Local Businesses Can Afford Wage Hike — Ibon

Jan. 28, 2007

MANILA — Local businesses are in a position to grant wage hikes since workers have been producing more in the last seven years, according to independent think-tank IBON Foundation.

According to IBON research head Sonny Africa, labor productivity or the ratio of national output to employment, has been rising for the last decade. Between 1999 and 2006, labor productivity has increased by 56.3% in nominal terms and 13.1% in real terms.

Thus, Africa pointed out, local employers are in a position to grant wage hikes, although this would mean that they would have to sacrifice some of their profits.

There is currently a wage hike bill pending in Congress which would grant wage and salary workers an across-the-board increase of P125 in their daily paychecks, to be given in increments over three years. The bill has been opposed by the business sector. In response, President Arroyo has vowed to veto the bill if it should be passed by the legislature.

Africa further pointed out that a wage hike would be beneficial to the economy since it would boost consumer spending, which has already contributed to growth of the gross domestic product (GDP) due to the influx of remittances from overseas workers.

Wage hikes can substantially contribute to meeting the need for increased domestic demand and, consequently, a reduced reliance on exports, Africa said.

IBON Foundation, Inc. is an independent development institution established in 1978 that provides research, education, publications, information work and advocacy support on socioeconomic issues.

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