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There is one rule for the industrialist and that is:
Make the best quality of goods possible at the lowest
cost possible, paying the highest wages possible. —Henry
Ford (1863 - 1947)
AS
expected, some labor groups slammed the P12 wage hike
granted by the National Capital Region-Regional
Tripartite Wages and Productivity Commission, with one
describing it as “nothing but alms,” and another saying
it’s only good to pay for noodles and eggs. What the
workers need, the militants say, is an additional P125
daily-wage increase.
And as
usual, the board defended its position by saying that a
P125 daily-wage raise would be disastrous to the
economy. It would throw more workers off their jobs,
said Labor Secretary Arturo Brion.
Expect
this wage issue to metamorphose into a morality play in
the next few days, with some organized groups painting
employers as greedy capitalists squeezing the blood off
workers. And employers, especially exporters, saying
that many of them are about to close shop because of the
strong peso and that a new round of wage increase,
therefore, would simply doom their business.
We have
been hearing these story lines in the last half century.
And it’s likely that we will hear about these things
again next year, unless policymakers learned to look at
the issue from a broader perspective and deal with the
real problem that is causing this annual exercise of a
virtual class struggle.
One of
the larger considerations here is the comparative wage
rates in Asia. At the current wage levels, minimum pay
in Metro Manila is close to $8 a day, against Thailand’s
$6.35, Beijing’s $3.43, Indonesia’s $3.25 and Vietnam’s
$1.27.
What
these figures suggest is that an unwarranted increase in
local wages would simply turn off investors some more.
This consideration is important because, in reality, at
the root of this incapacity of many firms to pay higher
wages is the small size of the Philippine economy
itself.
Despite
the significant growth rates we have achieved in the
last few years, the Philippine economy and its capacity
to create jobs has been generally weak. More so because
the new creators of jobs, specifically outsourcing, are
in the services sector that needs highly skilled
graduates who are normally paid rates higher than the
minimum-wage rates.
It’s
obvious that minimum-wage workers are probably
concentrated in the industry sector, which, by some
indications, are fast shedding jobs already—owing to a
lot of factors, including poor infrastructure, a strong
peso, strong competition from China and Vietnam, and
rapid technological change.
To
survive, many companies have relocated to China while
others are restructuring their cost structures to stay
afloat. You put a drastic wage increase in their
equations and it’s likely that they are just going to
fold up or simply adopt more labor-saving devices.
This is
not to deny the need for decent wages in the
Philippines. In fact, we need them here. But the reality
is that the performance of companies and industry
sectors are uneven.
Certainly, firms in electronics, mining, outsourcing,
banking, and wholesale and retail are probably doing
good. But other firms, especially small and medium
enterprises in the manufacture and export of furniture
and fixtures, as well as food, are probably ailing owing
to the strong peso and other factors.
It means
that while other firms could absorb the wage rates,
others are not likely to do so, and go under. The ideal
policy approach, therefore, is an arrangement that would
consider these different business conditions.
A
collective bargaining agreement is one option. But then
again, only about 4 percent of the country’s work force
is organized, and this is due to several factors.
Our
unions are either lousy organizers who are not adapting
effectively to winds of change, or are crowding out each
other in the same sites. These days, more than half a
million workers are in the “new economy,” and yet unions
have not made inroads into their ranks.
Because
of this weak presence within the labor sector, labor
unions are focusing their efforts on petitions for
state-mandated wage hikes to project relevance. But
these are measures that ultimately hurt the labor
sector, mainly because of their one-size-fits-all
approach.
One
school of thought says, though, that besides being
unable to cope with the impact of globalization in the
workplace, some labor leaders have limited their
ambitions to landing party-list seats in the House of
Representatives.
Of
course, the bulk of the labor sector is employed in the
small and medium enterprises, many of which are
mom-and-pop operations that are not suitable to union
organizing. If that observation is true, then we know
that the issue about low income for workers and the rest
of us Filipinos is really all about economic growth—or
lack of it.
Higher,
sustained and broad-based growth is the only thing that
could ultimately soak up joblessness. Hence, the
government should hurry on growth-oriented strategies,
which should involve reforms in policies and resource
allocation in education, trade, infrastructure
development and social services.
That may
sound like a vague set of proposals with long- term
impact. True. Most of the reforms workers want are those
that actually would have an immediate impact. For
instance, close to half of workers’ wages are used on
food purchases. But trade reforms (say, lower tariff for
rice, corn, sugar and wage goods) that would cheapen
food, therefore, would go a long way in expanding
workers’ purchasing power.
There
are so many other policy handles that the government
could use to help workers in a way that won’t destroy
their jobs as a wholesale wage increase would.
Creativity is the key.
And the
patience to help all stakeholders understand that in a
fast-changing world, the usual formulas sometimes just
won’t work the same way anymore. |
