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With the
prices of basic commodities rising at rates not seen in
recent years, labor unions have taken up the cudgels for
their members and are demanding pay increases, ranging
from P80 to P125 a day.
Meanwhile, President Arroyo—faced with a socially and
politically volatile situation touched off by the
rice-price shock—has sought to preempt her detractors by
taking immediate action on the clamor for higher pay.
First, she ordered a 10-percent increase in the basic
pay of some 900,000 government workers and over 200,000
soldiers, police and ancillary personnel. Then, she
directed the tripartite regional wage boards to convene
with the aim of increasing the floor pay of workers in
the private sector throughout the country.
Even
business groups such as the Employers Confederation of
the Philippines (Ecop) and the Makati Business Club (MBC)
have issued statements unusually sympathetic to the
workers’ demand for higher pay. As businessmen, however,
the leaders of the Ecop, MBC and other groups can be
expected to haggle over the amounts involved and quibble
over who should benefit from the pay increase.
Whatever
would be the regional wage boards’ rulings, the pay
raises will still cover only a fraction of the country’s
labor force, which is divided into the formal and
informal sectors.
The
formal sector of the work force refers to office
employees, factory laborers and others who render work
in exchange for fixed salaries. This sector has, in
fact, been shrinking. Ecop officials point out that the
ranks of formal-sector workers have dropped from 6.3
million in 2003 to 4.7 million in 2007.
On the
other hand, the informal labor sector—consisting of
public utility drivers, street vendors and the like—has
mushroomed from 21 million five years ago to 27 million
last year. It is these workers who can expect no direct
benefit from a pay increase, whether ordered by the
regional wage boards or by an act of Congress.
Still,
supporters of the concept argue that a
government-mandated minimum wage, as a matter of ethics
and social justice, helps check labor exploitation and
ensures that basic necessities remain within the reach
of workers.
Workers
have had to regularly fight hard whenever they feel the
minimum wage needs to increase. Just as regularly, they
have met stiff resistance from their employers. This
time, however, the strongest objection to the proposal
to raise floor pay comes not from businessmen but from
economists.
For one,
UP economics professor Benjamin Diokno has been quoted
as saying that raising the minimum wage in response to
rising commodity prices will ultimately make matters
worse for the workers themselves. Diokno, who was budget
secretary in the Estrada administration, said
businessmen would only pass on their higher labor costs
to consumers, triggering further increases in the prices
of their products and services—in short, a cost spiral
that would further accelerate inflation.
Others
argue that businesses are economic organizations—not
charities or welfare agencies—and that the process of
fixing the minimum wage is a comparatively inefficient,
costly and dysfunctional method of raising the living
standards of the poor.
They add
that it is much more practical and cost-effective for
the government to try and maximize opportunities for
work at whatever the going market rate for jobs,
supplement low wages with earned income-tax credit or
other direct cash subsidies, if necessary, and save
money in other areas.
Moreover, the government must remove various artificial
political additions to basic living costs which require
income subsidies in the first place, such as regressive
indirect taxes, tariffs on cheap food and clothing
imports and prohibitive housing policies.
The
President and many of her advisers are trained
economists; they are probably familiar with the
long-running debate between proponents and critics of
the minimum wage. As with their predecessors, their
problem is that setting the floor pay of some 7 million
Filipinos in the formal labor sector has become more a
political exigency and less an exercise in sound
economic judgment.
The
irony is that even if the minimum wage were increased,
it would not be appreciated by most of its intended
beneficiaries. |
