P200/day (HB 11376)

The circus came to Congress on 28 January as house and labor leaders met with a presumably prearranged agreement on House Bill 11376 or a ₱200 per day wage increase across all regions and industries.

It was a magic moment for both reelectionist congressmen and labor leaders who thrilled each other with the possibility of enacting the bill before election. The authors of the wage increase bill brags that “5 million workers will be eradicated from poverty.” They overlook the fact that there are 41 out of 46 million workers in the formal sector, an estimated 16 million workers in the informal sector and 2 million unemployed who are not covered by this bill. They will be plunged deeper in poverty due to inflation caused by the P200 wage increase.

The labor leaders probably use the media coverage of this meeting as propaganda to increase dues and recruit new members to their movement. But for how long can members’ blind faith on leaders’ unfulfilled promises last before despair sets in?

The congressmen’s afterthought of passing the bill to balance the interest of capital and labor with HB 11376 is an overly sentimental compassion, an economic fiction, out of sync with political realities, destroys the spirit of tripartism and reverses the lawful process of regional wage setting which takes into account the disparity of cost of living in different localities. It is a solution looking for a problem.

After the last legislated increase 26 years ago under RA 6640 in 1988, right thinking policy makers recognized the rationale of wage setting by region and crafted a law RA 6727 in 1989 creating the Regional Tripartite Wage and Productivity Board or RTWPB to determine and approve wage levels per region to equitably match salaries with the various levels of cost of living in the 17 major areas of the country.

Every election time, however, Congress becomes an Indian giver-with due apologies to Indians-as it habitually tries to get back from the RTWPB the delegated wage- setting authority given by congress itself 35 years ago. Perhaps, congress wants to projects itself as St Peter the Worker, labor’s patron saint, who will deliver workers from poverty by way of a legislated wage increase in exchange for their votes.

After such a high-profile meeting, supportive PR men go on overdrive to announce the compassion and determination of congress in improving workers’ living condition via a legislated wage increase. It is a promise which is unreasonable, unaffordable and counterproductive.

The old saw, “if it ain’t broke, don’t fix it” should guide legislators as they try to nickle-and-dime workers to vote for them by dangling the enactment of the wage increase bill if reelected.

A centralized wage fixing, where Congress dictates a national, uniform one-size-fits-all wage level is a reckless political act. It ignores varying cost of living and business conditions across regions and industries. Such exercise is influenced by national debates rather than economic realities on the ground. It defies the fifth fundamental law of economics which states that productivity determines the wage rate and violates the Christian principle of autonomy and subsidiarity as it arbitrarily disregards the competency of the RTWPB.

The resulting rise in manpower cost for MSME’s which comprises 99.6 percent of registered companies is unsustainable and will result in downsizing or laying off of workers when enterprises are shuttered permanently.

Expectedly, in 2028 and every three years thereafter, this political circus will come and congressmen will make sweetheart promises again.

Although historically congress has been unsuccessful to legislate a wage increase, the remote possibility unsettles employers and discourages new investors following the tagalog saying, “ang amba ay mas masakit kaysa taga” (difficult to translate and in the words of one senator, “how do I English this?”).

Ad nauseam, a legislated wage increase is a political theater staged every election season to win votes rather than improve workers’ lives, ultimately harming workers, businesses and the economy.

Hopefully, lawmakers could focus on meaningful reforms that genuinely uplift workers such as job creation, skills development, attract more investments and increase productivity.

Workers deserve nothing less.