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Business

Wages, inflation, and cause and effect

INTROSPECTIVE - Tony F. Katigbak - The Philippine Star

What is a recipe for a shaky growing economy? It’s the fact that people are spending more to buy essential goods and services to live at higher prices, but continue to sink into debt and financial instability to do it. This is what seems to be happening as we continue economic recovery, but fail to increase the basic wages while doing it.

After all, similar to the law of supply and demand and causality, one thing improving without the other will lead to an imbalance that will one day implode. And we are seeing out – quickly for most families and slower for others.

Poverty has increased significantly since the global pandemic. While there is work to be found these days – the truth is that salaries continue to go down, and income is regularly declining. This is all happening at a time when the cost of living has never been higher. What will we expect, except a growing imbalance that threatens to topple over any day?

Even before, we debated the livability of minimum wage, with people saying a family of four can live on P12,000 a month – an earmark of minimum wage earners. We all know this is ludicrous (it was even then and even more so now), and many wage-givers for minimum-salary jobs have failed to reexamine that this is no longer enough – especially now.

However, again – supply and demand. Because many Filipinos need the money so badly, they can’t afford to risk losing even a job that pays them so little. So, they continue. Those who were lucky enough or had enough time squeezed in more extra jobs to supplement their income, but even this was barely enough to make ends meet.

Since coming out of the pandemic, this has not improved. If anything, it has gotten even harder. As the prices of commodities continue to increase throughout the past year and income has been on the decline, more Filipinos have had to increase their borrowings just to be able to keep up. And this doesn’t look like it will change any time soon.

A recent survey showed that inflation and the impact of the pandemic have resulted in accelerated interest and borrowing in the past year, and growing Filipino debt. It is getting bigger and bigger. While this has allowed many families to survive daily, it leaves them with rocky tomorrows built on a house of card of debt that can fall at any time.

The survey revealed that Filipinos are borrowing more frequently than before because over 24 percent have noted that the money they earn is not enough or barely enough for essentials. So, they are forced to think about today and put off worrying about tomorrow for another day. While this works in the short run, it’s not sustainable and will be an even bigger problem in the long run.

Where does this leave the working Filipino – on shaky ground, to say the least? While there is still a number of Filipino who need work badly, they will continue to accept a minimum wage that can’t support basic living and will continue to find alternative ways to try to supplement their income.

We need to focus on finding ways to bridge this divide. Increased spending, coupled with increased borrowing isn’t giving the country the financial boost and economic recovery comeback we are hoping to achieve. If anything, it’s built on a shaky foundation that can, and most likely, will collapse in the future.

We must find long-term sustainable solutions if we want our economy to recover. This has been a problem in most of our COVID response programs. Sustainability has always been a problem with government support and subsidies, especially in a country like ours with limited resources and numerous subsidized programs that require extensive funding.

It is not just for food, but also programs like education and healthcare that are impacted by sustainability woes. While many programs are launched to provide essential goods, schooling or medical care to Filipinos in need, these aren’t sustainable due to funding and other problems.

It isn’t just everyday Filipinos falling into debt to survive. The country is also struggling to buoy the economy, and with the accumulated massive debt on the recovery journey. An approach that also isn’t sustainable.

So, what do we do now? It’s like we are caught between a rock and a hard place trying to figure out what to do next. There isn’t a straightforward answer. This will take a lot of changes ranging from wage increase support, subsidies, more robust economic policies, infrastructure, and so much more. It’s not a simple overnight fix, but a multi-step journey.

We must start now if we want to see changes sometime soon. We can’t just keep maintaining the status quo because the status quo is just not cutting it anymore. It’s time we start thinking about the future -- and not just today -- because if we do, we can begin to make fundamental changes that will hopefully positively impact the lives of every Filipino and their ability to meet their basic needs.

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