Maximize wages, minimize contractualizations

May 1, every year, is celebrated in many parts of the world, including the Philippines, as Labor Day. Year in and year out, the same laments are raised by workers and the same objections are put forth by employers and, at times, by the government. This year, the clamor for two demands: (1) to increase the minimum wage, and (2) to abolish contractualization, did not end on May 1, 2023. It has multiplied and amplified.

THE REGIONAL TRIPARTITE WAGES AND PRODUCTIVITY BOARDS have been delegated by Congress, under Republic Act No. 6727, the authority to fix the minimum wages for the private sector in the different parts of the country. The boards are composed of representatives from the government, the employers, and the workers. In the fixing of wages, public hearings are conducted. And given the varying economic and labor situations in the various regions, the wage rates authorized by the boards differ from region to region.

At present, the highest daily rates are in the National Capital Region at P570 for nonagricultural workers and the lowest are in the Bangsamoro Autonomous Region in Muslim Mindanao at P341. Agricultural workers are getting even less. Because of spiraling inflation (the rise in the cost of goods and services, like food, transportation, electricity, water, etc.), the members of the Senate and the House of Representatives have filed bills to increase wages nationally ranging from about P150 to P750 a day.

WHILE I AGREE THAT WAGES SHOULD BE MAXIMIZED as much as possible, I disagree that Congress should legislate an across-the-board increase. This knee-jerk reaction of our honorable lawmakers contravenes the wisdom of depoliticizing wages through the different wage boards, and of recognizing the different economic and labor conditions prevailing in various parts of the country. A one-size-fits-all response is never wise or beneficial in the long term.

I concur with the respected Foundation for Economic Freedom (FEF) in its opposition to the proposed bills that “do not take into consideration the varying local and industry conditions.” And beyond the FEF’s stand, I believe the wage boards should be empowered to act speedily in adjusting wages.

Yes, the wage boards have been wickedly slow in adjusting wages. The restrictions and limitations imposed by the law on their duties and powers (like wage adjustment can be made only once a year) make them look like decadent relics.

Consequently, if Congress must respond—as I respectfully believe it should—to the need to maximize wages, it should amend the authority, duties, and powers of the wage boards, instead of directly interfering in a framework that has withstood the test of time and only needs to be empowered to meet new and unforeseen expansions in this AI age.

Moreover, with due respect, the government—especially Congress—should also look into its own backyard and maximize the pay of government employees. Why should the private sector carry solely the burden of easing the pains of our people? In fact, IMHO, the government should set the example. Instead of muscling with its raw power, it should walk its talk.

As to the economists’ objection that wage increases would merely worsen inflation by circulating more cash, I can only refer the critics to Inquirer chair Raul J. Palabrica’s column (5/2/23) that the government’s subsidy programs to the poor amounting to several billions yearly and for 2023 alone, a whopping P20.5 billion, have not resulted in the unexpected and sudden rise of inflation. Simply stated, the inflationary effect of reasonable wage increases can be solved by our economists.

THE ABOLITION OF CONTRACTUALIZATION, on the other hand, is good only for grandstanding. It stands no chance of success. It is simply unrealistic and impractical because there are certain jobs that, by their nature and purpose, are seasonal (like farmworkers who work only during the harvest season), or project-oriented (like masons or carpenters hired to build or repair a specific house). Even past president Rodrigo Duterte, despite his election braggadocio of abolishing contractualization, did not and simply could not fulfill his election promise.

Of course, the abuse of contractualization, like the so-called “endo” or “5-5-5” in which the services of workers are ended after their probationary period of five months, and thereafter rehired directly or indirectly for another five months, and then again fired only to be rehired in endless cycles of five months (hence, the terms endo and 5-5-5) to evade the law requiring regularization after six months is an abhorrent and illegal circumvention of the law.

In several past columns (the latest being on March 27, 2022), I have written about how the Constitution, the Congress, and the Supreme Court, have been protective and promotive of labor, even more than the US Constitution, the US Congress, and the US Supreme Court. And I will no longer repeat them here. Suffice it to say that while legal contractualization cannot be abolished, it should be minimized only to what is truly legal and constitutional.

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