Uniform wage nationwide: Boon or bane?
Reportedly, the Department of Labor and Employment (DOLE) is pushing for an equal minimum wage throughout the country. This simply means that the minimum wage in Metro Manila shall be the same as that in the Province of Sulu. Since Metro Manila’s non-agriculture minimum wage is P491, a worker in Sulu stands to receive an increase in pay amounting to P226 (Sulu’s minimum wage is P265) when this proposal pushes through.
DOLE’s position (which, allegedly, is the same as that of President Duterte) is based on the premise that Metro Manila’s congestion is brought about by the influx of rural folks in the Metropolis (or what is popularly known as “rural exodus”).
“Rural exodus” or “rural flight” refers to migratory patterns that normally happen in a depressed region or province. Due to limited opportunities, there tends to be a movement of people from the rural areas to the urban areas. The search for better lives has always been their common denominator.
Thus, DOLE stresses that if salaries are equal, workers in the rural areas will stay put and the “probinsyanos’ in Metro Manila will return to their provinces. Consequently, Metro Manila will be decongested.
As expected, some labor groups are rejoicing. However, before we buy the idea of wage uniformity nationwide, let us look into some facts. Historically, negotiations for minimum wage increases have always been so intense. Since demands by labor groups have always been so unrealistic, their petitioned amount will not be granted. Thus, as has always been the finale in each negotiation, labor unions call for the abolition of the country’s Regional Tripartite Wages and Productivity Boards (RTWPBs).
Most of us, however, are in agreement that their demands have always been clothed with so much hyperboles. They usually do these to stay relevant to their union dues-paying members. Unfortunately, these swaggers brought about negative consequences to the new entrants in the labor market and the unskilled ones.
Factually, when non-productivity related increases are imposed, the unskilled and inexperienced workers or new graduates will suffer the major blow. With the same amount of pay, companies will definitely go for skilled and experienced ones.
Therefore, as the unskilled and inexperienced workers will turn out to be expensive, the possibility that they won’t get employed is imminent. Unfortunately, they will miss the opportunity to earn while learning skills and gaining experiences.
By the same token, if the proposal (equal minimum wage nationwide) pushes through, there shall be wild non-productivity related increases of wages in the countryside. Thus, in the rural areas, we can surely expect spikes in unemployment rate. Consequently, they (the “probinsyanos”) shall try to find their luck in Metro Manila.
Additionally, this move (equal minimum wage nationwide) is a disincentive to prospective investors in the countryside. Why will they pour their money in the rural areas if labor cost is just the same as in Metro Manila? Remember, for manufacturers, the closer they are to a huge market the better for them. Why? It is because if they put their plants in the rural areas and have exactly the same manufacturing cost, their products will come out to be more expensive when delivered to Metro Manila due to freight and handling expenses. Therefore, they’ll just put up their plants in Metro Manila. That’s a no brainer.
Moreover, this move discourages up-and-coming entrepreneurs and kills struggling business start-ups in the countryside. The minimum wage in Metro Manila is just too much to bear for these small businessmen. If they close their shops what is there for the “probinsyanos” in Metro Manila to go back for? Nothing.
The truth is, we’ve not been doing the right approaches and, now, we are also trying to come up with a wrong one. Agreeably, the most tenable approach should have been through productive employment in the countryside. This can be addressed by encouraging new investments there, both foreign and domestic. Or, should the government must directly intervene, through productive-oriented supports to the most vulnerable sectors, like the agriculture sector.
Indeed, except for the more professionally managed and growth and people oriented companies, wages always boil down to supply and demand. It simply means, when labor is scarce, the wages are high. When there is oversupply (of labor), wages are low.
Therefore, the most appropriate approach is to encourage investment in the countryside. Let the demand for labor in the countryside rise beyond the supply. Then, when it happens, salaries will obviously increase. Coupled with a good quality of life in the countryside, the “probinsyanos” in Metro Manila will naturally return to their origins.
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