“Give all workers their just due—not just the chosen few.”

The Trade Union Congress of the Philippines (TUCP) warned that even with the projected median salary increase of 5.7% for in-demand workers which Philippine employers plan to implement for 2023, according to the Willis Towers Watson (WTW) planning budget survey, this salary increase may barely suffice to entice these in-demand workers to stay with their firms or to apply. “With the current inflation rate at 6.2%, a 5.7% salary increase may not reverse the brain drain of the hot priority target employees that firms want to retain or hire,” cautioned Deputy Speaker Raymond Democrito C. Mendoza (TUCP Partylist)

According to the WTW planning budget survey of 6,945 organizations in the Asia Pacific, with 385 Philippine companies participating, private companies are allocating an average median increase of 5.7% in salaries for 2023, citing the tight labor market and inflation as their main reasons for a projected salary increase in 2023. 52.5% of the 385 respondent employers in the Philippines said they had increased their salary increase budgets this year from last year.

“On the surface, while it looks like a welcome development, our current inflation of 6.2 % is still far above the projected 5.7% salary increase for 2023. This means that even if the salary increases are implemented, the wages of these in-demand workers will still be outpaced by the inflation rate. It is as if the workers are just running in place, without any improvement in their spending capacity or economic condition,” explained Deputy Speaker Mendoza.

“For minimum-wage earners, who are not the target of these firms hiking salaries, the challenge of high inflation highlights the need for Government to target putting in place a clear road-map to at least ensure that regional minimum wages are above the official poverty threshold as clearly inflation is placing the prices of basic goods and services beyond the reach of minimum-wage earning families,” added Mendoza.

“The situation for minimum wage earners really calls for strong Government action, including subsidies, and Regional Wage Board salary adjustments. Union density is quite low and there has been a decrease in Collective Bargaining Agreements. The only way that a majority of minimum wage workers can get a fair shake is through State assistance or intervention,” emphasized Mendoza.

“We in TUCP are relating the results of the WTW survey to the findings of the Philippine Statistics Authority (PSA) July 2022 Labor Force Survey. While the PSA survey shows robust labor force participation, it also highlights rising underemployment. This only means that many of the underemployed want quality work and currently do not have it. They can hardly meet the expenses of the basic needs of their families and are therefore seeking additional sources of income. While they do have jobs, their jobs are not earning enough as they continue to struggle in their everyday lives with the spiraling costs of basic necessities,” explained Deputy Speaker Mendoza.

“Clearly, the tight labor market occurs in competing for the hot-ticket, skilled workers, and higher remunerated employment positions. The question is—is this good or bad? It is good in terms of the tight market pushing up wages to its appropriate level, and hopefully for the vast majority of rank-and-file workers, to bring up their subpoverty threshold minimum wages. But it does not necessarily work that way. The talent at the top may be offered more by way of higher salaries, but for the majority of workers at the bottom, it will be more of the same in terms of meager minimum wages.  It is also bad because it exposes a huge gap in jobs-skills mismatch.  On the one hand, we see robust labor participation and an army of the underemployed seeking additional sources of income, yet the employers are seeing too many unfilled job vacancies due to a lack of available or skilled workers for the hot ticket jobs,” added TUCP Vice President Luis Corral.

“While local firms are battling to retain talent and attract information technology (IT)-savvy workers with higher salaries, with the continuing plunge of the peso-to-dollar exchange rate and a surging inflation rate which may continue spiking upwards, many of these priority workers may actually prefer seeking greener shores in the overseas employment market,” warned TUCP Vice President Corral.

The TUCP officials explained that the tight labor market in the Philippines is a consequence of: (i) the Philippines being a “sending country” of labor working abroad; (ii) domestic inability to create quality jobs; and (iii) schools catering to what is in-demand in the overseas employment markets.

“For instance, we supposedly have an oversupply of nurses and yet, they are not here as hospitals have difficulty hiring nurses or getting them to stay,” said Mendoza.

“In the midst of the current global economy still in turmoil brought about by the pandemic and the Ukraine-Russia conflict, the TUCP calls on Philippine employers to continually assess and improve their salary budgets to remain competitive and to always take into consideration the welfare of all their workers—not just the IT-savvy or tech workers—during these difficult times. It is during these times that we should all urgently respond to the clarion call to save jobs and save lives, and to treat all our workers—and not just a chosen few—with decency and fairness,” urged Deputy Speaker Mendoza.