How to really help Filipino workers

Today is International Workers Day, and like in most of the world, it’s Labor Day in the Philippines, a public holiday in honor of our workers. It has become customary for the government to announce something meaningful for the labor sector on this day. Through the years, labor groups have persistently called for mandated national minimum wage increases or across-the-board wage hikes, and see May 1 as a good time to declare such. More often than not, they have been disappointed on this, not because the government is insensitive, but because it knew that persisting economic realities put into question whether mandated wage hikes truly redound to the greatest good for the greatest number.

What are these economic realities that I allude to? In 2003, less than half (48 percent) of those whowere employed were wage and salary workers. With the 10 percent unemployment (or 90 percent employment) rate then, that translated to only 43 percent of the labor force. The greater part comprised self-employed or unpaid family workers and the jobless, who stood to gain nothing from mandated wage hikes. Worse, wage hikes would discourage the creation of more wage-paying jobs, and at worst, provoke layoffs that swell the ranks of the jobless poor.

While the ratios have improved especially in the last seven years, wage and salary workers still account for only 62 percent of all employed workers as of last report (or 58 percent of the labor force, considering unemployment of 5.3 percent). Even now, then, mandated wage hikes would only benefit little over half of our labor force, with some actually put at risk of losing the jobs they have. The rest would either gain nothing or have a harder time finding work. Not surprisingly, it’s the labor unions, whose members already hold wage-paying jobs, who cry out loudest for wage hikes, while the jobless urban and rural poor groups don’t. If wewant to truly help Filipino workers more widely—that is, whether wage workers or not, and whether employed or jobless—something other than wage hikes must be able do it better.

There is evidence that the plight of Filipino workers has been improving in general. As earlier mentioned, there has been a significant rise in the proportion of wage and salary workers from 48 percent in 2003 to 62 percent in 2018, even as this still leaves much to be desired. Correspondingly, unpaid family labor was cut into half in the same period, from 13.3 percent then to 6.5 percent now. Data on index of compensation per employee regularly gathered and reported by the Philippine Statistics Authority also show average wages received to have risen faster in recent years, even with little if any adjustment mandated by the government. This suggests that the stronger economy has not only created more jobs, especially with our fast-growing manufacturing sector that generates formal wage-paying jobs, but has also led to higher average earnings per worker, even without the government pushing it.

Could this be why calls for wage hikes are not as strident as they used to be, and have given way to “endo” or contractual employment as the foremost issue of the day? In recent weeks, expectations appear to have been building up that the President will sign on Labor Day an executive order outlawing all contractual employment, especially the notorious “endo” or “5-5-5” scheme. Such schemes, when used to simply skirt standard requirements of regular employment such as social security and health insurance, are unwarranted and should indeed be banned (as they already are). But somewhere along the way, some groups began pushing even farther and would like virtually all contractual employment outlawed. Yet there must be a reason the government itself is actually the biggest contractual employer in the country, with more than 700,000 contractual and “job order” employees nationwide, or more than a fourth of all government jobs. Overly rigid labor rules could ultimately harm rather than help workers, and actually be antiworker in impact. In the end, it is fostering and sustaining broad-based growth in the Philippine economy that will really help all Filipino workers. It already is.

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