TRAIN-driven rising cost of living makes wage hike urgent

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Research group IBON said that tax-driven inflation is making the meager wages of poor Filipinos fall even further behind the rising cost of living. The group said this makes it even more urgent for the government to immediately raise wages even as it revisits the Tax Reform for Acceleration and Inclusion (TRAIN) law behind the increase in consumption taxes. The Duterte administration would be insensitive if it continues to resist the clamor for a decent national minimum wage.

IBON said that accelerating inflation has increased the family living wage (FLW) in the National Capital Region (NCR) and elsewhere. IBON computations show that as of June 2018, a family of six needs Php1,175 to meet their basic needs, while a family of five needs Php979. The FLW has increased by Php65 for a family of six and by Php54 for a family of five in June 2018 from the same period last year.

As it is, said the group, the NCR nominal minimum wage of Php512 is falling even further behind the rising cost of living. The NCR nominal wage is only 44% of the FLW for a family of six, and 52% of the FLW for a family of five with a wage gap of Php663 (56%) and Php467 (48%), respectively. The wage gap will continue to widen as inflation erodes the minimum wage.

Reacting to economic planning secretary Ernesto Pernia who said that a wage hike is not necessary, the group said that an immediate wage hike will help poor Filipinos cope with price spikes. The Duterte administration can respond to the demand of labor groups for a Php750 national minimum wage. IBON stressed that there are enough profits in the economy and among corporations to support the substantial increase in the minimum wage needed by workers and their families.

IBON also belied claims by the country’s economic managers in their joint statement on the June 2018 inflation that TRAIN’s reduction of personal income taxes, cash transfers, and allocation for free social and economic services “should help in coping with the rising prices of goods”.

The group said that their assertion that TRAIN “increased the take-home pay of 99% of income tax payers” is grossly deceitful because they know that only around 7.5 million or one-third (33%) of Filipino families are income tax payers. Of these, some two (2) million were already exempt from paying income tax even before TRAIN because they were only minimum wage earners. This means that 17.2 million or over three-fourths (76%) of Filipino families suffer inflation but without any increased take-home pay.

IBON also said that the government should stop hyping TRAIN’s cash transfers because when they are ended by 2020 the higher prices of goods and services due to TRAIN will remain. The group said that the Duterte administration’s unrepentant defense of TRAIN is daily affirmation of its callousness to the plight of tens of millions of poor Filipinos and its refusal to replace TRAIN with a more genuinely progressive tax package that is unafraid to tax the rich. ###

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