Like business, cardinal wary about legislated pay increase
Nov 07, 2005
Cebu Archbishop Ricardo Cardinal Vidal sides with business in opposing a legislated wage, saying that the poor will ultimately be at the losing end.
(Sun Star, November 06, 2005) But the government must do more to ease the burden on workers and consumers as a result of the Reformed Value-Added Tax, the cardinal said yesterday.
President Arroyo has asked Congress to pass a “reasonable” legislated wage, but like most business leaders in Cebu, the cardinal is against the move.
“Do you think everybody can follow that? I am not in favor (legislated wage increase) because I know that there will be small-scale businesses that will not be able to sustain it,” Vidal told Sun.Star Cebu.
The cardinal, who has been focusing the archdiocese’s efforts in the fight against poverty, believes the poor will become more oppressed with this measure.
Permanent
“If it is by legislation, then it is permanent. When it will be implemented, some businesses will just close down, go bankrupt, or will cause the dismissal of some employees,” he said.
Instead, the cardinal suggested that government leaders focus on other measures to help workers.
“I think the representatives of the government should come together and talk about other possibilities—about what else can be done,” Vidal said.
The National Economic and Development Authority and the Bangko Sentral ng Pilipinas have also warned against a legislated wage, as this will raise prices of goods and services and push inflation up.
Inflation as of October was steady at seven percent, but this is still much higher than the government’s full-year target of five to six percent.
Domino effect
Two bills are pending in the House of Representatives seeking P125-across-the-board wage increase.
Earlier, the National Statistical Coordination Board computed that a P125 increase in minimum wage will translate to a 15.5 percent increase in total cost of production.
It also said the prices of goods and services are expected to go up by 15.1 percent.
The Department of Finance has projected that the RVAT will have a minimal effect on food, but since petroleum products are now covered by the new tax, prices of consumer goods are expected to go up.
The Arroyo administration projected that additional revenues from new VAT law will reduce the budget deficit and provide resources for additional spending.
The RVAT Law is computed to bring in P4 to P5 billion in revenues this year and up to P77.6 billion revenues in 2006.
Like business, cardinal wary about legislated pay increase