The Trade Union Congress of the Philippines’ (TUCP) demand for a 75 pesos daily salary increase in 2011was met with a counter proposal of 25 pesos increase for Metro Manila workers by the Bangko Sentral ng Pilipinas (BSP) and an offer of 13 pesos hike by employers. According to the TUCP, Metro Manila workers need the demanded amount to cope with the rising cost of prime commodities, but may consider lowering their demand to 45 pesos. According to the BSP, a wage adjustment higher than 25 pesos will lead to inflation. According to employers, a wage adjustment as demanded might force companies to lay off employees, reduce working hours or simply shut down.[1]
The Employees Confederation of the Philippines (ECOP) assert that the 75 pesos hike will stop employment creation and will only benefit full time employees, which is 16 percent of the population. According to the Department of Labor and Employment (DOLE), fixing the minimum wage aims both to protect the low-income workers’ purchasing power and to preserve existing jobs. A balance must be determined between giving workers a decent standard of living and ensuring that the economy can sustain wage adjustments and viability of businesses, particularly of small and medium-scale entrepreneurships.[2]
Population growth and migration, and economic size and growth determine labor supply and demand, while market-determined or equilibrium wage and government-mandated minimum wage are the two types of wages. The three main schools of thought on why wages are viewed this way are as follows:[3]
Wage is determined by the cost of living of a family, with the minimum wage set by government at what a family of five would need per day or per month. This depresses the dynamism of the labor market because even the most unskilled workers will have to receive the same wage, resulting in their not being hired by businesses. Employers may choose to hire only single people or those without children, so the reason of family needs cannot be applied in wage hike negotiations.
Wage is determined by the rate of inflation or the price of commodities. The latter cannot be used to justify wage hikes because the inflation rate can increase for various reasons such as the high interest rates placed on government borrowing to finance the budget deficit, economic losses due to natural disasters and world oil price increases. If wages are increased in such conditions without a corresponding increase in productivity, many businesses may be forced to reduce working hours, stop hiring or lay off workers to remain viable, or just close shop.
Wage is determined by workers’ skills and productivity, which means that regardless of the workers’ having families or not or a rise in the inflation rate, wages cannot be increased if productivity has not increased. Otherwise, businesses cannot remain viable and unemployment and poverty will rise, due to the labor supply being higher than labor demand in the country because of its fast population growth.
Labor laws that overly benefit workers in the capitalist business landscape are rooted in the socialist point of view, with the argument that since workers do not own means of production, the state must protect them. Such rigid laws include high minimum wages for all workers, security of tenure, various types of leaves from work and extensive retirement benefits.[4] These result in companies favoring contractualization of most of their labor needs to ensure that productivity gained is equal to the payment given.
Private businesses cannot operate like the services in government, where security of employment also leads to job complacency, because they are commercial undertakings facing constant risks and only hire workers who are self-driven and willing to accept that their wages depend on their productivity in the company. In other words, workers must view themselves not as being entitled to wage adjustments every time their family needs are affected, but more as business persons who must do their part in sustaining and increasing productivity in their companies.
[1] “TUCP Rejects 25 Pesos Wage Increase for Metro Workers” Trade Union Congress of the Philippines,
5 May 2011, <http://www.tucp.org.ph/news/index.php/2011/05/tucp-rejects-p25-wage-increase-for-metro-workers/> [accessed 26 May 2011]
[2] “Employers Not Keen with 75 pesos Wage Increase”, JobOpenings.ph, 2011, <http://www.jobopenings.ph/article_item-319/Employers_Not_Keen_with_P75_Wage_Increase.html>
[accessed 26 May 2011]
[3] Bienvenido Oplas, Jr., “What Determines Wage?”, pdf, July 2006, <http://www.minimalgovernment.net/media/fm_200607.pdf> [accessed 27 May 2011]
[4] ibid
No comments:
Post a Comment