By Josua Mata, David Diwa
Philippine Daily Inquirer
A SPECTER is haunting the worker’s movement as it celebrates Labor Day today—the specter of “end of contract” (endo) and low minimum wages. Endo (not his real name) works as a computer-aided machine operator in a big auto plant at the Laguna Technopark. He is 23 years old, single, a college graduate and a native of Biñan, Laguna.
Living with his parents and two brothers, Endo is the family’s lone bread winner. He works six days a week, from Monday to Saturday, for a minimum pay of P337 a day or P8,762 a month. He works as a contractual worker and his five-month contract will end next month.
End of contract or endo is the latest buzzword or name for workers who stay on a job not longer than five months before he or she is fired and hired again for another five months and so on. Endos are paid the prevailing minimum wages—the farther they are from Manila, the lower the pay.
Anne (not her real name) works at a company that produces glass disks. A high school graduate from Samar, she is the typical barrio lass who comes to Manila looking for the proverbial greener pasture. She is 26 years old, single and now lives in Laguna close to the factory where she works. She sends money to her family in the province to help her parents put her two siblings to school.
Anne, like Endo, is also a contractual worker. She works on a 12-hour shift, earning P490 a day. If she works for only eight hours, she gets the minimum rate of P337, minus the usual deductions for contributions to the Social Security System, Philhealth and the Pag-Ibig Fund.
She spends P257 a day for food, jeepney fares, tricycle rides and for board and lodging. That leaves her less than a P100 when working eight hours a day. That drives her to work four more hours to earn an additional P150 for overtime work, allowing her to buy a new set of clothes every year, the only luxury she can afford.
Last year, a local union of the International Textile, Garments and Leather Workers Federation conducted a survey of incomes and expenditures of workers in big and medium-size garment factories in an export processing zone in Cavite. Results of the study showed an even harder and pitiful life for our minimum wage workers.
In field interviews, sewers and cutters were asked how much they were paid in an ordinary workweek and where they spent their money. The minimum wage in the area at the time of the survey was P298 a day for an eight-hour work. A majority of the informants were women, single and the only wage earner in the family.
Extrapolating from the data, the study found that the average weekly spending for food and nonfood items was P1,668 or a total family expenditure of P6,672 a month. The total wage income for a six-day workweek was P1,788 or a monthly income of P7,152.
This leaves an extra cash of P480 a month or P16 a day, barely enough for rent, electric and water bills or a cup of coffee. Hardly anything is left for medicines, shopping or savings.
The stark reality is clear: the minimum wage is barely enough to feed a family of five. In order to survive, a factory worker, whether single or married, must earn twice the prevailing minimum wage to be able to buy food and provide for other equally important family needs.
Stated differently, at the current minimum wage there must be at least two breadwinners for a family of five or six to keep body and soul intact.
Endo works for a big auto car parts manufacturer. Anne works in a big glass factory under the auspices of a manpower agency. Our female sewers work for a number of small and big companies in the processing zone.
They all work under different employers in different industries and workplaces. They all have one thing in common: they are all contractual workers paid below the minimum wage.
The typical minimum wage worker is young, female, educated and single. She comes from the province, is a lone income earner in a family of five or six and is a contractual. In other words, she belongs to the working poor.
Our minimum wages today are only a little above the poverty threshold. This is true for workers in the export processing zones as it is for the rest of the country. If minimum wage earners find it hard to cope with the demands of daily living, how difficult is it for those whose incomes are below the minimum wage?
Poverty statistics are generated by the government every three years. The last poverty estimate was recorded for 2009. Estimates are made for families or individuals. The standard measurement assumes a family of five. Anyone whose income falls below the poverty threshold is considered poor.
In 2009, the poverty threshold for a family of five was estimated at P7,936. If Endo or Anne works only from Monday to Friday he or she gets a gross pay of P7,414. Clearly, below the poverty threshold.
There are 5.6 million workers who are directly covered by the minimum wage law. They are wage and salary earners who work for an employer or particular company, according to the National Wages and Productivity Commission.
If minimum wage workers earn below or a little above the poverty threshold then we can conclude that many of them are poor.
There is another disturbing fact. A big number of the labor force is not covered by the minimum wage law.
Unpaid family workers
These are the unpaid family workers and the self-employed who comprise 64 percent of the entire labor force of 37.9 million in 2009. Largely outside the protection of labor laws, they work in precarious conditions and are vulnerable to all kinds of abuse, including nonpayment of minimum wage.
This limited coverage and inordinately low wage levels have made the minimum wage law a favorite target of criticism by workers, employers and some people in government. Workers complain that it is a poverty wage.
The employers say the minimum wage is high that they can no longer afford it. The government has taken notice of its unintended consequences. It is now prepared to introduce a more flexible system.
The problems associated with a minimum-wage regime are enormous.
The issue of poor coverage is only one. Another is the issue on exemptions. There are companies that avail themselves of the exemption clause every time a new wage order is issued. The exemption can vary from individual company applicants to a whole cluster of industry groups like exporters and those whose assets are less than P3 million.
