Wage policy

The four-cornered dustup over the House approval of a bill granting a legislated P125 across-the-board increase in workers’ wages nationwide, payable over three years, proves one thing: The government wage policy – in fairness, a policy inherited by the GMA government from past administrations – simply isn’t working.

How successful can a policy be when all affected sectors are dissatisfied? Some die-hard labor advocates in the House complain that workers need P300 right now, not P125 spread over three years. The President has declared she won’t support a legislated wage hike. Signals of a presidential veto are unmistakable.

The House labor and employment committee trumpets the hike as a victory of moderates over party-list colleagues who have long argued for a larger and immediate wage increase. Maybe so, but it’s obvious the employers’ groups don’t share their elation. Their fear is that a mandated wage hike would cause more businesses to shut down and further damage our already severely eroded competitive situation, as compared with other countries in the region that allow market forces to dictate wage levels.

Politicians in the executive and legislative departments think they have earned brownie points with their respective constituencies. In fact, they are all regarded as having being driven by politics, not considerations of justice or equity. In wanting to be seen as decisive, the House only succeeded in reviving suspicions that the congressmen saw the wage issue as a political opportunity, rather than a historic challenge to adopt long-term solutions to a seething problem.

I’m sure the Palace has to chart a hazardous course between the Scylla of labor agitation and the Charybdis of employers’ concerns. But its reliance on Regional Wage Boards, bad words with labor, also betrays a bankruptcy of new ideas or a troubling inclination (as far as labor is concerned) to see things from business’s point of view.

Malacañang should realize that regional wage boards are not seen as pro-active instruments to maintain a balance between wage levels and rising costs of living, but as tools of government and business to keep pressures for higher wages at bay. If wage boards persist in doing what they’ve done all along, and keep wage increase petitions endlessly "pending", we cannot expect them to help avert labor unrest.

This is not to say that regional wage boards have never acted, in a manner of speaking. But their decisions, from labor’s point of view, tend to be tardy, first of all, and completely unrealistic to boot. While they can always assure evidentiary support for "correct" wage levels in particular regions, that assurance does not comfort people who see their purchasing power continuously eroded by spiraling prices which, albeit beyond the government’s control, nevertheless impact on them with awful certainty.

When workers complain about shrinking food budgets, rising transportation costs, escalating prices of power and water, they’re not talking theory like erudite government economic planners. They are the anonymous victims in those impressive macro-economic presentations. They view suffering in terms of fewer daily meals with less nutrition (one reason why salt-laden noodles in packaged "instant meals" are so popular), kids staying away from school and walking rather than riding to places of work.

You can see why the situation is so combustible.

On the other hand, employers are not spinning fairy tales when they fret that legislated wage hikes will kill businesses already on the edge, and make the wage hikes illusory. They have long insisted that our thrust should be to preserve the jobs we already have but which are threatened by high interest rates and limited access to credit, rapidly increasing power and fuel costs, poor infrastructure, unabated smuggling, and unfair foreign competition brought about by indiscriminate "liberalization."

There is also the demonstrable damage wrought by competition from countries that lack minimum wage, labor standards and environmental pollution laws. The conventional wisdom is that China (and, to a lesser extent, Thailand and Vietnam in Southeast Asia) now dominate manufacturing. Our last hope lies with specialty items like furniture or garments. While calling centers are a bright spot, the Philippines must contend with giants like India. Moreover, the long-term viability and contributions of calling centers to the economy are at the very least arguable.

However, the threat of employers’ groups to withdraw support from cha-cha is also misplaced. Even if the government considered this a serious threat, which it does not, withdrawing "support" for unicameralism does not help employers one whit.

As we shall soon see, the Senate’s consideration of the wage hike bill will make the House action seem limp-wristed. Some senators want a bigger wage hike, no installment plans and other non-wage benefits as well. Where wages are concerned, one House of Congress is as clueless as the other. Unicameralism has nothing to do with it.

There are those who argue that wage hikes must be keyed in to productivity, not to cost of living or longevity. Many urge employees to flex on such "untouchables" as security of tenure and employers’ retrenchment rights. The idea is that legal entitlements often result in inefficient and unprofitable operations.

Some industry analysts disagree with enforcing industry-wide wage levels, as against determinable shares in actual business profits, net of expansion costs. When a particular industry is under serious competitive attack internationally, should the market be allowed to dictate wage levels in the interest of saving jobs? Or should we let that industry fade into the sunset and its workers lose their jobs?

Finally, there is the issue of what the government is doing in terms of "safety nets." International competition, advances in technology, and new demands of the consumer market make it inevitable that people will lose jobs. Many of these displaced workers will still be of employable age. What’s the government going to do about them?

The wage issue is not simply about wages. Government economic planners know this, but it’s unclear what they’re doing about it. Periodic upheavals over wage levels get us nowhere. The Executive, Congress, labor and business should now talk turkey and work out lasting solutions. Otherwise, we’re priming ourselves for a crisis which will make our other national problems look like child’s play.