The Employers Confederation of the Philippines (ECOP) has manifested its strong opposition to the proposed legislation that seeks to impose harsher penalties against employers for non-compliance with minimum wage rates prescribed by the regional tripartite wages and productivity boards (RTWPBs).

House Bills Nos. 942, 1817, 1889 and 2884, authored by Reps. Reynaldo Umali, Emmeline Aglipay, Ben Evardone and Joseph Victor Ejercito, respectively, propose to further increase the penalties, already severe under Republic Act No. 8188 by amending Republic Act (RA) 6727, otherwise known as the Wage Rationalization Act, to the detriment of enterprises, big and small, distressed or non-distressed, for non-payment of wage rates prescribed by the various RTWPBs.

These bills, ECOP President Edgardo G. Lacson has pointed out, “characterize the unique orientation and narrow focus of populist legislation in the country to impose the harshest punishment possible on enterprises ostensibly to protect wage and salary workers against violation of their rights, which in this case, the prescribed wage rates.”

“Nowhere in any other market economy in this region, including communist ruled China and Vietnam, among two of the fastest growing economies in the world is such prescription imposed against enterprises, which, needless to say, are the key generators of wealth and employment,” Lacson emphasized.

Moreover, Lacson said these bills fail to take into account the dynamics of minimum wage fixing which RA 6727 sought to rationalize as well as the stark realities of the Philippine labor market characterized by a shrinking formal sector and an expanding informal sector, stagnant labor productivity and jobless growth.

Thus, these bills, Lacson warned, will accelerate the contraction of the formal sector, as it would induce micro and small enterprises to go underground to escape the threat of these oppressive sanctions which the bills seek to impose.

This adverse pattern of a shrinking formal sector and an expanding informal sector is confirmed by various independent studies of the United Nations Development Programme (UNDP) and the World Bank, Lacson pointed out. The findings indicate among other things that quite a number of local businesses that are unlicensed and thus untaxed is increasing as many traders avoid the high cost of regulation, which includes onerous populist labor laws.