January 28, 2007

Ike Señeres

Wage hike conundrum

Who is going to take the heat for the wage hike conundrum that is now in the midst of the government and the business sector? Under normal conditions, backdoor diplomacy usually works between these two sides, but normal communications channels between them appear to be broken now, as the business sector had to pay for full page ads in several newspapers, just to express their opposition to the legislated wage hike bill now pending in Congress.

Surely someone has to take the heat for this very serious case of disconnect, which was not supposed to happen in the first place. Is the proposed bill just the handiwork of a few lawmakers who probably wants to score some points among the working class, as they probably would run for re-election? Or is the bill the handiwork of some bright boys in the Palace, for the purpose of getting the support of the labor sector during these political times?

Based on the usual practice, cabinet secretaries are the ones who would normally recommend to the Palace the bills that should be certified as urgent. Either that or they are consulted by the Palace as a matter of procedure whenever bills are filed that are within their functions. In the case of the legislated wage hike, many are wondering whether Labor Secretary Art Brion was consulted, and if he was, many are curious to know what position he took, whether he supported it or not.

It’s ironic that the business sector had to spend millions of pesos just to deliver an old message- that the regional wage boards should be strengthened instead. Perhaps the signatories to the full-page ads were just being diplomatic with their choice of words, because instead of saying, “strengthened”, they should have said, “respected”, as it would appear that the regional wage boards are the ones that were sidestepped by the bill.

I really don’t know what went haywire as far as the issue of wage hikes is concerned, but as far as I can recall, the idea of localizing wage hike decisions by way of the regional wage boards was already an established principle, to the point perhaps that it has already become an institution. Conversely, it goes without saying that the idea of nationalizing wage hikes has long been unacceptable, and that is why many in the business sector are wondering how and why this mandatory hike came up from the left field.

Is there really something in our culture that makes us different from the other countries? In theory, there is no place for mandatory minimum wages in a free market economy. Under a free market, the costs of labor are supposed to arrive at its own competitive levels. Somehow however, our lawmakers in the past came to think that a free market scheme will not work for us, because the probable tendency of employers is to bring down labor costs, at very low levels that would not be sustainable for workers.

Those who came up with the idea to legislate a mandatory wage hike may have had all the good intentions in mind, but I sure hope that they considered all economic implications of their proposal, before they filed their bill. Of course, we would like our workers to earn more so that they could have a better quality of life, but what are these workers going to do if foreign investors are going to stay away from our country due to the higher costs of doing business here?

It is already a known fact that our electricity costs here are higher than those in the other countries around us, and this is of course due to the fact that there is supposedly something in our culture that prevents us from safely operating nuclear plants. Combined with high electricity costs, the reality of having higher mandatory labor costs is a double whammy that is guaranteed to scare investors and locators away. I wonder if the government was able to consider these realities in the cabinet level, with the Trade, Labor and Energy Secretaries present.

When push comes to shove, national priorities would expectedly conflict with each other, to the extent that it is already difficult to choose one over the other. At the outset, it should be a priority to increase the incomes of our workers, generally speaking that is. At this point in our national economic life however, I think that the greater priority is to attract as many new investors so that more new jobs could be created. It goes without saying that it should also be a priority to keep the existing jobs that we already have.


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