End of employment

Understandably, after two years of economic stagnation due to the Covid-19 pandemic and the global impact of the war in Ukraine, workers and businesses alike are encountering overwhelming economic difficulties.

The road to recovery is littered with daunting challenges that require a collective and unified effort from the tripartite stakeholders of government, organized labor, and employers.

However, the noisy and aggressive rhetoric by labor groups demanding an unreasonable legislated hefty wage increase of P1,000 per day is shocking, irresponsible, reckless and self-destructive to put it mildly.

It sends shockwaves to struggling employers and dampens the enthusiasm of potential employers.

It is a sad reality that 99.5 percent of registered enterprises in the country are micro, small and medium enterprises which can barely meet the financial burden of running their business even before the pandemic and the Ukraine war.

Micro entrepreneurs in the MSME sector comprise 90.5 percent of the total registered enterprises employing 65 percent of workers, contributing 40 percent of GDP, and helping eradicate poverty.

Micro businesses that have less than 10 employees are severely under-capitalized, unbankable, mostly home-based, and nearly hand-to-mouth businessmen who continue to operate to make both ends meet. While all of these micro companies may be exempted from the mandatory minimum wage order, there is an untold and harmful economic and psychological impact on their employees of any inflation-triggering wage increase order which is largely inapplicable to them.

The routine early calls by these labor unions to mandate a P1,000 per day minimum wage increase, if granted, will force many employers in the MSME sector to permanently shutter their business, or face a fine of P100,000 and/or imprisonment of four years for violating such a wage order. Alternatively, employers will opt to continue to operate but adopt unsustainable schemes just to survive like reducing the number of workers, adopting work shifting schedule, requesting subsidies from the government, and unilaterally suspending payments of loan amortization which can lead to foreclosing on company assets including the owners' personal properties, and many other options that ultimately lead to bankruptcy.

The atrocious demand for a P1,000 per day increase although eventually tempered and scaled down to P100, with the official filing of recent petitions to the wage board, is still unaffordable as businesses are still gingerly trying to recover from the economic quagmire left by the pandemic and from the already high cost of operation as inflation continues to increase month after month.

Historically, for the past eight years, the average minimum wage for NCR was legally raised by P22/day.

It is important to note that any mandated minimum wage increase benefits only 10 percent of the total 47.6 million employed workers. A serious study may be needed to determine the relevance of RA 6727 or the Wage Rationalization Act.

At this point, the government could help employees and alleviate the worsening economic condition by taking steps to lower the prices of consumer goods and resist the urge to mandate ruinous populist measures such as mandated unaffordable minimum wage increase at this time.

Organized labor should tone down its vintage and dogmatic rhetoric laced with veiled threats on the imperative need to raise wages beyond the capacity of employers to pay.

It will be a delicate and difficult balancing act for the Department of Labor and Employment to determine the appropriate level of wage increase versus the prevailing battered economic condition of all businesses.

Organized labor groups must be aware that most of today's employers (unlike slave owners of old) are enlightened and compassionate businessmen who treat their workers like family and will always extend assistance to them up to the affordable limit without the menacing threats from labor groups and government intervention.

Our country has overcome harsh economic challenges over many decades such as the second world war, the declining value of the peso from 2 to a dollar to 59, the oil crisis of the '70s, the Asian financial crisis of 1997, the subprime crisis of 2007, near economic shutdown after the assassination of Ninoy in 1983, and a series of recurrent shocks from natural disasters and political conflicts since the 1898 independence declaration.

Today, we are facing two globally extreme and lingering economic threats from the pandemic and the Ukraine war. Any misstep in disturbing business momentum toward recovery could plunge the economy to a depth never experienced before.

In times of severe adversity, people often quote the German philosophy "what doesn't kill you will make you stronger." But it can also make you weaker. Businesses that survived thus need reinvigorating measures to keep them going.

The harsh lockdowns imposed during the pandemic have traumatized employers and many are still taking cautionary steps to restart their businesses. The economic situation is still fragile and any headwinds like an unaffordable wage hike at this time could ruin the business recovery plans and may woefully END EMPLOYMENT for many hired workers and new entrants to the labor market.