New demands for wage increase: Devoid of sympathy

A few weeks ago, on Valentines Day, the Cebu Labor Coalition led by the Alliance of Progressive Labor (APL) filed a petition with the Department of Labor and Employment (DoLE) seeking a P120.00 increase in daily minimum wage. They justified their demands on account of the recent round of increases in prices of basic commodities and transport fares.

To recall, in September, 2009, the same Cebu Labor Coalition (CELAC) filed a petition for a P128.60 across-the-board wage increase for Central Visayas before the RTWPB. They claimed that such 48% increase in pay is necessary because there have been “insufficient wage increases from the past, the reduction of the purchasing power of the peso, unstable oil price, increases in the prices of basic commodities, consumer price index, inflation rate, the value of the current minimum wage of PhP267.00 has a purchasing power of only PhP16.00, R-VAT and hike in taxes, globalization effects, transportation fare increase and water and electric increases”. In less than a year (on August, 2010), the Regional Tripartite Wages and Productivity Board (RTWPB) – Region 7, approved the PhP18.00 daily wage increase for Central Visayas.           

This cycle has been going on since the first time we created the RTWPB. Though wage increases consider cost of living, inflation rate, fuel cost and its possible impact on employments and retrenchments, different labor unions and coalitions will always raise their arms in protest of the RTWPB’s board’s decisions. Threats of strikes follow. Not to be outdone, politicians and left-leaning groups will join them in their grievances, not for an honest-to-goodness concern, but to maintain visibility and quick recognition. Then, new rounds of demands for wage increases ensue. 

In trying to understand the present situation, we must take a look at wages in an all-encompassing perspective. In more professionally managed companies, it is viewed positively as investment not cost. To some cash-strapped institutions, it is something that they would like to control to survive. To some miserly affluent companies or businessmen, however, it is something they’ve made their hapless employees continued to starve. Clearly, in these three scenarios, employers differ in the ways they treat their employees and in their approaches in compensating them. Some are too generous, a few are reasonable and others are just too stingy.  

On the other hand, laborers and employees differ in many ways too. Overly protected by our labor laws, even those with salaries three times higher than the established minimum wage are filing notices of strikes. However, it is a fact too that despite receiving wages way below established floors from unreasonable employers, some laborers just grumble in the corner by their lonesome. Obviously, they prefer to have little something than have nothing at all. Indeed, there are varying approaches among employers and employees. These varied approaches are either necessitated by business and economic conditions or just mere attitude. 

In the meantime, however, let us revisit a bit of history on legislated minimum wages. Lacking in originality, as it has always been, we look into other countries’ practices and take them as our own solution as well. As usual, we are precariously taking them as our own despite the assortments of conditions that are just so different.

History will tell us that legislating minimum wages was started in Australia and New Zealand with a noble purpose of ensuring decent standard of living for unskilled workers. It was perceived as both the wall shielding the workers from exploitation by unjust employers and as a primary weapon in the war on poverty. 

Australia, one of the first advocates of the minimum wage law, showed us one of its damaging effects when, in 1921, the federal court established a minimum wage for unskilled workers. Ignoring the employers’ right to value the workers’ worth vis-à-vis their skills, the workers (through the minimum wage law) priced themselves out of the market. Consequently, unemployment increased and those who insisted to work found some solace from employers who can ill-afford but are willing to break the law.

The same situation prevailed in the United States of America when a hospital terminated a group of women after the District of Columbia’s Minimum Wage Board ordered them to raise their wages to the legal minimum. Sarcastically, the women filed a case to halt the enforcement of the minimum wage law. Acknowledging the merits of their case, the U.S. Supreme Court, in 1923, ruled that “the minimum wage law was simple price-fixing and an unreasonable infringement on individuals’ freedom to determine the price at which they would sell their services”. Consequently, they stayed and enjoyed the usual benefits they had.

Another conflict happened in 1990 when the U.S. Department of Labor ordered the Salvation Army to pay the minimum wage to their volunteers in its work therapy programs. The programs provided participants (mostly, homeless and drug and alcohol dependents) a meager weekly stipend, three-month food and shelter subsistence as well as counseling, in exchange for processing donated goods. The Salvation Army appropriately reasoned out that compliance of such an order would force them to close the program. 

Just considering these unfortunate events in these countries’ wage legislation makes us shiver. Added to that fact could be a very tricky scheme that maybe employed by our employers that is very legal and yet disadvantageous to our workers. This precarious option could be the changing of the workers’ compensation package. It is a known fact that our workers have tax-free benefits. With this wage increase, most employers will be forced to redesign their compensation packages to the detriment of the employees. It is almost certain that some employers will simply reclassify or transfer some of their employees’ tax-free benefits to their basic pay. It simply means that tax-free medical benefits, rice and laundry allowances and the like will be transferred to their basic pays. Certainly, transferring these tax-free benefits to their basic compensation is substantial compliance of the wage order as far as employers are concerned. 

On the other hand, the unskilled and inexperienced workers will suffer the major blow. With the same amount of pay, companies will definitely go for skilled and experienced ones. Therefore, as the unskilled and inexperienced workers will turn out to be expensive, the possibility they’ll loss their jobs is imminent. 

Moreover, some unskilled or new entrants in the labor market may not be given the opportunity to work and gain experience. These are valuable experiences that are really necessary for them to use as bargaining chips for higher pay demands in the future. Unfortunately too, they will miss the opportunity to earn while learning skills and gaining experiences.

Whatever selfish motives some may have, however, there is no shade of a doubt that the demand for a wage increase is noble intentioned. Sadly, businesses are still trying to psyche themselves up to try to establish a stronger hold on whatever assets left from the menacing downturns (same predicament the labor sector claimed they are severely strangled) they were in. Whether labor unions considered these businesses’ predicaments in demanding for such huge increase, we do not know. In all respects though, such demand is totally devoid of sympathy. 

For your comments and suggestions, please email to [email protected]. – THE FREEMAN