Labor Day and Wage Increase

Labor Day rally

Demanding something that almost impossible to be given by the businesses and the government.

Today May 1 here in the Philippines and other countries is celebrating the day of the workers. It is very obvious for the many years that the workers are fighting for a better pay of their works however some of their demands are unrealistic and cannot be given away by the employers and by the government for simple reasons.

For more than two decades, labor union groups sought a legislated wage increase of Php125 basing to the forces of inflation instead of productivity, no wonder that the Philippines has the highest labor cost in Asia that turns off businesses especially foreign to set-up here in our country which results to fewer jobs to millions of Filipinos. Labor union groups never think the implication of increasing the daily wages to Php125 would result to higher inflation which means higher prices for basic goods and higher prices for services while the productivity side is stagnating due to our anti-business environment.

I am not against to any wage increases however increasing wage should not make the businesses, the consumers, and the workers themselves more problematic in a long-run. Wage increases should reflect to total factor productivity of our economic cycle not though the price inflation as a basis of wage increase. Minimum wage system that decided by the government is just killing small-scale businesses while benefiting the larger ones which is stiffing competition. Stiffing competition in the job market results to fewer job opportunity options to anyone and thus tends the wages to stagnant.

To have a better wage increase in a long-run, we must market forces to dictate how much the wages should be received by the workers and to achieve that, we should let real competition to exist in the job market by creating more business-friendly laws like letting investors especially foreign to set-up freely without much restrictions from the government. Having a real competition would force each companies who are existing right now to increase the wages of their workers in order to maintain their workers from competing companies.

So, in celebration of Labor Day, we must encourage our government to create more business-friendly laws so that more workers can choose their options for high-paying jobs.