Labor and economic woes

Dindo Manhit, President of the Stratbase ADR Institute

The annual celebration of workers could not have come at a better time. As the Duterte administration concludes its second year in office, the lingering issues of labor and inflation should serve as a constant reminder for the President to keep his promise of inclusive growth.

International Workers Day, adopted on the first of May in 1886, symbolizes the historic struggle of workers to establish humane working conditions. To date, what the event celebrates has not only continued but has also transcended things like the daily eight-hour working shift toward the expansion of workers’ economic and political rights.

Almost two years after the administration assumed power, economic issues are still foremost among Filipinos’ concerns. The results of Pulse Asia’s March 2018 Ulat ng Bayan survey showed that the most urgent concerns of Filipinos are the following: the need to increase the wages of workers (50 percent), controlling the rising prices of goods (45 percent), reducing poverty (35 percent), and creating jobs (32 percent). These seem to imply that, almost two years into its term, the administration has done little or nothing to assure its constituents that it is doing enough to address the problems related to wages, inflation and jobs.

Aside from the rising costs of everyday living, the slow growth of wages has been a key obstacle to workers’ enjoyment of increased prosperity. According to the Philippine Statistics Authority, the average daily wage of workers at the national level has increased by only 2.84 percent from July 2016 to July 2017, representing the gross amount of P412.92. Among the regions, Bicol and Eastern Visayas recorded the highest increase at 24.28 percent (P400.84) and 17.10 percent (P376.79), respectively, while wages in Central Luzon, Davao, and Caraga even decreased by -3.94 percent (P396.00), -2.05 percent (P359.30), and -1.67 percent (P349.18), respectively. Meanwhile, the top three highest average daily wages by major industry groups were registered by education (P749.16), electricity, gas, steam and air-conditioning supply (P659.23), and human health and social work activities (P639.04).

Further, whatever increase in wages that the workers may have seen during the last year is instantly curtailed by inflation, significantly eroding their purchasing power. Inflation, which reached a three-year high of 3.8 percent during the first quarter of 2018, has exceeded the expectations of most analysts. Accordingly, the faster increase in prices is attributed to the direct and indirect effects of the first tax package (TRAIN), the increase in global oil prices, the weaker peso, and the tightening of US monetary policy.

All the talk about inflation begs a quick reference to the issue of the TRAIN Law. In the earlier stages of its implementation, many analysts were careful not to jump the gun and decided to give the law a chance to demonstrate its worthiness as a sound tax measure. At present, however, the faster increase in the prices of commodities has affected the people targeted as the beneficiaries of the tax reform. While the government has allocated funds for a continued cash transfer program, such subsidies may not be enough to cover these beneficiaries’ most basic needs.

President Duterte continues to remain popular, indicating that many Filipinos still believe that he can carry out his promises. But if economic reforms are not felt by ordinary people and if they continue to become victims of persistent social problems, the President may see a substantial drop in his performance ratings. In turn, other promises like “making government more functional” that rely on the radical economic change of safeguarding and protecting workers could simply go up in smoke.

Of course, it is never too late to stimulate relevant changes. Mitigating measures should be immediately and effectively instituted to cushion the TRAIN Law’s adverse effects and to make it more acceptable to the working population. As for inflation, the appropriate policy response in the form of monitoring and countermeasures could be adopted.

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