Should we junk the minimum wage law in the Philippines?

Workers unite! But then ask the question: Unite to do what exactly? That slogan has been around for more than two centuries now, and though many “activist” elements out there might want us to believe that their “fight” was what put iPhones in our hands, WiFI signals in our living rooms, and Hong Kong vacations on our calendars that we now feel we are entitled to, perhaps it is time to revisit the real mechanism at work that determines the real value of labour.

minimum_wage_lawWhat determines the value of compensation one can demand for an amount of work one delivers to one’s employer?

The thinking that went into answering the above simple question, it seems, has for so long been delegated to the obsolete rhetoric of our Leftist comrades. It has resulted in a legislative construct that we now take for granted — the concept of “minimum wage”. In essence the laws that draw on this quaint concept uphold the “social justice” in a dollar or peso figure we arbitrary place on what we think the value of labour should be.

Will lives of ordinary folk sustainably improve on the basis of what a bunch of armchair economists think a worker’s worth should be?

History has shown that this is not the case. Indeed, Philippine President Benigno Simeon “BS” Aquino III himself thought that Filipino lives should have improved by now, three years into his “presidency”. He so believed in it that he went out of his way to undermine people like Arsenio Balisacan who happened to be in the unfortunate position of having to tell The Anointed One that what one thinks should be so is not necessarily consistent with what is real — that all the much-trumpeted “economic growth” the Philippines is supposedly raking in is not changing the wretched lives of the majority of Filipinos.

It’s quite simple: You cannot manage economic realities by edict. In much the same way you cannot legislate good manners, you certainly cannot legislate an egalitarian society. The notion of “minimum wage”, if we step back far enough from the noise of commie rhetoric is, in essence, a flawed and dead-end deal.

Indeed, we can take some interesting lessons from English history where at one time English labour was so valuable following the decimation of her majesty’s population by the plague, that her feudal administrators at the time actually had to implement a maximum wage law to curb skyrocketing labour costs…

Yet the pestilence had slow but permanent effects on English society. The shortage of labour [as a result of the population decline] had the immediate result of increasing both the level of wages and the chances of employment. The phenomenon of the landless or impoverished peasant wholly disappeared. But the rising demands of the working people who had survived, their worth now doubled by the epidemic, provoked a reaction from the landowners and magnates. The knights of the shires, in particular, perceived a threat to good order.

An Ordinance of Labourers was passed by a parliament in 1349, forbidding employers to pay more for labour than they had before the pestilence. The same Act deemed that it was illegal for an unemployed man to refuse work. The measures were not realistic. Many workers and their families could simply move to another district and to a more generous employer who was willing to ignore the law. Some migrated to towns, for example, where there was great demand for manual labourers such as masons and carpenters. A ploughman might become a tiler. More than enough work was available.

[…]

Many younger people now possessed their own holdings of land. And the best land did not remain vacant for long. There had once been too many farmers and labourers working too little soil, but now they were dispersed over the countryside.

[NB: Above is an excerpt from the book The History of England – Foundation by Peter Ackroyd.]

The lesson here is simple, really. You just need to understand the law of supply and demand. Filipino workers will always be “victims” because, again quite simply, there are just too many of them from which employers can choose from. As I had earlier tweeted: The reason Pinoy workers are abused is because there is an enormous supply waiting to take any job vacated by “victims”.

We already know the solution to the Philippines’ supply debacle: population control. Ironically, it is commies like Risa Hontiveros who championed “advocacies” to address that little issue. The other side of the equation is demand. Perhaps the SIMPLE reason there is no domestic demand for Pinoy workers is because what we think their blood and sweat is worth within our own islands does not line up with what the market thinks it is actually worth.

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Post Author: benign0

benign0 is the Webmaster of GetRealPhilippines.com.