An equitable minimum wage system is one that can apply to as many workers as possible. Minimum wage systems are tools to distribute wealth and thus help reduce poverty.
200 wage rates
Republic Act No. 6727, the law that created the regional-wage fixing mechanism, instead of one national minimum wage, is a failure. It has failed to live up to its mandate of rationalizing wage setting in the country.
Instead, it created layers of minimum-wage rates at the regional level with one region having as many as 40 wage scales in as many cities or municipalities. There was a time when there were about a thousand wage rates all over the country. Today, the number has been reduced to about 200.
Problems of equity
A largely differentiated wage scale even in one region creates problems of implementation. Not only workers but also employers are at a loss on what rate to enforce in an area close enough to each other. Somehow, it creates problems of equity.
Cainta, for instance, which borders Pasig City and Quezon City, is part of Region IV-A whose minimum wage is P337. But Quezon City and Pasig City are part of Metro Manila whose minimum wage rate is P404.
A factory on one side of the street in Cainta would invariably pay less to its workers compared with the one on the other side which happens to be in Metro Manila.
This is replicated in the provinces of Batangas, Cavite and Laguna where contiguous towns and cities would have different wage rates. The minimum wage in San Pedro, Laguna, is P337 but a few kilometers away, across from the South Luzon Expressway, is Cabuyao, Laguna, where the minimum wage is P315.
Even the concept of what a minimum wage is underwent drastic change. Previously, the minimum wage was considered the lowest remuneration an employer can pay a worker. This is the concept of the floor wage.
Today, the minimum wage has become the prevailing wage. What used to be a floor wage is now considered the highest salary bracket.
Alternative wage setting
The Coalition for Labor Agenda calls for a complete reevaluation of the minimum-wage setting process in the country. There is a need for an alternative-wage setting mechanism.
The ideal situation is a national minimum wage with no exemptions. On top of the minimum wage is a tier determined through collective bargaining at the industry, territorial and the firm level. This will require strengthening of workers’ bargaining power by removing constraints for union organizing.
But the bigger question is, why are so many workers trapped toiling with minimum wages? That’s because of massive unemployment and underemployment.
For as long as the economy is unable to create decent and productive work for all, large numbers of workers will be consigned to low pay, substandard working conditions, employment without job security, etc. In other words, grinding poverty.
Jobs cannot be created without industries, a vibrant agriculture and a fully developed fisheries and maritime industry. The economy’s inability to develop is due to the lack of a cohesive industrial development plan. And yet, all administrations since the fall of the Marcos dictatorship took a headlong dash toward trade liberalization that left our agriculture and industry in tatters.
Growth alone does not guarantee employment creation. Despite modest economic growth the past few years, unemployment and underemployment continued to increase. This is called the phenomenon of jobless growth.
There is no other choice. The lack of employment opportunities in the country pushes our workers to go abroad, which leads to brain drain.
This Labor Day, the Coalition for Labor Agenda challenges the Aquino administration to make use of its popular mandate; walk the talk on matuwid na landas (straight path) and give the millions of Filipino workers a new and better deal, especially the working poor.
Workers need a wage adjustment but the more important thing for them and the country is to be freed from poverty and underdevelopment. End poverty wages and ensure job security.
(Josua Mata is the secretary general of the Alliance of Progressive Labor [APL] while David Diwa is the national president of the National Labor Union [NLU]. APL and NLU belong to the Coalition for Labor Agenda, a group of labor centers, national federations, industry unions and workers’ associations formed last year to present an “18-Point Labor Reform Agenda” to then presidential candidate Benigno Aquino III. Other members of the coalition include Kongreso ng Pagkakaisa ng Manggagawa sa Pilipinas, Manggagawa Para sa Bayan, Automotive Industry Workers Alliance, Confederation of Independent Unions in the Public Sector, National Union of Workers in Hotel Restaurants and Allied Services, and National Federation of Labor Unions.)
Minimum and living wages
Region Minimun Living
NCR P404 P917
CAR 255-272 883
Region I 228-248 860
Region II 237-245 766
Region III 265-316 809
Region IV-A 253-337 809c
Region IV-B 252-264 809c
Region V 204-247 787
Region VI 223-265 701
Region VII 240-285 910
Region VIII 238 610
Region IX 255 876
Region X 254-269 818
Region XI 286 787
Region XII 260 781
Region XIII 243 no data available
ARMM 222 1,322
A As of April 2011
B Estimate for a Family of 6, as of Sept. 2008
C Estimate for undivided Region 4
Source: National Wages and Productivity Commission
Compiled by Schatzi Quodala, Inquirer
Labor force profile
(15 yrs and above) 61,532,000
Labor force 39,195,884
Employment rate 92.60 %
Unemployment rate 7.40 %
Underemployment rate 19.40 %
Employed workers by sector
(as of end 2010)
Unionized workers 1,700,000
Private sector unions 1,345,000
Public sector unions 356,000
Workers’ associations 781,000
Workers with CBAs 231,000
Workers with CNAs 33,457*
*2009: Collective Negotiation agreements
source: bureau of labor and employment statistics