Saturday, November 24, 2007

A stupid Wage Increase

‘Consistently, it is the national government and its instrumentalities that have benefited from the latest round of Metro Manila wage increases.’

WITH the prices of basic commodities skyrocket-ing to new heights, with global oil prices knocking at the door of US$100 per barrel, it is only right that the government should come to the rescue of our harried minimum wage earners. Wage earners are entitled to an annual increase in their compensation through the so-called regional wage boards.

In Metro Manila, such a thing happened when the Regional Tripartite Wages and Productivity Board-National Capital Region, invoking R.A. 6727 or The Wage Rationalization Act, issued Wage Order No. NCR-13 granting a P12/day increase. The long and short of it is that the daily minimum wage in Metro Manila was increased from P350 to P362. A mere pittance, if you ask me, but it is better than nothing, especially now that business conditions are not so good.

The increase can hardly be considered a "gift" to the workers of Metro Manila because it does them as much good as the poisoned apple the witch gave to Snow White when the Seven Dwarfs were not looking. That’s because the same wage order also mandated the integration of the previously non-taxable P50 per day cost of living allowance (COLA) as part of the basic pay and thus made it fair game for the Bureau of Internal Revenue.

Prior to the new Metro Manila wage order, a single minimum wage earner’s net monthly pay was P8,003.15 consisting of a basic salary of P7,850 less P1,146.85 in withholding taxes and employee contributions, plus another P1,300 in COLA. But under the new order that makes the COLA adjustments taxable now, being part of the basic salary, the basic monthly salary goes up to P8,463 but the taxes and employee contributions increase to P1,524.29. As a result, the beneficiaries of Wage Order No. NCR-13 are actually "blessed" with the privilege of taking home P7,938.71, which is P64.44 less than his previous net monthly pay and despite the fact that he got a P12 per day wage increase.

Of course, our Metro Manila basic wage earner will enjoy a higher 13th month pay that reflects the increase, assuming the employer complies with the mandated wage rates and that the worker lives long enough to enjoy it since very few of the recurring expenses incurred by minimum workers everywhere can actually wait around for the end of the year or the arrival of the 13th month pay to be satisfied.

In the meantime, who benefited from the wage order? Not the employers who definitely have to shell out the additional P12 per day. Definitely not the workers either since their monthly take home pay actually declined as a result of the wage increase. It is the government that benefited from the wage increase. Withholding taxes increased to P995.09 from P692.65 or 43.7 percent. PhilHealth contributions also increased from P87.50 to P122.50 or 40 percent, while Social Security Service premiums jumped 23.4 percent from P256.70 to P316.70. Contributions to the Pag-I.B.I.G fund remain the same.

One can also argue that these increased amounts redound to the workers’ good. Our taxes get spent wisely, the SSS is in such a good state of health that it is not in danger of collapsing and the level of health care will correspondingly jump. Those are very nice premises and one has to argue a lot in favor of these premises to convince any daily minimum wage earner that these are all true.

Those classified as the head of family with no dependents as well as those with a single dependent plus those who are married with no children suffered a net decline in their basic monthly take home pay. It would be unfair not to point out that the other categories actually did benefit from a take home monthly pay increase of P7.30, which is even less than what the daily wage increase was in the first place.

Consistently, it is the national government and its instrumentalities that have benefited from the latest round of Metro Manila wage increases. Since the NCRWB is also part of the national government, what we have here is a situation similar to a judge awarding a pittance to one of the parties in a civil case for his own benefit. And, I believe that, in a revolutionary context, these are the kind of people who are the first to get lined up against a wall for a public shooting.
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