EDITORIAL - Populism

This is becoming predictable every election season: a legislated wage hike, approved by lawmakers with little regard for the views of those who will shoulder the increase.

The House of Representatives, whose members together with senators are under fire for mangling the 2025 national budget to finance their election campaigns, is pushing populist measures possibly as part of damage control. The House leadership has announced the approval of an across-the-board increase of P200 in the daily minimum wage nationwide. That’s an increase of about P5,000 a month for those with a five-day workweek.

No one will dispute the boost in productivity that comes with decent compensation for workers. All successful entrepreneurs know this, and do what they can to promote their employees’ welfare. Unhappy employees are bad news for any business.

Such efforts, however, must be tempered with the employer’s capacity to pay, the cost of living and the funding requirements for running a business. Politicians cannot ignore the concerns of those who run the private enterprises that generate employment. Neighboring countries have focused on providing an attractive environment for both domestic and foreign investments that generate meaningful jobs for the most number of people.

Job generation is critical particularly in a consumer-driven economy such as ours, where consumption is heavily dependent on the remittances of millions of citizens working overseas because they lack decent employment and livelihood opportunities in their own country. The country has not even fully recovered yet from the economic tsunami and job losses arising from the COVID pandemic restrictions.

Over 90 percent of businesses in the Philippines are micro and small enterprises, which are highly sensitive to any increase in operating costs. Wage-setting is a balancing act that cannot be left to politicians who are focused on personal interests. The law provides a tripartite mechanism to facilitate this balancing act, with workers, employers and the government sitting down to ensure that wage rates can be reasonably enforced and will not result in downsizing or business closures.

As expected, employers and business groups have called for wage-setting to be left to the tripartite wages and productivity boards. President Marcos, who is already left holding the bag in the budget mess created by Congress, should resist going along with the populist tide. Economic growth targets have already been missed for the past two years. The President will get the blame if his congressional allies force a return to politicized wage-setting and the move results in business closures,  job losses and a further economic slowdown.