Highlights: Dr. Romulo Miral Jr., OIC Director General of the CPBRD underscored the importance of unemployment and wages in the issue of inclusive growth in his opening remarks.
The presentation on “Jobs Expansion and Development Initiative” by Drs. Aniceto Orbeta and Vic Paqueo contended that generally, minimum wage is not always helpful to the common man and the disadvantaged. Rise in minimum wage results in lower household income by 20% and reduces the demand for workers in small firms. Dr. Paqueo introduced a 12-point strategy called the Jobs Expansion and Development Initiative (JEDI) which aims to expand gainful jobs through increased labor intensive production in manufacturing and to improve investments in education and other human capital development. The authors recommend that government should moderate minimum wage increases and focus on productivity growth to achieve inclusive growth and rapid job creation.
The paper by Dr. Leonardo Lanzona found that minimum wages cause firms to reduce their production workers due to greater marginal costs. Because of this, it is difficult for small firms to mature into larger firms and in the process, the production and demand for production workers go down. Also, larger firms are able to hire some of skilled workers, thereby reducing costs for training and the need for younger and untrained workers.
The main issues raised and addressed during the open forum included the following:
Representatives from the National Wages and Productivity Commission (NWPC) commented that the recommendation to allow companies to hire unskilled workers who voluntarily opt out from the minimum wage requires caution as this can be subject to abuse. They also raised several concerns regarding the recommendation to provide cash grants and other subsidies to poor families, including how to identify the ultra poor, amount of grants to give, the implementing agency, and whether the program will be permanent or temporary. This is because subsidies also redistribute resources in a manner that may be consistent with how market forces will distribute the same and also subsidies once given are difficult to withdraw unless there is a strong political will to do so.
Orbeta replied that based on their evaluation of the conditional cash transfer (CCT) program, they found that there is no evidence of dependency on the program and that beneficiaries who are currently employed want more work, with those who are not employed wanting work as much as non-beneficiaries. This is evidence that the CCT does not develop dependency on the program. On the effects of minimum wage, Lanzona explained that if there are other ways to which firms react to increases in minimum wage, they will not be able to observe the effects that they have described and that their data showed that minimum wage decreases employment. For his part, Dr. Paqueo suggested to do a pilot to identify the consequences of his recommendations. Dr. Miral asked whether this needs legislation in light of the existing laws but the presenters said that there is no need to pass a law to do the pilot study.
On the proposed quadripartite system under the JEDI Plan, Atty. Benediles of the Bureau of Labor Relations commented that under the current tripartite consultation process, the labor sector already includes workers in the informal sector, who are mostly unemployed and underemployed. They said that the challenge is to encourage representatives of the informal sector to become member of the tripartite. The Bureau is also working on dispute resolution and would want to know how to simplify labor disputes and how to make hiring and firing of people flexible as recommended by the study. Dr. Paqueo responded that there are now moves to streamline labor dispute and he would like to look at the proposals of the Bureau.
There was also an observation that the recommendation to moderate the increase in minimum wage leads to contractualization. Dr. Lanzona disagreed and explained that as shown by their data, there was higher incidence of contractualization because of the increases in minimum wage since establishments could not afford to grant them to their employees.
Dean Sale of the UP-SOLAIR commented that while it is easier to blame labor policies, it is better to check the implementation of these policies. Citing data from the DOLE, he said that the problem could be due to the uneven character of growth and development. He added that there is no need for a new law, but only to implement the law the right way.
On training workers to increase their productivity, there was a discussion on who should finance for the training of the workers. The authors said that the government should intervene and provide assistance to workers for their training. Firms should not be expected to train their employees. Related to this, on strengthening unions, the authors said that instead on focusing on wages, labor unions must now focus on keeping their members employed. To achieve this, unions should help train their people the right way to make them increase their productivity. Prepred by Rommel V. Asuncion
Jobs Expansion and Development by Mr. Vicente Paqueo, Ph. D., PIDS, Mr. Aniceto Orbeto, Ph. D., PIDS, Mr. Leonardo A. Lanzano Jr., Ph. D., PIDS
The Effects of Minumum Wageson the Philippine Economy by Mr. Leonardo A. Lanzona, Jr., Ph. D., PIDS