When a wife tells a husband who comes home late at night with a tall tale, “OK, Darling, I give you the benefit of the doubt.” It’s a left-handed assurances.

Similarly, when organized labor asks for unreasonable and varying amount of increase in minimum wage ranging from P350/P800/P1,200 policy makers should not give them false assurance.

Government should be forthright and instead tell labor to “doubt the benefit” of their demands.

Let’s look at the facts: The Philippines has the highest minimum wage in Southeast Asia next to Singapore and Malaysia. Out of the 42 million workers in the country’s workforce only less than 3million or 7% are receiving minimum wage. And more than 95 % of these minimum wage earners are employed by MSME’s who are cost challenged.

A wage order precipitates inflation as unscrupulous traders will take advantage to push up commodity prices immediately after a minimum wage order is published.

The pain of inflation will hurt the 39 million not covered by the minimum wage increase.

What is not publicly transparent is the distortion effect of a mandated minimum wage increase. Affected enterprises in order to maintain employee morale and equilibrium in their pay scale will need to adjust upward the salaries of their staff from line supervisors up to managerial level.

The unintended consequence of salary distortion is significantly much higher than the impact of the minimum wage increase.

The labor code recognizes the salary warping effect and it prescribes a distortion formula which MSME’s could not afford.

Another collateral damage of a wage order is the additional 30% increase in payroll cost such as contributions to SSS and PhilHealth, attendant increase in overtime pay and retirement benefits.

Employers, by and large, are not insensitive to their workers’ needs and voluntary grant special economic adjustments in basic pay or cost of living allowance.

Majority of employers are guided by two basic principles to recruit and retain employees, pay them well and treat them well.

In times of great challenges, business has two options to survive, increase revenue or cut cost, wages being one fixed cost that may be considered.

However, the Philippines has a peculiar labor law that prohibits and criminalizes diminution of salaries and benefits .

Thus, once minimum wage is raised it stays at the new level irrespective of any economic crisis that may hit the country which may call for belt tightening across all levels of company operation.

Wages and benefits cannot be included in cost cutting as it is legally protected by the Labor Code.

Employers are understandably cautious about mandated upward salary adjustments because it is the only earthly movement that defies Newton’s Law of Gravity.

Surely, when payroll cost is beyond the capacity of employers to pay, it will result in downscaling of operation, layoffs, or business closures, not to mention the disincentive to investors to expand or start a new business in the country,

Learned economists are aware of the harmful impact of a one-size fits all minimum wage increase as each industry and region are differently situated.

Organized labor is in denial of this reality and calls it blackmail by employers to ward off a minimum wage increase.

But prudent labor leaders should temper their next- to-impossible expectations, reckless wage petitions, and advocacies for self destructive labor bills.

It may be time for our labor partners to indulge in self examination and the first step, I suggest, is for them to “doubt the benefit” of their demands.

Employers Confederation of the Philippines (ECOP) (Business Organization) : Chairman

Philippine Chamber of Commerce and Industry (PCCI) (Business and Industry Assn.): Honorary Chairman

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