Do you ever feel like your salary is not enough to meet you and your family’s needs? You’re not alone.
A new study by Picodi released earlier this month says that in January 2020, full-time minimum wage earners received a monthly net pay of P7,139 which is only 3.2 percent higher than the P6,920 they received in the same month in 2019.
With this benchmark, the Philippines ranked at number 39 out of the 54 countries Picodi followed concerning the “rate of increase in minimum wage year-on-year.”
To make sense of these numbers, Picodi collated how much Filipino minimum wage earners presently make with how much basic food products cost right now.
According to Picodi, a basic and frugal shopping basket could consist of about eight food items namely milk, bread, eggs, cheese, rice, fruits, vegetables, and meat. These items meet an adult’s nutritional requirements and the prices of these items are regularly monitored all over the world. Below are the prices of each item as recorded at the start of 2020.
- Rice (1.5 kg) — ₱75
- Eggs (20) — ₱138
- Bread (10 loaves, 500 g each) — ₱545
- Milk (10 litres) — ₱810.80
- Cheese (1 kg) — ₱265
- Fruits (6 kg) — ₱588
- Vegetables (8 kg) — ₱607
- Meat (poultry and beef, 6 kg) — ₱1,418
These total to P4,447 showing a 1.76 percent increase compared to 2019, revealing that 62.3 percent of the minimum net pay of a Filipino worker goes to these eight products alone.
In an attempt to alleviate such a situation, in December 2017, the Tax Reform for Acceleration and Inclusion (TRAIN) was passed into law as part of the Comprehensive Tax Reform Program that aims to make the country’s tax system “simpler, fairer, and more efficient.”
With the TRAIN law, people who earn a yearly taxable salary under P250,000 are exempted from paying personal income tax, therefore letting minimum wage earners keep that chunk of money that would otherwise be deducted from their monthly pay.
In theory, this should provide relief to “99 percent of income taxpayers” as stated on the Department of Finance’s dedicated page on the TRAIN law.
In addition to this, according to the DOF, the TRAIN law allowed for unconditional cash transfers of P200 a month in 2018 and P300 a month in 2019 and 2020 as a way to make up for the “moderate but temporary” rise in prices that the TRAIN brings on.
Yet, even with these adjustments, the nation still ranks as one of the worst countries to live in for minimum wage employees. Think-tanks like IBON Foundation and the Philippine Institute for Development Studies (PIDS) believe that this is because the TRAIN law is not exactly giving workers the “relief” it promises.
In a 2018 Manila Times article, IBON said that “the TRAIN law is among the drivers of inflation and should be reviewed and amended,” which would explain why minimum wage earners’ monthly salaries are still not enough despite receiving unconditional cash transfers and not having to pay income taxes anymore.
In October 2019, a report by researchers from PIDS titled “Impacts of TRAIN fuel excise taxes on employment and poverty” says that because of the rise in product prices that TRAIN brought on, it “offset the increase in factor incomes,” and therefore worsened poverty in all sectors. However, the researchers noted that the unconditional cash transfers eased the increase in poverty.
But overall, the rise in poverty has been attributed to the new excise taxes that were applied to sweetened beverages and cosmetics services among others.
In another 2019 report called “Effects of TRAIN fuel excise taxes on goods and prices,” the same researchers from PIDS said that while it is highly commendable that the TRAIN law aims to “raise public revenues to improve the delivery of basic services and improve social and economic outcomes in the future,” there are other factors that the government should consider in formulating tax policy, echoing the position of IBON when it said TRAIN needed to be analyzed and modified in the previous year.
So, it seems that until the TRAIN law is further scrutinized and adjusted, minimum wage earners will continue to be subjected to the hike in commodity prices, and unfortunately won’t experience the true relief the government has promised until then.
However, the idea of the TRAIN law may not be the only potential solution that can remedy this dilemma.
In a 2019 Manila Bulletin article, some senators are in favor of granting workers a “living wage” besides increasing minimum daily stipends considering the country’s present economic status.
This was in response to a petition the Trade Union Congress of the Philippines (TUCP) filed, seeking to add P710 to the daily minimum salary of Metro Manila workers. TUCP said that this was because the minimum pay of P537 is not enough to cover for the basic necessities of Filipino families.
Considering the feasibility of such a policy suggests that maybe the problem is not that Filipinos are not able to make do with what they earn, but that how much they earn is not appropriate to the country’s current and rising cost of living.
Senate Committee on Labor, Employment and Human Resources Development called on the Department of Labor and Employment (DOLE) and the National Economic and Development Authority (NEDA) to explore this possibility and propose a study, as well as the needed policy reforms to the legislature to make this a reality.
Our country still has a ways to go when it comes to providing the “relief” Filipino workers need to make a decent living, but as long as our government officials and agencies are considering the right points and are willing to shift perspectives, we could be well on our way.