Why Philippine Wage Rates Should Be QUADRUPLED (A Statistics-Based Analysis)

This article is aimed at presenting STATISTICAL PROOF THAT THE CURRENT MINIMUM WAGE RATES IN THE PHILIPPINES SHOULD AT LEAST BE QUADRUPLED. YES, AT LEAST QUADRUPLED. (If you’re a big businessman, you have probably decided by now to ignore this post; BUT I BEG YOU TO READ ON. Statistics don’t lie.)

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Kilusang Mayo Uno, Makabayan Bloc, Act Teachers Party-List and other groups calling for the doubling of the minimum wage rates ARE RIGHT and SHOULD BE VIGOROUSLY SUPPORTED IN THEIR JUST CAUSE, because minimum wage rates in the country should actually be quadrupled, not only doubled.

Of course, when I say “JUST,” I mean, within the constitutionally mandated social justice and human rights framework in which we ARE ALL REQUIRED TO DISCUSS wage matters. For starters, the 1987 Philippine Constitution says in Article XIII, Section 3 that the State (the Philippine government) is required to “…guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, AND A LIVING WAGE.” (emphasis supplied)

Merriam-Webster defines living wage as “a wage sufficient to provide the necessities and comforts essential to an acceptable standard of living.” Meanwhile, Richard Anker’s International Labor Organization (ILO)-funded research further explains what a living wage is by emphasizing that “(t)he idea of a living wage is that workers and their FAMILIES SHOULD BE ABLE TO AFFORD A BASIC, BUT DECENT, LIFE STYLE that is considered acceptable by society at its current level of economic development. Workers and their families SHOULD BE ABLE TO LIVE ABOVE THE POVERTY LEVEL, AND BE ABLE TO PARTICIPATE IN SOCIAL AND CULTURAL LIFE.” (emphasis supplied).

It is in this context that the ILO somehow semantically equates the minimum wage and the living wage, noting in an explainer entitled “How to define a minimum wage?” that “(t)he purpose of MINIMUM WAGES is to protect workers against unduly low pay. THEY HELP ENSURE a just and equitable share of the fruits of progress to all, and a MINIMUM LIVING WAGE to all who are employed and in need of such protection. Minimum wages can also be one element of a policy to overcome poverty and reduce inequality, including those between men and women.” (emphasis supplied)

With these things in mind, I have arrived at the idea of computing the minimum or low-tier wages as a percentage of cost of living.

Most – but not all – countries have minimum wages. For example, Indonesia has provincial minimum wages, and the Philippines have regional minimum wages, whereas countries such as Australia have national minimum wages. Meanwhile, as a British resident of Norway notes, “(c)ontrary to popular belief, there is no national minimum wage written into Norwegian law. Despite this, almost everyone receives a fair living wage. Why? Because Norway is heavily unionised and the vast majority of employees belong to a trade union. These unions come to collective agreements on salaries and working conditions with companies, which are then applied to all workers, not just union members. This general application of the collective agreements is in place partly to help prevent foreign workers from being taken advantage of.” In a nutsell, Norwegian wages are set by the capitalists and representatives of workers’ unions through negotiations that typically produce collective bargaining agreements.

For countries where there are no provincial, regional or national minimum wages, low-tier wages were instead culled.

For countries where there are only provincial or regional rates, the rate for the capital is chosen (if available).

For data on rents, cheaper rates for accomodations “outside of the city center” were favored.

Data for cost of living were culled (as of 30 May 2018) from Numbeo, “the world’s largest database of user contributed data about cities and countries” (whenever available). Cost of living either for the capital city or the biggest city (whenever availble) is utilized.

User-contributed data is way better than official statistics because official statistics for the cost of living are usually unreliable (if not downright ridiculous).

For example, as we note in an upcoming conference paper entitled “Poverty, Inequality, and Development in the Philippines: Official Statistics and Selected Life Stories”: “(a)s per the latest (2015) official poverty statistics released by the Philippine Statistics Authority (PSA), “a family of 5 needed at least 9,064 pesos (US $174) to meet both basic food and non-food needs monthly” of which 6,329 pesos (US $122) is allotted “to meet basic food needs,” allowing only for a meager 2,735 pesos (US $ 53) for “non-food needs.” Such pitiful amount for the non-food needs won’t cover all the items enumerated by a 2007 resolution of the country’s National Statistical Coordination Board (NSCB): 1) clothing and footwear; 2) housing; 3) fuel, light, water; 4) maintenance and minor repairs; 5) rental of occupied dwelling units; 6) medical care; 7) education; 8) transportation and communication; 9) non-durable furnishings; 10) household operations; and 11) personal care & effects.” It must be noted that the Philippine government’s categories of essential non-food items doesn’t include any item related to leisure/entertainment, despite the fact that the United Nations’ Universal Declaration of Human Rights (for which the Philippines voted in favor) mentions “the right to rest and leisure…” in Article 24. Other entities such as the European Union’s Eurostat (2015) includes leisure in their “quality of life indicators.” This laudable inclusion is a reflection of the generally accepted idea that leisure is an essential human need (Leversen et al., 2012, and Veal, 2015). Thus, a genuinely holistic poverty threshold should certainly include leisure-related items in the essential non-food items.”

Numbeo’s monthly cost of living statistics for a family of 4 in the Philippines (117,455 pesos) may “look” or “feel” high but it’s actually roughly equal to the 120,000-peso monthly figure favored by Filipino respondents interviewed by the National Economic Development Authority (NEDA) for the Ambisyon Natin 2040 project, which “probed into how much it takes to have a simple and comfortable life based on the specific needs” such as “having a medium sized home, having enough earnings to support everyday needs, owning at least one car/vehicle, having the capacity to provide their children college education; and going on local trips for vacation.”

