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Philippine Business Magazine: Volume 8
No. 3 - News & Updates
Daily Minimum Wage
Not Enough
A newly-released study by the National
Wage and Productivity Council (NWPC) suggests that minimum wages
are not enough to sustain families’ needs.
The study only being released now
was a result of a 15-year effort that was actually started by the
defunct National Wage Council in 1984. When NWPC was created in
1989, it took over the role of its predecessor, NWC, in estimating
the national living wage. The study was actually finished in 1999
but has just been released.
Under Republic Act 6727 (Wage Regionalization
Act), “the living wage” is one of the ten criteria that
the Regional Tripartite Wages and Productivity Boards should consider
in determining minimum wages.
A “living wage” is defined
as “the amount of family income needed to provide for the family’s
food and non-food requirements, with sufficient allowance for savings
and investments for social security, so as to enable the family
to live and maintain a decent standard of human existence beyond
mere susbsistence level, taking into account all of the family’s
physiological, social, and other needs.”
The Employers’ Confederation
of the Philippines (ECOP), however, warns that the NWPC living wage
figures might give workers false hopes, in that they might expect
that employers are bound to compensate them by what the living wage
amount specifies.
| The Ideal and the Reality |
Selected
Regions |
Monthly Living Wage |
Monthly Minimum Wage |
| Metro Manila |
8,053
|
7,607
|
| CAR |
8,785
|
5,627
|
| Ilocos |
8,745
|
5,779
|
| Central Luzon |
8,016
|
6,342
|
| Southern Tagalog
|
8,481
|
6,600
|
| Central Visayas
|
8,669
|
5,779
|
| Central Mindnao
|
8,080
|
4,867
|
| ARMM |
12,167
|
4,258
|
Source: National
Wages and Productivity Council
* Based on group of families which are: non-poor; with six members;
solely dependent on wage and
salary; from 5th, 6th and 7th decile group; and, with 1.9 members
working. |
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Oil Price Hikes
Unstoppable
Oil companies raised gasoline and diesel prices
by an average of 45 to 50 centavos per liter on 23 and 25
May, respectively. This was the first round of fuel price
increase under the Arroyo Administration.
In end-June, the Department of Energy’s
Petroleum Price Monitor reported the Dubai crude spot price
was US$24.79 per barrel and the spot exchange rate was P52.43/US$.
The average crude price for June, however, was higher at US$26.65
per barrel from an average of US$25.57 per barrel last May,
an increase of US$1.08 per barrel. Based on the average monthly
exchange rate depreciation of P51.57/US$ from P50.53/US$ and
on the conversion factor of 159 liters per barrel, the change
in crude prices translates to P0.5175 per liter.
| Pump Prices |
Average
price of oil products as of
first week of July, in pesos per liter |
|
Premium
|
18.96
|
| Unleaded |
18.39 |
| Regular |
17.35 |
| AVTurbo |
18.15 |
| Kerosene |
14.17 |
| Diesel Oil |
14.64 |
|
Fuel Oil
|
11.19 |
| LPG |
10.59 |
Sources: Department
of Energy, Petron,
BusinessWorld, Inquirer |
Given the situation, oil prices were expected
to rise by more than 60 centavos per liter starting the middle
of June. On 1 July, Pilipinas Shell implemented a staggered
hike in fuel prices by an average of 37 centavos per liter.
By 2 July, six oil firms likewise followed the increase: Petron
(37 centavos per liter), Caltex (39 centavos per liter), Flying
V and Eastern Petroleum (30 centavos per liter), TotalfinaElf
(40 centavos per liter), and Unioil
(40 centavos per liter).
| Signals |
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Inflation in the first six months averaged 6.7%. Last
June, year-on-year inflation picked up to 6.7% (as it
was last February and March) from 6.5% last May. Except
for clothing, all other consumer categories picked up
in terms of month-on-month inflation. The 1% month-on-month
growth is seasonal in June when the costs of educational
products and services soar with the opening of the new
schoolyear.
Imports in April increased by 6.5%
to US$2.693 billion from the previous year’s level
of US$2.528 billion. However, the 15.8% drop in exports
to US$2.246 billion resulted in a trade deficit of US$447
million in April. This was the first trade deficit reported
in a month since April 1999. On a cumulative basis,
imports dropped by 4.2% in the first four months of
the year. A trade surplus of US$845 million was recorded
during the four-month period, which was 3% lower than
year-ago level of $871 million.
