Calling a spade
Business world, 2 May 2012


There is nothing unexceptionable about PNoy’s goals regarding employment: he wants jobs to be kept, new jobs to be created, workers’ skills upgraded, and labor laws, specifically those regarding the worker welfare, to be strictly implemented. Great. I agree.

I also agree that the P125 per day across-the-board wage hike “demanded” by worker groups will, as he says, not achieve the first goal. I would add that it will not achieve the second goal either.

But the figures he uses to prove his point, with the exception of how many people are added to the labor force every year (a little over 1 million, January 2011 to 2012) are lamentably inaccurate. He should have run them by his sister Pinky Abeleda, who is an economist, and one of my best teaching fellows, before he put them in his speech.

I winced when he used 40 million Filipino workers as the base for how much the proposed wage hike would hurt the Philippines. As he must have been apprised by now, 40 million (40.3 million, January 2012) represents the entire labor force, employed or unemployed, wage or unwaged, skilled or unskilled.

The unemployed will not get a wage, much less a wage hike, so they should be removed. That brings the 40.3 million to 37.4 million as employed labor force.

But of these employed, only 54.8% are wage and salaried, the rest being either self-employed (e.g. most farmers and fisherfolk) or unpaid family workers. And of these wage and salaried, one has to prune them down to include only those who “work for private establishment,” because those who work for private households (domestic help), and government or government corporations do not come under the ambit of the minimum wage law.

Per the January 2012 Labor Force Survey (LFS), those who work for private establishments constitute about 41.6% of the employed labor force.

We’re not done yet. Not all of those who work for private establishments are unskilled labor, who are the direct beneficiaries of the minimum wage law. There are the skilled workers, professionals, clerks, etc. etc .among them, who are not covered by the minimum wage law. Fortunately, LFS results also classify workers according to occupation, and it turns out that 32.1% of the employed labor force are “laborers and unskilled workers.”

Bottom line: At most, 32.1% of our employed labor force — “laborers and unskilled workers” — are covered by the minimum wage law, and should be the proper basis of any calculations. Why “At most?” Because of course, these laborers and unskilled workers could be working for the government or private households, etc.

Which then means that PNoy’s 40 million will now have to be pared down to at most 12 million.

But of course, the employers’ outlay will have to cover more than that, because increasing the minimum wage for unskilled workers will logically result in employers having to increase the salaries of their skilled workers, to prevent the situation where unskilled workers are getting more than their skilled counterparts.

By the way, PNoy also gives an estimate of how many of the employed work force would lose their jobs as a result of a P125 minimum wage hike: 527,000 jobs. How this was estimated, I haven’t a clue, and can’t find one either. Perhaps the National Economic and Development Authority could supply one. In any case, that would represent 4.4% of the estimate of unskilled laborers (12 million) that was arrived at in the above computations, which sounds reasonable to me.

At least, much more reasonable than another set of figures PNoy threw at us in the same speech, when he talked about the implications of House Bill No. 4583 — aimed at giving security of tenure to workers. He said that while it would benefit 1.8 million workers, it would result in job losses for — are you ready? — 10.3 million workers.

Are whoever made these calculations out of their minds? Ten point three million people losing jobs means more than half of our employed labor force who are waged and salaried (20.49 million workers as of January this year).

Good grief. I don’t know what assumptions were used to get the figure, but off hand they have to be ridiculous. I don’t buy any of it. PNoy should send his people back to the drawing board — or ask Pinky Abeleda to look at the figures he was provided with.

One can sympathize with employers who have a hard time getting rid of inefficient employees who, because of their “permanent status” are very hard to get rid of. On the other hand, one must ensure that employees, no matter how temporary, must have safety net privileges — membership in the Social Security System (SSS), health insurance, etc. — which they can carry with them wherever they go. That’s the balance that PNoy has to strive for.

As to the rest of his prepared speech — I give him high scores for setting aside educational funds for Government Service Insurance System and SSS members and their families. That is consistent with the Pantawid Pamilya principle that education is the best income equalizer, and will break any intergenerational transfer of poverty.

Now to address his off-the-cuff remarks. Of course everything is always a balancing act. But there must always be, as the Church calls it, the preferential option for the poor. Those who have less in life should have more in law. And that’s what PNoy doesn’t seem to get. That’s my first beef.

My second beef concerns a specific application of his balancing act — the one regarding the Philippine Airlines Employees’ Association (PALEA). It seems that he is balancing the need to repatriate, at a moment’s notice, workers in the Middle East and Africa who may get caught in domestic troubles there with the need to protect the PALEA members. Huh?

To hear him say it, the logic is that if PALEA members get their wish (no outsourcing — and they are right, because PAL has completely distorted the concept of outsourcing), then there will be no more PAL, and if there is no more PAL, then the government cannot repatriate overseas workers who need to be brought home quickly.

Hasn’t he heard of Cebu Pacific? Hasn’t he heard of charter flights offered by any number of airlines? Good grief.