Job creation, VAT removal better than wage hike, says employer group

Amidst public calls to hike workers’ wages to address surging inflation, the head of the Employers Confederation of the Philippines (ECOP) is asking the government to look at creating more jobs and easing taxes instead, saying a salary increase will only benefit a small portion of workers while hurting the struggling micro and small enterprises.

ECOP president Sergio Ortiz-Luis, Jr. in a November 29 interview with Radio Veritas, said a wage increase is bound to benefit only the formal minimum wage earners, excluding the vast numbers of informal workers in the process.

“While we sympathize sa call na itaas ang sweldo, ang 50 million [labor force] divided into two iyan—formal and informal sector. Ang formal sector ang covered ng mga batas tungkol sa labor, under sila sa DOLE, sila rin ang miyembro ng SSS, Pag-IBIG. Ang problema, 16% lang yun,” Ortiz-Luis said.

“Ang 84% mga walang employer, gaya ng taxi driver, jeepney driver, market vendors, nasa agriculture sector, small business, family business. Pagka ginagalaw ang minimum wage, hindi sila [informal sector] kasali, kasali lang ang nasa formal sector.”

He added that a more pressing need is for the government to create more jobs for the informal workers that comprise the 84% of the labor force that stand to be excluded from the wage hike that would enable formal workers to cope with rising prices.

“Asikasuhin yun, bigyan natin ng pagkakataon makapagtrabaho at kung makapagtrabaho bigyan natin ng pagkakataon na makapagtrabaho nang maigi, pati ang kita. Otherwise, walang paghuhugutan ang mga yun habang tumataas ang inflation,” Ortiz-Luis continued.

“Ang importante maka-create tayo ng maraming jobs para tulungan natin ang ating mga kababayan.” in a November 30 news report said the Bangko Sentral ng Pilipinas is projecting inflation to settle between 7.4% and 8.2% this month. If the upper limit of the forecast range is realized, the November figure would beat the 7.7% reading in October, which is already the highest in 14 years.

Ortiz-Luis further said that aside from informal workers, another group that badly needs government focus and assistance is the micro, small and medium enterprises (MSMEs), which continue to suffer the most from poor macroeconomic conditions.

“Sila ang hirap na hirap at dapat tutukan ng ayuda ng gobyerno,” he stressed, noting that Filipino MSMEs are the most “underbanked” in Asia. “Pinakamahina ang naipapautang [sa kanila] dahil hindi nag-wo-work ang ating Magna Carta for MSMEs,” he said.

He likewise supports the legislative attempt to remove the value-added tax (VAT) on utilities, particularly power, as he said energy cost in the country is the highest in the region and a big turn off for potential investors.

“Isang problema natin sa paghihikayat ng mga investor dito ay pinakamataaas ang power plant cost natin… Mga factories kinu-compare nila mag-iinvest ba sila dito o sa Vietnam o Thailand? Talo tayo dahil napakataas [ng power cost natin] kaya tumataas din pati presyo ng mga produkto, pati pagkain.”

Meanwhile, asked which sectors have the potential to generate badly needed jobs, Ortiz-Luis listed the manufacturing, construction, and business process outsourcing industries among them. The government’s infrastructure projects and the hotel and tourism sectors are also expected to be among the top employment generators.

Further he said there is already an ongoing private-public effort to generate a million jobs that was started a year ago through a partnership between the business sector including the ECOP, Philippine Chamber of Commerce and Industry, and BPO, contracting and manufacturing groups and government agencies such as the trade and labor departments.

He reported that the goal to create a million jobs was reached in March this year, but that the collaboration continues as more new jobs are being built through the partnership.

Moreover, he expressed optimism that the electronics industry will remain a major provider of employment with a projected annual growth rate of at least 5% to 10% “so at least marami pang taong papasok sa trabaho na yan.”

Ortiz-Luis also believes the recovery of the mining industry can likewise help raise the number of vacancies in the country.

Close Menu