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Unemployment rate in April slid slightly to 13.3% from
13.9% last year. In terms of head count, however, more
people were unemployed this year to the tune of 4.46
million versus 4.38 million owing to the 2.0 million
increase in labor force population which stood at 33.6
million in April 2001. Nonetheless, employed persons
numbering 29.2 million increased by 7.2% in April 2001
from its level last year. Fourteen regions posted double-digit
unemployment rates with Metro Manila posting the highest
at 17.7%. This was followed by Western Visayas and Central
Visayas (15.5%).
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Rising interest rates last year worsened nonperforming
loan ratios of commercial banks from 15.1% in end-December
2000 to 16.6% in end-April 2001. To bring down the ratio
of nonperforming loans, BSP supports an asset management
company which will buy bad loans from banks at a discount.
Metropolitan Bank and Trust Co. and Equitable PCI Bank
Inc. plan to assign P50 billion of their bad debts to
an asset management company. The Philippine National
Bank (which is under rehabilitation) and the United
Coconut Planters Bank (which is under sequestration)
likewise plan to get rid of their loans through this
scheme. Metrobank’s bad loan ratio as of end-2000
reached 15.56%, while E-PCIB’s bad loan ratio stood
at 14.34%.
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Investments registered with the Board of Investments
reached P33.31 billion in the January-May period
this year compared to P10.46 billion in the same period
last year. During the five-month period, the agency
approved 93 projects compared to last year’s 66
projects. These new projects are expected to generate
employment for 12,189 people. Equity investments
skyrocketed by 371% to P17.68 billion in the first five months
of the year from only P3.75 billion a year ago. Local
investors dominated equity investments with P15.35 billion
(87% share) while foreign investors accounted for the
remaining P2.15 billion (13% share). Major foreign
investors in the first five months include Japanese,
Australians, and Singaporeans.
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Export Target Downscaled
Weak Markets
The government has brought down its export
growth projection for the year 2001 to 1% from the original
4% target to factor in the economic slowdown of two
of the country’s major trading partners, US and
Japan. It is not writing off chances of even hitting
a flat growth or even a contraction in exports this
year.
Philippine Exporters Confederation head
Sergio Ortiz-Luis says that his group is already looking
at a minus 1% contraction to a positive one percent
growth in exports.
Confederation members have not received
any significant purchases as of yet, which should, otherwise,
be coming in already by now.
Issues at the Education
Department
Education Blast
Schoolyear 2001-2002 started June with
both resolved issues and new headaches.
Public elementary and high schools had something to
smile about when the Education Department imposed a
“no fee policy” nationwide. This was the first
time that DECS truly implemented the constitutional
mandate to provide free elementary and high school education.
While some public schools still collected from enrollees
contributions such as Parent-Teacher Association fees
and Red Cross fee, Education Secretary Raul Roco assured
parents that these will be reimbursed.
Still in sympathizing with the population’s
economic difficulties and for fear of losing their students,
87 private colleges and universities deferred tuition
fee increases for this school year. This was observed
by the Commission on Higher Education. However, there
were 93 other tertiary schools who pushed through with
their plans to hike tuition fees.
On the whole, though, the economic crisis
still becomes pretty apparent, causing a projected rise
in the transfer rate of students from private to public
schools.
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First Mango Shipment
Off To Australia
The Philippines officially made its first shipment
of fresh Guimaras mangoes to Australia in June. Lapanday Fresh
Produce, the marketing arm of fruit grower Lapanday Foods
Corporation, started the trial shipment for a minimal volume
of 2,000 kilograms.
Australia approved the Philippines’ mango
export application last year, requiring exporters to export
only Guimaras mangoes that have undergone the VHT or vapor
heat treatment process. VHT is a post-harvest treatment procedure
used to ensure that fruits remain pest-free before shipment
to other nations. Guimaras Island is the country’s only
pest-free producer of mangoes certified by the United States
Department of Agriculture and Lapanday, which ranks as one
of the Philippines’ largest exporters of cavendish bananas
and pineapples, is the only firm which has so far secured
an export permit for the Australian mango market.
The fruits will be shipped to Australia by air
to preserve its freshness since the paltry volume and the
perishability of the product makes it highly impractical to
export the fruits using commercial shipping vessels.
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