Is Lower Wages Beneficial To The Philippines?
I read an article a few days back about the dilemma of small and medium size companies having to cope with the rising labor cost. An old argument was presented ” cheap labor cost generates more jobs to the unemployed”. Because of higher wages, the Philippines is becoming a less preferred investment destination
On the labor side, year in and year out, groups representing this sector has been consistently pressing for a wage hike. The present minimum wage, according to them, is not aligned with the rising cost of living.
These opposing mindsets have its own merits. A healthy debate, though, may help form a new paradigm that will be beneficial to all concerned. Herewith are my thoughts on the issue:
- Effect on Family: With minimum wage that cannot help you live decently, chances are both parents will work or one will have to work abroad. In this way, parenting is focused on providing the financial needs and less attention in molding the character of the next generation. Kids are influenced by cable TV, internet and peers. A strong family is the backbone of progressive society.
- Effect on Investment: With cheaper labor cost, we lure investors and more jobs are created. But the workforce will have to find other means to meet their needs. A few will venture into questionable, if not outrightly illegal activities. A modest wage, however, will help ordinary people live decently and not depend on Gov’t doleouts. This may also reverse the effect of diaspora. However, as they say, higher wages means fewer investment and jobs, cheap wages generates employment.
- Effect on Education: If the population cannot afford quality education, they will end-up in public schools. When public school teachers are not paid well, the good ones will likely venture into another country or career. And guess what will happen to the quality of education? and the future of a nation?
- Effect on Governance: With a higher cost of doing business in the country, gov’t. will have to offer more incentives and let go of some revenues needed for basic services. Governing a population, however, that only understand “lack and need” is harder. Furthermore, a bigger budget is needed for basic services.
- Effect on People: People who only understood lack may most likely (1) become insensitive (2) necome a problem to society (3) become dependent (4) develope a slave mentality (5) have a low self esteem. A few may be motivated to work and study hard to break out of the poverty. On the other hand, people who are earning modestly lives a respectable and decent life, not necessarily fancy. And may not need the basic services provided by the Govt.
- Effect on Economy: With people having more money to spend is beneficial to the Philippines, being a consumer based economy. However, with limited budget, spending is reduced. Spending may still be sustained through debt. Paying the debt, however, is another story in itself.
How do we add value to one without sacrificing the other?
9 Responses to “Is Lower Wages Beneficial To The Philippines?”
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indeed, this is a chcken and egg debate for most Filipinos (rich, richest, poor and poorest)…all the explanations you had cited are true and correct…it is a cycle, everything are interconnected…it affects all. the question is, how are we going to help build each other for the good of all and not for the select few only?
Hey Sonnie,
I agree in your views. Here are my thoughts:
1. There is too much supply of labor force in our country to justify the increase in minimum wage. I don’t think there’s a major problem in people going abroad to work.
2. The angle I want to pursue is in education and media. The problem there is that they don’t teach the right attitudes to people. There is not enough love for the country being taught there. Most especially the media. Filipinos abroad fear going back to the Philippines because all they hear in the news are about the negative side of the situation.
3. Even movies highlight conflict more than nationalism. I commend the likes of Independence Day, Rocky IV, Superman II, and other movies who highlight the American “Beauty” in their plots. I commenc Jet Li even more for his nationalistic views in his movies Hero and Legend (if you haven’t watched it you should. You can really see his love for his country and its values). There aren’t enough movies showing love for the country here.
4. Of course, I don’t need to say anything about our newspapers, TVs and radio. They’ve said enough already.
5. In the case of education, the country can benefit a lot if they try to instill love for the country as a core value. Unfortunately, that’s not happening. There are of course exceptions here. I know a lot of really good teachers who were offered jobs abroad but turned them down simply because they wanted to pass on what they have learned to other Filipinos. There’s still hope.
6. Even if Filipinos go abroad, if they really love our country, they would even take pride in boasting of our country’s “beauty” wherever they are and that would at least raise our perceived value. Other country’s still think of us as barbaric, good source of sexy women, and terrorist-trainers. I think India or China is not our competition here in terms of cheap labor. We’re short-changing ourselves,.
7. To sum it up, I think that we should abolish the minimum wage and let people negotiate their worth to their employers. If employees think the offer is too small, look for another job if posible, go abroad. With the law of supply and demand equalling out, we may achieve a stable economy. Of course, I’m not an economist so I know there are a lot of other factors that may affect this.
Hi Jared! How’s life in Cebu?
IMHO, abolishing the minimum wage will open more abuse from some employers.
Hi Sonnie. I agree with some of your thoughts on wages and wage setting in this country. Allow me to add:
1. Wages should be based on productivity and expected output for which that wage is given. Even if our wages are relatively higher compared to other Asian countries, our manpower can develop its competitive advantage in terms of productivity, e.g. more output from a given input, and quality of output. As long as an employee produces more than what he is being paid for, then s/he is still creating value or value added for the organization s/he works for.
2. Depressing wages “to attract investors” is an argument older than our grandparents. An employee must earn a living wage for him/her to return to productive work the next day. What is a living wage? That amount that will keep body and soul together. Or, an amount that will enable an employee to maintain himself as an employee and to produce heirs of future employees so business/es will be able to survive and sustain itself.
So long for now. Best regards and more power.
Hi Joyce,
“how are we going to help build each other for the good of all and not for the select few only?”
You posted a good question. Ideally, those who are well off should extend assistance to the poor and not manipulate them with lower wages. And the poor should not depend on the kind acts of the Govt. and others.
Regards
Hi Babes,
Nice to see you here! Thank you for the valuable inputs..
I totaly agree with Jared, specially with item 7. This would also result in a competent workforce because most would strive more to be able to get a higher salary.
Regards to all. I’m newbie here
Hi Sonny,
Though quite late, my comments:
1. I agree with your points for our ordinary workers.
2. I also agree with Jared on item No. 7.
Filipino culture has to change. We should negotiate for a price for our skills and talents. If we are not satisfied with the pay, then move to another company. We focus on lifetime employability rather than lifetime employment. Any company will pay higher if the value of the employee is high. So there is no need to impose a higher pay. It will come along if the employee is qualified and talented.
On the other hand, If we allow a higher minimum wage or living wage, companies are only willing to hire 1 staff instead of 3 and pay him higher for the work of 3. That would also mean than people are earning higher but only only a few of them.
That is what is happening with IT and other multinational companies. They pay high but the employee has to be highly qualified and high performing, but they also maintain a lean workforce. This results to only a few earning better.
Hi Teresa,
Your comments are as valuable as those who earlier shared their two cents.
My thoughts:
If Filipinos will receive adequate pay (good enough to support a family of 4) then one of the parents will have the liberty to engage in other productive activity and focus on raising the kids.
Both will not be compelled to engage in corporate slavery.