Wage hike okayed Businesses fear additional burden to micro-entrepreneurs and SMBs

The implementation of the P56-increase on the daily minimum wage is feared to result in a mass retrenchment in the micro and small and mid-sized business (SMB) sector.

In a text message yesterday, Arturo M. Milan, Davao City Chamber of Commerce and Industry president, said the micro and SMEs make up about 95% of the total number of businesses. Aside from the wage adjustment, they are also grappling with the impact of the new 10% increase in local business taxes as well as the impact of the Tax Reform for Acceleration and Inclusion (Train).

“I really hope this will not result in retrenchment just for businesses to survive,” said Milan, after the Regional Tripartite Wages and Productivity Board (RTWPB) in the Davao Region approved the P56 increase in minimum daily wage, which will be implemented in two tranches.

Approved on July 27 and released Wednesday, Aug. 1, the RTWPB said Wage Order No. 20 was the result of the deliberation of the board and the consultations of stakeholders.

The result of these events “has determined the need to restore the lost purchasing power of minimum wage earners in Davao Region for them to cope with the rising cost of living without impairing the productivity and viability of business and industries,” the board said in the order.

The board said it is implementing a two-tiered wage order, “which prescribes poverty threshold as the floor wage and productivity-based scheme for the second tier, the regional board deemed it necessary to raise the lowest statutory wage rate in the region to a level above the poverty threshold.”

“There is a need to build the capacity of business enterprises to be competitive through productivity improvement and gain-sharing programs,” it added.

Under this new wage order, by Aug. 16, workers in companies that are non-agriculture, industrial, commercial and retail and services with more than 10 workers are set to receive P370 daily and that by Feb. 16, 2019, will increase to P396.

Those in similar companies but are employing 10 or fewer workers will receive P355 a day by Aug. 16 and this will increase to P381 by Feb. 16, 2019.

Those in the agricultural sector will receive P365 starting Aug. 16 and that this will increase to P391 a day starting Feb. 16, 2019.

Early last month, the Pilipino Banana Growers and Exporters Association, which was informed of the impending increase, said that the new wage order would drastically hit the banana industry.

In a press statement, Stephen A. Antig, branded the increase as unreasonable, pointing out that it was not “well thought of” as the industry has been reeling from the impact of the Train, a government tax package designed to generate more revenues for government to sustain its infrastructure programs.

Claiming that the board did not thoroughly conduct consultations on the wage adjustment, Antig said the industry “has been experiencing market and production problems, which makes the adoption of a new wage order anti-productive and threatening.

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