Wage increases and joblessness

As has been customary, expect the demands from different labor unions and coalitions for rounds of increases in the country’s minimum wage to be always more intense.  Since demands will be so unrealistic, then, as usual, the petitioned amount will not be granted.  Thus, similar to what happened lately, labor unions will always call for the abolition of the country’s Regional Tripartite Wages and Productivity Boards (RTWPBs). 

Most of us, however, are in agreement that all these demands are clothed with so much hyperboles.  They (labor unions and their officers) usually do this to stay relevant to their union dues-paying members.  These swaggers though had brought about negative consequences especially to the new entrants in the labor market.

To recall, in March, 2014, five senators (Senators Juan Edgardo Angara, Paolo Benigno Aquino IV, Teofisto Guingona III, Grace Poe and Aquilino Pimentel III) filed Senate Resolution No. 499 calling for an inquiry on reports of high unemployment rate.  This call was triggered by the results of the 4th quarter (of 2013) surveys conducted by the Social Weather Stations (SWS) and the government’s Labor Force Survey (LFS). 

Notably, the SWS’s report revealed an unemployment rate of 27.5 percent in December 2013 or about 12.1 million jobless Filipinos. 

On the other hand, the government’s LFS showed that the youth unemployment rate was at 14.5%.  This simply means that more than half of the total unemployed workforce are young Filipinos with ages ranging from 15 to 24.  Moreover, it was also reported that the employment in the agricultural sector showed a frustrating negative 2.6%.  Only the service and industry sectors registered positive growth.  The service sector with a disappointing 1.6% and the industry sector with a negligible 1%.

While the senators were quick to point out then that these poor performances were attributed partly by the natural and man-made disasters that hit the country (Typhoon Yolanda, the 7.2 magnitude earthquake in Bohol and Cebu and the siege of Zamboanga City), I beg to disagree.  Remember, after calamities strike, rehabilitation efforts follow.  Therefore, job generation is a given.  The primary reasons are very obvious and using these calamities as excuses are untenable.

First and foremost, the constant increases in the minimum wages demanded by the labor unions is the main reason the unemployment rate of the young workers rose.  Logically, when non-productivity related increases are imposed, the unskilled and inexperienced workers or new graduates 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 won’t get employed is imminent.  Thus, 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 experience.

Secondly, yes, the service and industry sectors recorded measly increases.  Why?  We don’t generate much fresh investments.  Yes, we do have our own share of foreign direct investments.  Notably, however, most of these have been so focused only on business process outsourcing (BPO).  That is the only reason why we have this modest growth in the sector. 

Unfortunately, however, employment wise, the BPO sector does not contribute that much.  This sector employs not only the well-educated but the best among them.  Thus, they don’t directly give opportunities to individuals who are among the inadequately educated, the poorest of the poor, so to speak, who are mostly in the agriculture sector.

Thirdly, to the government’s credit though, it has addressed this concern in the agriculture sector by allocating billions of taxpayers’ money.  On record, through the Department of Agriculture, billions have been released to address our poor farmers’ concerns for decades.  Bastardly though, the support was just on record.

The truth is, we are not doing the right approaches.  The most tenable approach should have been through productive employment.  This can be addressed by encouraging new investments, both foreign and domestic.  Or, should the government must directly intervene, through productive-oriented supports to the most vulnerable sectors, like the agriculture sector.   

Indeed, as we (honest workers) move ahead with our respective journeys, we felt, among others, disrespected and unrecognized. Why? Because we equate such recognition or respect with the size of our pay.  To a certain extent, that is accurate.  To some, it wouldn’t hold true.  The truth is, except for the more professionally managed and growth and people oriented companies, wages always boil down to supply and demand.  It simply means, when labor is scarce, the wages are high.  When there is oversupply (of labor), wages are low. [email protected]