPBs) have the directive that even though we just recently issued wage adjustments, we will still consider the current situation so we can help our workers and entrepreneurs.”
The same article also shed light on the capability of employers to raise salaries in the event of another wage hike – especially since most privately owned businesses are micro, small, and medium enterprises (MSMEs). The Employers Confederate of the Philippines and the Philippine Chamber of Commerce and Industry bared their thoughts in the Inquirer article.
“If you raise the minimum wage further, only two things will happen: these small businesses will either cut the number of their employees, or they will raise the prices of their products,” states ECOP President Sergio Ortiz-Luis Jr.
More debate on the matter can be read in this article.
For minimum wage earner JR, he can only do so much but gird his loins.
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