The Minimum Wage Puzzle

front20130226Although the topic has not appeared on the media radar for a couple months, the always-contentious issue of the minimum wage will again be front-page news in 2013, if everything goes according to the Aquino Administration’s plans. By the end of this year, the government has a goal to replace the current minimum wage regulations with a two-tiered system that will consist of a low floor wage for new and unskilled workers, with a productivity-based wage tier for more experienced workers. The second, higher tier will reportedly be regulated by wage advisories for specific business sectors, based on indicators such as labor productivity growth, business outlook, labor market conditions, and other factors.

Once again, the administration of President Benigno S Aquino 3rd has demonstrated its uncanny ability to take an issue that has some merit and find a way to micromanage any possible benefit to anyone out of it. The original intention of the two-tiered system was to offer a compromise to the strident calls for a P125 across-the-board hike in the minimum wage in the first few months of Aquino’s term, an idea which was naturally unpopular with employers. The solution, however, won’t work for anyone; the lowest-paid workers, the ones who actually get the most benefit from mandated minimum wages, will likely be paid even less under the new scheme, while employers will be saddled with another layer of impractical government regulation that discourages job or wage growth.

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About BenK

I write a column for The Manila Times on Tuesdays, Thursdays, and Saturdays. Most of the energy sector and the heads of several government agencies probably wish I didn't.

3 Comments on “The Minimum Wage Puzzle”

  1. very intetesting – and not a surprise.
    added to that is many low skilled and even semi-skilled workers
    in SM and 5 star hotels tell me that the policy is to recruit on less than 6 month contracts and then replace, or employ on 75% of minimum wage.
    slave labour continues. no wonder ofw’s put up with so much hardship and abuse and still see that as preferable to working in the philippines.
    it is not inly human rights which is a disgrace, but human dignity.

  2. i was just speaking to manager at the bar in hotel – 5 star.
    he gets 12,000 pesos a month but 3,000 pesos deduction – net 9,000.
    no way he will vote for team p-noy since he says everything has got worse in last three years, not just salary remaining static, but higher deductions and far higher commodity/electric prices.
    contrast that with my doctor who gets 250,000 a month ( i inow since she told me), but if like the rest of doctors and i guess lawyers only claims to get 9,000 ( average bir submission for doctors) and therefore ostensibly pays next to nothing.
    the poor subsidise the rich. crazy

  3. The stupidity of Aquino and his advisers once again rears its ugly head.

    The problem is Aquino and the KKK are all rent-seekers living off the income of others, like most of the oligarchs and their inbred spawn.

    As a result, they have no idea how the real world works. If they did they would do what every other country in the region has done and pursue economic liberalisation. Get the oligarch-protecting anti-FDI provisions out of the Constitution and watch FDI actually come here and create jobs. Then there won’t be any need for such stupid, ill-thought out rulings from an incompetent rent-seeking maladministration.

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