P15 wage hike more realistic

The macroeconomic situation we are in right now, calls for circumspection and calibrated response because overreaction and under-reaction can both lead to adverse results. I am proposing a combination of responses.

First, an increase in the minimum daily wage, in Metro Manila for example, by P15.00.

Second, increase the TRAIN Law unconditional cash grant to P500.00 per month. It is now at P200.00. These first two steps would benefit the poor.

Lastly, for workers earning more than minimum wage but lower than P21,000, I am proposing a special additional tax exemption of P16,500.00 applicable only for taxable year 2018. This would benefit most of the middle income households.

The combination of these measures would be more than enough to make up for the purchasing power lost from last January 2017 to May 2018.

This way, government and employers share the burden. I prefer this option and I recommend this to the Department of Finance and the Department of Labor and Employment. Palagay ko kakayanin na ang bigat niyan kasi magtutulungan ang gobyerno at ang pribadong sektor. Doable, realistic, not long shots nor wishful thinking.

Our focus must be on the purchasing power of the peso. Since January 2017, according to the PSA data, the peso lost 5.86 percent, rounded off to 6 percent of its value. This means the 100 pesos of January 2017 can buy only 94 pesos’ worth. In other words, 6 pesos was lost.

To further illustrate, the minimum daily wage of P 512 per day in Metro Manila is now worth P481. The value lost is P31 per day. Multiplying that roughly by 30 days, the monthly value lost is P930.

This is why the employees and laborers are hurting. They are feeling the pain of P930.00 of lost purchasing power value of their monthly minimum wages. Workers earning P21,000 per month lost P1,260 in purchasing power.

Mahirap kitain ang P930.00. Mahirap din kitain ang P1,260. Dahil sa inflation, ganyan ang halaga ng pagkain na hindi nabili ng mga Pilipino. Masakit po iyan.

To restore the value of the minimum wage earned per month back to the January 2017 level, government might want to increase the TRAIN Law’s social safety net cash grant to at least P930 per month. This financial burden is all on the national government. Medyo mabigat sa budget.

Another way is to increase the Metro Manila minimum wage by P31 to make up for the value lost since January 2017. This places all of the burden on employers. Mabigat rin para sa kanila iyan.

Considering these two extremes, I chose the middle way, the doable way: minimum wage hike of P15; unconditional cash cash hike to P500 from P200; and a one-time special additional tax exemption of P16,500.