Running on fumes
This week, we’re going to cry about gas prices and how daily wages are being severely outrun by the speed of inflation.
A generational debt
2021 is still not done haunting us with the Philippines accumulating a total of P1.2 trillion in debt paid by the national government. This is an all-time record-breaking number as the country’s expenses are further inflated by the high costs in financing the Covid-19 response.
According to the Bureau of the Treasury, the P1.2 trillion of 2021 is a 30% increase compared to the P926.46 billion of 2020 as it had to consider both interest and amortization.
The increase was brought up by the 69.6% borrowed from domestic creditors and 30.4% loaned abroad.
This had the government’s outstanding debt reach P12.03 trillion as of January 2022, up 16.5% or P1.7 trillion compared with P10.327 trillion in the same month last year.
Finance Secretary Carlos G. Dominguez III did point towards the two-year fight against Covid-19 resulting in a massive economic downturn. He also stated that “high levels of government debt stock, now equivalent to 60.5% of gross domestic product (GDP), is not sustainable and should only be temporary.”
He claims that the Duterte administration is determined to make sure that the transition towards the next set of leaders for the Philippines will be equipped with the necessary tools to help soften the blow of the debts. They are working on a fiscal consolidation plan that will “formulate a program to limit the budget deficit and improve our debt-to-GDP ratio.”
A big part of this fiscal consolidation program is the improvement of collections to meet expenditure requirements. It should be noted that the P1.3 trillion from our Covid-19 debts alone will have to be paid all the way up till 2060. The good news is, we already know what to pass down to our grandchildren. The bad news is, they have to pay for it.
A liter a day keeps the budget away
If you haven’t topped up your tank with gas in the last few weeks, you’re about to start second-guessing going for it anytime soon.
According to the Department of Energy, should global prices continue to surge, local pump prices per liter of gasoline could hit as high as P86.72 and diesel at P81.10.
Energy Undersecretary Gerardo Erguiza Jr. emphasizes this problem for all sectors in the government. “We have a framework where we have the objective of fair pricing, but still we are unable to do that,” he said.
The Philippines’ economic managers were opposing requests to temporarily suspend excise tax of petroleum products as it will cause us to lose P117 billion in revenues or 0.5% of the country's gross domestic product.
The DOE already declared a time of crisis when Dubai crude hit $80 per barrel. As of March 14, the price has gone up to $120.34 per barrel.
Erguiza explained that supplies aren’t the problem, it’s really just the pricing. With a cost per liter like that, I’m sure that anyone would be scrambling to purchase gas at the moment.
Corporations to the rescue (somewhat)
Although, an app called PriceLOCQ has been gaining traction recently for enabling the user to pre-purchase gas at its current price which they can claim in a Seaoil branch later on. Yes, prepaid gas is a thing now.
Founder Mark Yu didn’t initially plan on prepaid gas as a business model. What started as a platform meant for digital tokens based on oil is now a place where users can “buy fuel in advance to reduce their exposure to volatile and rising fuel costs, enabling them to save money on fuel expenses.”
Yu also mentioned he is currently in talks with other fuel companies to extend the service beyond Seaoil.
Alternatively, the DOE is proposing to local oil firms to keep a minimum inventory on a per product and per depot basis.
The guidelines specify that there needs to be a minimum inventory level of a 30-day supply for refiners covering the combination of crude oil and finished petroleum products, 16 days for direct importers of refined petroleum products, and a seven-day supply for LPG importers.
Petron Corp. has already stated that they have sufficient supply for the next 30 days but the proposal from the DOE would require additional spending—something which other companies might not be able to do.
From employer profit to worker deficit
Workers from the National Capital Region are being more vocal about how difficult it is to sustain a living with higher prices brought by inflation.
Daily commodities such as food, water, electricity, and gas have all received significant bump ups in price while salaries stay the same.
According to the Department of Labor and Employment’s National Wages Productivity Commission, the daily minimum wage in NCR ranges from P500 to P537. Labor Secretary Silvestre Bello mentions that this is no longer a livable wage for workers who have to support families in NCR.
The Trade Union Congress of the Philippines submitted an appeal last Monday for a P470 increase on the daily minimum wage to bring it up to P1,007.
The labor group cited hunger, malnutrition, and the alarming rise of gas prices and basic goods as reasons for their request to the Regional Tripartite Wages and Productivity Board (RTWPB)-NCR office. Add in the looming threat of a pandemic to top it off, and you have a cost of living that is just too high for the average worker nowadays.
The last wage hike implemented was the P25 increase granted back in November 2018. The TUCP warns that “workers will find themselves dying of hunger and malnourishment if the minimum wage is not increased.”
Even though reasons are valid for an increase, the Employers Confederation of the Philippines mentions that there are still a few factors to consider given the implications of the request.
The ECOP chief said that “out of the 44 million workers in the labor market, only 16% are in the formal sector or those with employer-employee relationship. Meanwhile, 84% are informal workers such as tricycle drivers, farmworkers, and small business owners.”
This means that if the request is approved and applied, only the formal sector will benefit from it as they’re the ones regulated by DOLE.
Increasing minimum wages will also drive employers to adjust the prices of their goods and services to sustain paying their employees in the current economic climate which will have ripple effects on the consuming public.
ECOP President Sergio Ortiz-Luis Jr. did reassure that they are open to reviewing the request and admitted that minimum wage was never meant to be a living wage. It was only supposed to be for “students who just graduated so that they will not be abused by employers.”
Someone should probably tell some employers out there that they’ve been paying their workers like students for years now.
