Less holidays does not promote real productivity

Improved productivity has been experienced by many progressive countries when employers and employees break the impasse on wage hikes, arrive at the practical reality that imposing minimum wage is not realistic with unprofitable small companies like our micro, small and medium enterprises (MSMEs), of which we have aplenty.

Can reducing paid holidays, which we hear is now being proposed in the Senate, improve the profitability of these companies, or allow them to be able to pay better wages, without real increased productivity? You can spend a much longer time at work, if there is no measure of real productivity and trade-off for doing such, it’s no guarantee of higher productivity of the workers.

A meta study done on more than 50 companies in September 2019 by Chris Doucouliagos, chair of Economics at Deakin Business School in Australia, “suggested that on average, employees at companies with profit-sharing worked harder and smarter, took greater care and felt more connected.”

“We can see at the moment that the government is struggling to improve productivity and wage growth in Australia, and that’s something that many countries are grappling with around the world,” Doucouliagos said.

Profit-sharing could be a positive way to boost the economy and jumpstart stagnant wage growth, according to the Deakin study, looking as well at the effect of profit-sharing on increased employee productivity. A profit-sharing scheme directly links employee compensation to firm profits and/or increased revenues.

In the Philippine situation with a million MSMEs still beleaguered in recouping after COVID-19, the Senate should consider instead legislation to exempt MSMEs from paying the minimum wage and in exchange, there should be a progressive compensation scheme agreed upon and approved by the DOLE, between the management and the labor union, if any, to increase the workers’ take-home pay, based on the gross profit (GP) on the incremental revenues (i.e. net of the cost of sales), say, 30 percent to 50 percent of the GP distributed fairly and equitably to all employees, based on salary levels.

Who can disagree with such a win-win formula for all, encouraging a progressive productivity culture in this country? – Marvel K. Tan, CPA [email protected]