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.

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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.

46 Replies to “Should we junk the minimum wage law in the Philippines?”

  1. “We already know the solution to the Philippines’ supply debacle: population control.”

    With this statement, you just made it sound that humans are mere commodities. Surplus and scarcity. Wow.

    1. Nice piece Benigno0,

      Labor is a commodity and like that it is a matter of supply and demand. Say for example I barrow 20000 peso and want to work it off in barter. Now minimum wage law says I can’t do that because anyone who works must be paid a minimum compensation. But I can’t get a loan because I don’t have a job but I can’t get a job because nobody wants to give me a job because of my skill level. Also think of all the people that companies may hire if they could test unskilled workers and pay them a small amount for their time and then give them a raise if they work out. Under minimum wage an employer can’t afford to take a risk at the higher rate and have to wait until they find someone. The government should be working on laws that make to work place safe and that people are not abuse. Let the market work it out because a company that pays little or nothing will not find works to do a good job and will go out of business. Free markets let you prosper restricted market don’t.

      1. Indeed. Let the people decide how much — or how little — money they are willing to get out of their banig for. Over-regulation merely creates black markets outside of the radar of the state’s ability to govern where it matters.

  2. Job opportunities

    18,000 criminals – appointments may 13
    Child laborers – 3.3 million ( current)
    Sex workers (domestic) – 1 million (current)
    Sex workers abroad – 2.5 million (current)
    Hustlers – unlimited

  3. Since when does minimum wage actually matters. When a country struggles with unemployment, underemployment and OFW dependence, it just don’t seem that big of a deal now.

    You don’t “fix” a sickness by treating the symptom. This is just another excuse of our government to say that they are doing “something” to make themselves look good.

  4. What do you guys think about this: Instead of a minimum wage across the board, a collective bargaining agreement to establish a basic income depending on the industry or profession one works in. The “minimum wage” concept by nature pigeonholes everyone into the same category regardless of training, experience and skill level. That has always seemed to me to be inequitable and unfair. The collective bargaining model would make worker compensation more commensurate to the capabilities of the individual.

    1. Sounds sensible. An across-the-board “minimum wage” penalises or subsidises specific industries regardless of the scarcity or abundance of their respective labour supplies.

      But then why go through an artificial exercise of setting benchmarks from the top-down when there already exists a more efficient and more reliable bottom-up mechanism for setting labour rates? It’s called the free market.

      1. IDK how the trading in the fils is handled, I really do not. But in the West, the ‘free-market’ no longer exists, that is a FACT.

        The idea espoused above is a fantasy that will NEVER happen.

      2. “Let the people decide how much — or how little — money they are willing to get out of their banig for.”

        This is what I mean. Implementing a collective bargaining agreement model instead of an across the board minimum wage approaches the issue from the bottom up. This will do three things:

        First, the responsibility shifts to the workers/professionals and employers from a specific industry to work out an equitable wage structure. In the current system — where the state sets a universal minimum standard from the top down — decisions are heavily influenced by political lobbies on either side; it’s become a matter of influence pending.

        Second, a CBA derived wage should more closely reflect industry specific requirements without overstating or (conversely) diminishing labor’s worth. As Jim Arndt stated in his comment, it’s in the best interests of both labor and business owners to come to an arrangement that everyone can live with. Otherwise, everyone loses.

        Third, it lessens the need for government intervention other than as an arbiter to ensure that the CBA is a civil affair. Less regulation allows free market forces to determine the outcome, not political interest.

        I’m not completely certain, but I believe the first incidence setting a minimum wage was based on the CBA model. And this was implemented in Australia and New Zealand at the end of the 19th century. Rather than set a universal minimum, they set the basic wage for specific industries through collective agreement.

        Also, the CBA model is in effect in Germany and northern European nations like Sweden and Denmark. It isn’t a newfangled notion.

    2. A collective bargaining agreement usually implies labor unions – an entity employers love to hate, doesn’t it?

      The issue then will become how well the Philippine government (and the vested interests behind it) can handle it.

      1. The CBA… something that should be enforced, but was conveniently disregarded by those who closed up RPN 9 and made over 200 people lose their jobs. And what the over 200 were paid was way below the CBA’s ruling.

      2. We deal with labor unions now. In principle, they are a good thing. Workers form unions with the idea of achieving common goals such as protecting the integrity of its trade, achieving higher pay, and maintaining or improving working conditions.

        The problem we have with unions today stems from union leadership engaging in other interests far removed from employee welfare. In the US for example, it’s been well documented how unions campaign for certain candidates in order to receive subsidies from the federal government. Money which in turn gets funneled back to those candidates in the form of “donations” or “campaign contributions.”

        Using the CBA model forces the union to focus on engaging with employers instead of lobbying or paying off politicians to decide in their favor.

    3. Dream on, that will never happen.
      the minimum wage is already too high at P400. that’s $10/day or about 9X’s less than the West’s countries. it is obvious that the RP has been selected for certain low-wage jobs EXACTLY because the employers can pay a Filipino soooo badly, it will not change…..GUARANTEED.
      and since you chose to rain on my parade, consider this WAR John-boy. Your idea ain’t gonna happen and that IS A FACT.we get to watch your fantasy not happen, nice one!

