BUSINESS YET TO FEEL EFFECTS OF ECO GROWTH
MANILA, February 5, 2005 (STAR) By Mayen Jaymalin - The business community continues to reel from financial difficulties despite encouraging reports about the country’s economic growth.
Members of the Employer’s Confederation of the Philippines (ECOP) said yesterday they have yet to feel any improvement in the country’s business climate, despite a higher-than-expected gross domestic product (GDP) in 2004 and strengthening peso.
"Although economic developments are encouraging they do not really reflect whether businesses are making money at this time," ECOP president Rene Soriano said in an interview.
Many commercial establishments can hardly cope with rising power and water rates, which dampen profitability, Soriano said.
The recent appreciation of the peso against the US dollar as well as the rise in stock investments do not necessarily indicate growth in business, Soriano explained. Besides, there is really no proof that this growth will be sustained.
Even if the country’s economy does improve, the business community is not expected to reap the rewards until after a year or two. Thus, Soriano said, it is unlikely for most commercial establishments to grant additional benefits to workers at this time.
Earlier, various labor groups called on employers to grant additional benefits, citing the government’s claims that the country is already on the road to economic recovery.
"It is premature to say at this point that we can afford adjustments to workers’ compensation, because how can you talk about increases when it’s not yet very clear if businesses are really growing?" he said.
ECOP said in a position paper that the passage of bills in Congress seeking to impose a P125 across-the-board increase in the minimum wage could actually make things worse for the economy.
The group cited that the Philippines has actually slid from the 29th down to the 52nd slot in terms of "world competitiveness" among 60 countries listed in the World Competitiveness Yearbook. The country’s economy was also ranked as "most unfree" by the Heritage Foundation.
"One of the major factors for the continued decline of Philippine competitiveness is overall low productivity which is the lowest in the region," ECOP said in its paper.
It added that the Philippines has a higher daily minimum wage level (at $5.31) than its neighbors Vietnam, with $0.92; China, with $0.31 to $1.28; Indonesia, with $1.39; and Thailand with $4.29.
It is estimated that businesses would have to allocate P633,399,250 a day or P16.5 billion a month to comply with the basic wage alone and another P50.5 billion for other forms of remuneration such as bonuses and gratuities and indirect costs such as social security, cost of training and welfare services.
And since the wage increase would not be productivity-based, ECOP said it might cause a chain reaction of adverse consequences, including "unprecedented spiraling cost-push inflation."
Meanwhile, lawmakers expressed gratification over a study by British Standard Chartered Bank predicting the country’s steady credit rating by Moody’s Investors Services, which they said validates the positive outlook and growing confidence of investors in the Philippines for the year.
Tarlac Rep. Jesli Lapus, chairman of the House committee on ways and means, and Davao City Rep. Vincent Garcia, a member of the House committee on economic affairs, said that with this encouraging development, the people should stay the course with the Arroyo administration and make sacrifices for the common good so the country will be headed toward higher and sustainable economic growth. – With Ding Cervantes
Reported by: Sol Jose Vanzi
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