Country	Wage as % of Cost of Living for 1 Person Without Rent	Wage as % of Cost of Living for a Family of 4 Without Rent	Wage as % of Cost of Living for 1 Person With Rent	Wage as % of Cost of Living for a Family of 4 With Rent	Monthly Minimum or Low-Tier Wage	Monthly Cost of Living for 1 Person	Cost of Living for Family of 4 Without Rent	Cost of Rent for a Family (3-bedroom apartment)	Cost of Rent for 1 Person (1-bedroom apartment)	Currency of Available Data
Norway	271.67921	75.52933449	144.0015	53.06851959	28,632	10,538.90	37,908.45	16,044.44	9,344.23	NOK
Brunei	68.728522	19.31378135	37.56362	12.93456082	400	582	2,071.06	1,021.43	482.86	USD
Cambodia	29.72028	8.403569045	19.87537	6.428728095	170	572	2,022.95	621.43	283.33	USD
Indonesia	51.098128	14.80968162	35.69504	11.24491857	265	518.61	1,789.37	567.25	223.79	USD
Laos	No Data	No Data	No Data	No Data	1,100,000	No Data	No Data	10,465,250	2,895,385.83	KIP
Malaysia	49.181276	13.87460621	29.94926	8.807894637	255	518.49	1,837.89	1,057.24	332.95	USD
Myanmar	No Data	No Data	No Data	No Data	108	No Data	No Data	940.00	350.00	USD
Philippines	53.210974	15.64707576	36.73993	12.13234111	14,250	26,780.19	91,071.33	26,383.33	12,005.95	PHP
Singapore	83.442885	22.93573019	33.80619	13.78879725	1,060	1,270.33	4,621.61	3,065.79	1,865.19	SGD
Thailand	47.358156	13.16239416	32.61044	9.562533415	9,900	20,904.53	75,214.28	28,314.77	9,453.85	TB
Timor Leste	No Data	No Data	No Data	8.214285714	115	No Data	No Data	1,400	466.67	USD
Vietnam	39.798199	11.03123358	24.97804	8.390181581	176	443.01	1,598.28	499.41	262.85	USD

In all aspects analyzed, Norwegian workers are in a relatively very good situation. For example, Norwegian workers need only roughly two (2) low-tier monthly incomes to afford the monthly cost of living for a family of 4 with rent. Meanwhile, Cambodian workers need nearly 15 minimum monthly wages to afford the monthly cost of living for a family of 4 with rent. Yes, Filipino workers are somehow relatively better off compared with Cambodian workers, as Filipino workers (in Metro Manila) need roughly 8 minimum monthly wages to finance the needs of a family of 4 with rent. In most aspects analyzed, Filipino minimum wage earners are just slightly in a better situation than Indonesian and Malaysian minimum wage earners but are also slightly behind Singaporean and Bruneian minimum wage earners.

Simply put, we are still in a shithole (perhaps not as shitty as we think, but it’s nevertheless shitty).

Considering that the Philippine government claims that under the Duterte administration, Philippine macroeconomic statistics are generally positive and very much improving, President Duterte should ensure that the minimum wage rate in our country is AT LEAST doubled.

Otherwise, all talk of macroeconomic growth under the Duterte administration will be deemed as fake news.

If the aforementioned statistics will be taken in consideration, PHILIPPINE MINIMUM WAGE RATES WILL HAVE TO BE QUADRUPLED IF WE WANT A FAMILY OF 4 TO LIVE WITH ONLY TWO MINIMUM WAGES.

Media firms in the Philippines GENERALLY DON’T CULL DATA FOR WAGES AS % OF COST OF LIVING. Most PH media firms limit their reports on wage rates and GDP per capita data – which is useless comparison because we all know GDP per capita is computed by averaging income groups in each country which means GDP per capita data is computed by averaging the income of Filipino billionaires, Filipino professionals and Filipino minimum wage earners; thus we can’t clearly see the connection between wage rates and GDP per capita, other than the fact that GDP per capita will always be way way ahead the minimum wage rate. Hence, it’s very useful to take the trouble of culling data for wages as % of the cost of living. This provides CLEAR proof that the government can no longer ignore calls for a wage hike in the country. Statistics don’t lie.

We will tackle other matters related to wage hikes (such as the inflation myth and the bankruptcy bogeyman peddled by neoliberal economists and capitalist groups in the country) on our next post.

UPDATE: Part 2 of this post is now available at: https://alternative2022.wordpress.com/2018/05/31/81/

NOTE ON SOURCES:

Most sources are cited and/or hyperlinked in the article.

Sources for minimum wage rates are listed below:

Brunei: http://englishnews.thaipbs.or.th/us400-monthly-minimum-wage-filipinos-brunei/

Norway: https://www.lifeinnorway.net/norway-minimum-wage/

Cambodia: https://www.reuters.com/article/cambodia-economy-garmentworkers-wages/cambodia-hikes-minimum-wage-for-textiles-workers-by-11-pct-from-2018-idUSL4N1MG1Q6

Indonesia: http://www.thejakartapost.com/news/2017/11/01/jakarta-sets-2018-minimum-wage-at-rp-3-6-million.html

Laos: https://laotiantimes.com/2018/04/24/laos-government-approves-minimum-wage-increase/

Malaysia: https://www.reuters.com/article/us-malaysia-election-wages/malaysias-najib-dangles-minimum-wage-hike-other-benefits-ahead-of-vote-idUSKBN1I234S

Myanmar: https://www.mmtimes.com/news/government-sets-new-daily-minimum-wage-k4800.html

Singapore: https://www.bna.com/singapore-adopts-minimum-n73014452866/