    4. Dream on, that will never happen.
      the minimum wage is already too high at P400. that’s $10/day or about 9X’s less than the West’s countries. it is obvious that the RP has been selected for certain low-wage jobs EXACTLY because the employers can pay a Filipino soooo badly, it will not change…..GUARANTEED.
      we get to watch your fantasy not happen, nice one!

  5. I think the wage workers should find other means to earn, or start a business. Ideally, the workers should earn at least on minimum wage to meet their basic necessities, but in reality employers will either (1) limit the number of employees, (2) lay off some people, (3) move to other country where workers are paid less, (4) influence politicians to favor them.

    This is a eternal struggle where workers in most cases lose.

  6. After abolishing Minimum wage, what’s next? Slavery? Allowing Child Labor? Minimum wage did not start in any communist country.

    In fact most of the capitalistic countries have Minimum wage. Why whine on minimum wage when it is already small in the Philippines and it’s not even the issue.

    What is demand (in supply/demand) when only the few rich can afford it.

        1. And having minimum wage is not instrumental to their success. It may show that minimum wage itself may not be a real solution to wage problems. It seems to be only a short-term solution. Perhaps what Singapore did to expand its job market and make jobs outnumber workers is the solution.

        1. Miauw Ming,

          That’s an apples-to-oranges comparison isn’t it? Somalia has a drastically different situation from Singapore.

          There hasn’t been a functioning government since 1991. Despite this, there is a very healthy informal economy. Granted, a large part of the income in the country is the result of criminal economy such as piracy. But Somalia has accomplished a lot in agri-business, money transfer services in the absence of a formal banking sector, telecommunications and media, and the hospitality sector. They’ve even managed a steady GDP growth rate of 2-3% over the last three years. Some economists attribute this to the Somalis’ resilience and their collective deference to the informal, customary laws of the society that work in place of a formal legal system.

          If there’s one thing we can take away from Somalia’s successful free market, it’s that less direct intervention by the state has produced remarkable growth even if prospects are severely limited by the internal fighting and the chaos of having a total lack of government.

    1. U R Correct, Sir!!!! the minimum wage was intro’ed to prevent worker abuse in the USA. if the Corporations that run the world had their way, everyone would work for NOTHING!!!! the ‘outsourcing’ of jobs from the West is the direct un-doing of the middle-class’s in the U.K., Ireland,mainland Europe and the U.S.A..The EXACT reason of the ‘outsourcing’ is to exploit slave labor pools in developing countries that have massive population explosions. the fils is fertile territory for such an undertaking.
      Its the old: “Find a chump who will do the job for free” routine.

    2. “(T)he 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.”

      The wage structure IS the whole issue. The cost of production is always increasing, be it from scarcity of resources or labor, or any number of factors in the process. That’s a given. If the minimum wage you set for the workplace is sufficiently high to price you out of the market, then it becomes the problem; it doesn’t preserve the workers’ interests. You’d need to re-evaluate the concept of minimum wage — do away with it all together and/or replace it with some other scheme more appropriate to the prevailing economic conditions.

  7. Instead of increasing or removing minimum wage, wouldn’t it be more proper to lower the cost of living? For example by lowering the cost of electricity for everyone by removing/remaking EPIRA, it would benefit the majority.

    1. Shouldn’t the solution be to RAISE THE STANDARD OF LIVING? Eventually the costs of all goods and services goes up. Our focus should be on improving the economic status of people in the community. Not seeking the lowest common denominator.

      1. You really do not get it. it is all about finding a slave to do the job for as little as possible. Why do you think JP Morgan,Wells fargo, Allstate ins. co. are in the Fils? because they care about Filipino’s? if Wells Fargo could get a person too work and pay Wells Fargo for the privledge of doing that job, they would find a way to export the job to Mars!

        believe it or not(and ,yes I don’t care if you believe it or not), the wage laws are a snide way to tell the people that is all they are going to get. IF they are lucky enough to find a job.

        and YOU think I fantasize????
        YOU really do make me laugh. BWAHAHAHAHAH!!!! collective what?

      1. I am dealing with an arrogant ,thinks he ‘knows-it-all’, flip the script !@#$@bag who deserves every intellectual slap in the mug he gets.

        BTW, this is an internet blog forum where no one has to use his real name or idea’s and should not be taken all to seriously.
        as u kno, nothing discussed here bears no weighty consequences what-so-ever on the world outside of it, so lighten up. it doesn’t matter.

    2. the ENRON scandal is alive and well in the philippines. I have seen the speculators on ABS-CBN bragging about the huge profits they are raking in. $247 Billion(Dollars!) and the President says ‘He can not do anything about it’ in his speeches in places like Davao where people are starving.

      You raise a perfect example of how the energy sector is completely monopolized and controlled and the people are collectively abused.

