Labor Secretary Rosalinda Dimapilis-Baldoz said that despite rising labor productivity growth at 5.7 percent in 2013 and a positive growth outlook, the majority of private-sector workers still live below poverty threshold due to declining real wage rate stuck at less than 2 percent annual growth rate.
Addressing labor officials and private-sector leaders at the National Productivity Convention on Thursday, Baldoz said there is a pressing need to “link wages with productivity” not only for the improvement of the minimum wage but more so on the total compensation that combines minimum wage and workers’ productivity incentives and salary increase.
She said leveling off the country’s labor-productivity and real wages growth is a serious challenge for the Philippines as it joins the 2015 Asean integration.
“Amid robust economic growth despite natural disasters, sound macroeconomic fundamentals and high level of confidence of the international community brought by the series of credit upgrades, the challenge of decent work to achieve inclusive, sustainable and equitable growth remains a serious concern,” Baldoz said in her keynote speech.
The critical challenge, she said, is “to increase the level of productivity, the output per worker, and translate it into wage gains and how to compete not on the basis of low wages, but on higher labor productivity.”
The labor department has embarked on a two-track approach to promote inclusive growth by increasing productivity. Under Tier 1, minimum wages in all 16 regions are targeted to meet above poverty threshold.
Under Tier 2, wages are linked to productivity that combines the minimum wage plus productivity wage or pay increases.
She said the Philippines has outpaced its neighbors in the Asean with labor-productivity growth from 4.7 percent in 2010 to 5.7 percent in 2013.
“Compare these productivity increases with real wage and we see that there remain gaps that need to be addressed,” Baldoz said.
The labor chief said despite the labor-productivity growth, decent work indicators from 2010 to 2013 showed that “real wages grew by less than 2 percent per year.”
Baldoz said decent work indicators from 2010 to 2013 showed that real wages grew by less than 2 percent a year.
“Across sectors, real wages grew relatively faster in services than in industry and agriculture. Meanwhile, labor productivity grew by 4.7 percent in 2010, dipped to -1.0 percent in 2011, and continued its upward trajectory to 5.6 percent in 2012 and 5.7 percent in 2013,” Baldoz said.
She said across major industries, these gaps have been observed in manufacturing, construction, utilities and financial services.
Baldoz urged the National Wages and Productivity Commission, an attached agency of the Labor department, “to address real wage and labor-productivity gaps by aiming to zero in on very specific sectors where real wages lag behind productivity growth and tailor-fit policy and program intervention.”