Labor Day wish list: Living wage, humane workplace
For the past few days, I’ve been in a lively viber chat with friends on the concept of a living wage. Caritas Manila recently held a forum pushing for its living wage advocacy. Living wage goes beyond the minimum wage required by law. It is defined as “the minimum income necessary for a worker to meet their basic needs,” comprising of food, shelter, utilities, transport, health care, and childcare, for a family of four.
Some 4.1 million minimum wage earners have benefited from 15 wage orders issued by Regional Tripartite Wages and Productivity Boards in 2023. In Metro Manila, the latest pay hike made in July 2023, raised the daily minimum wage to ₱610 from ₱570, the highest in the country.
Wage distortions arising from the raising of minimum wage levels due to mandatory wage increases covered an additional 8.1 million full-time wage and salary workers earning above the minimum wage, according to the National Wages and Productivity Commission.
In 2017, Congress enacted Republic Act 11310, An Act Institutionalizing the Pantawid Pamilyang Pilipino Program (4Ps). The 4Ps Act provides social safety nets to its intended beneficiaries for a maximum period of seven years, believing that this is a sufficient period within which a supported family could attain a reasonable measure of self-reliance.
During the previous Aquino administration, the 4Ps benefits were disbursed from the budget of the Department of Social Work and Development (DSWD). Social workers surveyed and identified the poorest families at the sitio and barangay level. Covered families received their ayuda through debit cards issued by the Land Bank of the Philippines. This marked a sharp departure from past practice. Direct award of benefits — called dole outs — substituted the tasking by the national government of local government units (LGUS) to perform this function. Of course, financially capable LGUS continue to provide similar assistance programs, especially in the aftermath of fires, floods and calamities.
MSMES — or micro- smalland medium enterprises — have been the reason for push-back on intermittent demands for further increases on the minimum wage, including from those who profess that they also believe in the concept of a living wage. In 1988, as President of the People Management Association of the Philippines (PMAP), I informed a committee of the House of Representatives that we were opposed to a legislated minimum wage increase for the same reason.
That was 36 years ago when I was 35 years young. Today, at age 71, I find it extremely difficult to continue embracing this position.
For starters, why not an optional, not legislated or mandatory, payment of living wages?
Human Nature, a Gawad Kalinga company declared on its 10th anniversary in 2019: “Every Human Nature worker gets dignified living wages. The minimum wage is at ₱512 but we give our employees a living wage at ₱910 - almost double the standard, so they can afford to have a comfortable life and save up for themselves and their family. In a forum held last year, Human Nature CEO Anna Meloto says that in order to afford living wages, the company’s sales and marketing efforts are geared toward achieving continually rising revenue levels.
Boldr, a BPO company, declares that “100 percent of our team members in the Philippines are earning a living wage or higher.” This is the outcome of research and dialogue with various think tanks like Ibon Foundation and universities. “We believe that every team member who works at Boldr should receive a wage allowing them to live dignified lives. The conversations we've been having about this is truly inspiring,” says Boldr Founder and CEO David Sudolsky in a Linked-in post.
The Management Association of the Philippines (MAP) has a Shared Prosperity Covenant Committee headed by Dr. Ben Teehankee of De La Salle University. In 2020, MAP urged its members “to manage in ways that benefit the various stakeholders of the business, in addition to producing profits for the shareholders.”
A Shared Prosperity business model for workers may be actualized through several interconnected strategies. According to the MAP website:
“The first strategy is to build a career path for the lowest workers to earn a family living wage. The family living wage is the income required by a worker to live a decent life supporting a family of five members. According to the Ibon Foundation, the family living wage in the National Capital Region as of February is ₱1,198 per day or ₱26,049 a month. The minimum wage is barely half this amount. Global companies such as Unilever, L’oreal, IKEA and Patagonia have all committed to paying living wages.”
Productivity-based pay is the second strategy. The concept of productivity is still a hard-sell concept in the country. Noted economist Bernardo Villegas of the University of Asia and the Pacific points out that there is no popularly accepted Filipino word for productivity.
Strategy number 3 is to provide continuous training and development with the caveat: “Business leaders should take care in using such technologies not merely to be more efficient since this can lead to harmful loss of jobs for workers… (but) to innovate market-creating processes.
Finally, minimizing pay inequality will be achieved by “monitoring the ratio of CEO pay to average employee pay.” Heeding management guru Peter Drucker, “this ratio should not exceed 20:1.”
Our colleague and co-author Jun Cabochan shared some impressions from the Caritas forum. He reported that a literal translation was used for living wage: “nakabubuhay na pasahod.” Living income was also mentioned; this can be translated into “makataong kita” or humane compensation. Jun reflects: “In a humane workplace, there is a blending of life and work. Life supports work, and work supports life. Loving what you are doing doesn’t sound like work. Work-life harmony should be built-in, an integral part of the management system.”
With more owner-entrepreneurs thinking alike with Jun, there’s hope that we could see more enlightened organizations embracing the living wage concept.