    3. phantonmagnum,

      Just to clarify — legislating price controls from the top have never really worked. Especially if there are no corresponding efforts to increase production. Successful economies have more efficient, productive industries capable of withstanding changes in the market. The level of wealth, comfort, material goods and necessities available is high. Consequently, they have both a higher standard of living as well as a higher COST of living. And while the cost of goods and services rises, they will remain affordable for as long as production is high and the economy remains robust.

  8. “Worker unite. You have nothing to lose but your chains.”From the Communist Manifesto. Unfortunately, nations that turned communist; their peoples’ chains were replaced by: Gulags, Slave Labor concentration camps, murderous dictators like Stalin and Pol Pot. Family dynasties like the Castros of Cuba, and the Kim Jung On of North Korea. Communism is an obsolete ideoleogy. It did not work. Leaders in the Politburo, lived like nobles. While the rest of their people are supplied with meager rations. Our nation is governed by Feudal Monopolistic Oligarchy. It is like communism also. Family dynasty is there. OFW slave workers are there. Leaders with condimunium in New York, U.S.A. are there. Leaders like Aquino, who swindled the government of Hacienda Luisita is there….To Hell with idiotic ideologies. They’ve produced: Stalin, Pol Pot, Hitler, Mao Tse Tung, Aquinos, etc…

    1. Ideologies are just ideas that propel thieves to the pinnacle of power where they can steal all that is not nailed down.
      The filippines is a feudalistic society masquerading as a sort of democracy modeled after the USA/UK.
      it might do better as two, or better yet, three separate countries! That might cut down on the corruption a bit,WAIT? probably not, but the taxes might get distributed a bit more equally.

  9. Minimum wage should be a safety net, not a prescription for exploitation.
    Good companies want to attract and retain the best but the sad fact is that the economy in the philippines does not promote competitiveness and innovation, and just as important the culture does not respect the individual but sees workers as a disposable commodity not to invest in but simply replace periodically, so the result is a drive to the bottom – i.e cost driven, short term, low quality where the need for good management is replaced by an autocratic style.
    Inevitably this promotes an us/them scenario but with the balance of supply/demand, labour law etc in favour of the employers then power is limited.
    A major step forward would be to end the practice of contractualisation and use of ‘training’ period at 75% of minimum wage – with very few trainees actually taken on, and even then it is onky on 5 month cintract basis.
    Supply certainly exceeds demand but that is not an excuse for many of the practices, and will not pay long term dividends.

    1. the exploitation of the excess labor market in the country is at a despicable level. a whole new mall was built in CDO, across the street from Gaisano Mall, w/’trainee’ labor.THE ENTIRE PROJECT was built w/virtually no labor costs. Guys were told that if they ‘worked out’ after 30 days they would be hired at ‘full-time’ wages. Virtually 99% of the men were not hired after 30 days FREE work, and some even did 60-90 days!
      the same is happening with nurses who are told they are trainees and getting valuable work ‘experience’ they can use when they get work over-seas (jobs they will not be qualified for due to the substandard education they pay for).
      This practice happens nation-wide and no one in the gov’t. has even taken step-one to stop it.

      1. Interesting, can you back this up with evidence? Cause this is something that should really be looked upon. BTW, such practices happen virtually in all parts of the country. I watched a documentary once that employs child labor in which the daily wage amounts to 20-40 a day.
        Maybe that “free labor” at least have some form of subsistent allowance.

  10. maybe the benchmark figures are
    what % is minimum wage of average salaries
    what % of working population/employees are on minimum wage.
    cant find figures for phlippines.
    not best comparison but in uk 10% of workers on minimum wage – mainly london – retail/ restaurants/service ( tips can make a big difference there)

  11. If I am a foreign company, I will definitely not invest in the Philippines and if I will do so, I will make sure that I’ll be capital intensive as much as possible! The labor cost here is so high that the real wage of an ordinary Filipino should have been P200.

    And I think, this will even apply to domestic companies.

    Seriously, what is the worth of having high minimum wage when the employment opportunities are scared away. So what do really the people want? Greed for the few, or employment for everyone. Don’t say that this is the case because we have already seen a lot of OFWs across the globe and I am not proud of that because they are most often abused.

    Examples of labor intensive companies that LEFT the Philippines and also left thousands of people jobless.
    Johnson and Johnson, Toyota, Singer sewing machines, Some clothing brands, etc..

    So what does the Filipino people really want? An imaginary high paying job or a real employment for everyone. (Pls pick the latter or you’ll scare me away again)

    I am an investor, a businessman, and an employer.. How will you attract me to offer you employment?

    1. Why would you want to invest in this country anyway? Are you quite mad?
      Didn’t you know that you need a Filipino partner and that he will be the major controlling shareholder of your capital to the order of 60-40% !!
      What foreign investor in his right mind would invest here just knowing that?
      There are many other draconian law oddities that should chase away foreign investment that can afford to pay a good wage without effecting an excellent profit.
      The problem is the Chinese business community do not wish to deal with such competition!!
      Its very clever really.

  12. i say JUNK IT!! Why…. coz a lot of the so called inveators and businessmen are giving the so called minimum wage to their workers. Everybody knows that. In a country where the businessmen and capitalist rules…. Must we still expect? Toughluck.

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