Think tank says wage hike not enough to cover basic needs

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For some workers in Metro Manila, a wage hike does not necessarily mean that they will be able to make ends meet.

(CNN Philippines) — While some welcomed the news of a wage hike in Metro Manila, independent think tank Ibon Foundation said the P15 increase is no cause for celebration as it is not significant enough to keep up with the rising cost of living.

In a media release last Thursday (March 19), Ibon said that to live decently, a family of six needs P1,088 daily. In the think tank's estimate, the hike to be implemented in April, however, will only cover 40 percent of the needed family wage for agricultural workers — who will get a daily minimum wage of P444.

The P481 daily wage of non-agricultural workers, on the other hand, account for 44 percent of this, the think tank added.

Related: Daily minimum wage up by P15 in April

The demand of labor unions for a P16,000 monthly minimum wage will only cost companies an average of 17.1 percent of their profits, Ibon argued.

"Accepting this slight reduction still leaves them with considerable profit, and will not be inflationary by not passing the costs to consumers. Granting workers a substantial wage increase will improve the welfare of workers and will provide their families much-needed respite from the increasing cost of living," it said.

Economist Ernesto Pernia, however, said the increase could negatively impact the economy as companies may need to lay off workers.

This could then result in a decrease in labor productivity and consequently to higher prices of goods and services.

Also read: Salary in limbo because of 'two mayors'

(Not) making ends meet

With the extended family setting in the Philippines, Aiza Factor, who works as a cashier, struggles with her current salary.

Half of her salary goes to her child and the rest she makes do by budgeting.

She also helps in the education expenses of her two siblings in Romblon — one of the poorest provinces in the country.

“If there are sudden expenses, my siblings also ask money from me,” Factor explained  in Filipino. This, in turn, prompts her to borrow money from her friends.

Company Driver Richard Ifurong is under the same circumstance as his monthly salary is used to support his wife, two kids, and six other relatives.

With this, Ifurong explained that they can only buy basic items.

“Of course I can’t buy the things my children want because my budget is just enough for us to survive everyday,” he said.

‘Stifled’ economic activity

According to Ibon Foundation, a wage-led growth is an internal and more sustainable source of economic growth than external markets.

"More than half of the total labor force are wage and salary workers, and this is a potentially very large market, whose demand for and consumption of various goods and services could spur economic activity,” Ibon said.

This potential, however, is stifled because only 71 percent of workers in this market receive the minimum wage or even less than the minimum, it added.

CNN Philippines’ Paola Palma contributed to this report.