The folly of legislated wage increase

“Organized labor persists in continuing class struggle between the employed and the employers.”

The world is now on the threshold of the fourth Industrial Revolution where progress is no longer measured by linear standards of the past.

Creativity, speed, innovation and the application of new technologies are the accepted measures of success of any human enterprise.

Yet, emerging economies like the Philippines remain preoccupied with the dark memories of past iniquities during the first Industrial Revolution where workers are still believed to be toiling under subhuman working conditions.

Fast forward today. Organized labor persists in continuing class struggle between the employed and the employers. This is based on the bias in the 1900 declaration of the Chicago-based Federation of Workers which declared and adopted the slogan: ORGANIZE. DEMAND. STRIKE.

The present street cry of the unenlightened union is a legislated wage increase across the board, which varies in amount from P320 to P1,200 per day for the entire country.

In some parts of the world, but most especially in the Philippines, petitions for a legislated wage increase dominate the agenda of some policymakers and regulators on top of several self-defeating and unending demands for benefits like more holidays, perpetual employment, a large share in company profits ahead of stockholders and taxmen, longer jail time for erring employers and many other job-shattering bills.

On closer look, all these bills are not pro-labor but simply anti-employers.

Today’s loud noise coming from a few labor unions moves some populist policymakers to view workers in the light of the inglorious history of the first industrial revolution. Workers today, as painted by the noisy groups, are perceived to be still oppressed, exploited and underpaid by dambuhalang (gigantic) employers.

In reality, many big companies do not have any minimum-wage earners in their payroll. Without exception, all are above the level of minimum wage.

But MSMEs like marginal exporters, small shops, mall vendors, repair shops and the like are covered by wage orders. A big number of these companies are owned by Filipinos who are themselves on a hand-to-mouth existence and continue to worry where to get the next payroll for their workers.

True, a safety net exempts financially-distressed companies from wage orders but getting an exemption is a year-to-year-case-by-case basis and is not a walk in the park.

Legislating a wage order across the board defies reason and economics. It is also an injustice against the MSMEs. Then and now, there is wisdom in the creation of the regional tripartite wage and productivity boards or RTWPB to determine wage requirements regionally which takes into account the disparity of poverty threshold levels between regions.

Going back to legislated wage increase is a giant leap backward. It makes unionism irrelevant, collective bargaining unnecessary, removes workers initiative, diminishes productivity in the workplace and, ultimately, discourages business expansion and the entry of new investments.

In other words, the growth of our national economy will be stunted and we will once again become a laggard in the ASEAN Integrated Community.

Policymaking is imbued with national interest and each piece of legislation must be carefully weighed for its cost-benefit impact on the national economy before it destroys what it intends to develop.

We believe that Congress adopted its key performance index or KPI based on quality and not quantity of authored bills, and we hope the move to pass a law to mandate wage increases is not a turf issue aimed simply at retaking the authority of issuing wage orders from the RTWPB.

There are already hundreds of pending labor bills that need deeper study and more public consultations. And passing a bill into law that will legislate wage increases is one bill too many.

It is our belief that business will flourish even more in an environment where there are fewer restrictive and punitive regulations and where the overriding code of conduct is trust, collaboration and cooperation among stakeholders.