Labor force: Be reasonable

Amid the noise, furor and innuendos brought about by the announcement by Mayor Edgar Labella during the Executive-Legislative Agenda Formulation Workshop last September 25 that the “Cebu City government is partnering with SM Supermarket on its plan to modernize the Carbon Public Market Complex”, other important issues or developments were buried deep down in our list of priorities.

One of these is the pending petition by a certain labor coalition for across-the-board minimum daily wage increase.

To recall, the Regional Tripartite Wages and Productivity Board-7 (RTWPB) on June 18, 2018 under Wage Order No. ROVII-21 approved the minimum wage of P386 in Central Visayas. Then, recently, in just a little over a year from the previously approved raise, the labor group, Cebu Labor Coalition (CELAC), filed for a wage hike petition again to the tune of P341.75 across-the-board wage adjustment or almost doubling the current pay.

As expected, the Cebu Chamber of Commerce and Industry (CCCI), through its President, aired its opposition to such round of wage increase saying that such move is counterproductive.

We can’t help but agree to the position of the CCCI. The arguments that it has put forward have factual basis. True enough, we are lagging behind in business and productivity surveys globally. For one, in the “ease of doing business surveys”, we are always in the bottom half of the economies surveyed. The same is true with productivity surveys. To put it bluntly, our competitiveness efforts leave much to be desired. Consequently, foreign direct investments (FDIs) are coming in trickles.

Yet, as has been customary, expect that this demand, which will definitely gain support from the other labor unions and coalitions, will soon be more intense the coming weeks. Since this demand will be so unrealistic, as usual, the petitioned amount will not be granted. Thus, similar to what had always happened, these labor unions or coalitions will again call for the abolition of the country’s RTWPBs.

Most of us, however, are in agreement that all these demands are clothed with so much hyperboles. They (labor unions and their officers) usually do this to stay relevant to their union dues-paying members. These swaggers though had brought about negative consequences especially to the new entrants and the unemployed in the labor market.

For one, the constant increases in the minimum wages demanded by the labor unions is the main reason the unemployment rate of the young workers is very high. Logically, when non-productivity related increases are imposed, the unskilled and inexperienced workers or new graduates will suffer the major blow. With the same amount of pay, companies will definitely go for skilled and experienced ones.

Absolutely. Why? This is because the unskilled and inexperienced workers will turn out to be expensive. Therefore, the possibility they won’t get employed is imminent. As a result, some unskilled or new entrants in the labor market are not given the opportunity to work and gain experiences. These are supposed to be valuable experiences that are really necessary for them to use as bargaining chips for higher pay demands in the future. Unfortunately too, they will miss the opportunity to earn while learning skills and gaining experiences.

On the other hand, labor unions might have considered largely the higher than usual wages of those in the business process outsourcing (BPO) industry as basis for the current demand.  True enough, the workforce in this industry are really paid beyond the minimum wage. Yes, these BPOs are also in need of more workers. Unfortunately, however, these BPOs could hardly get from the labor markets the quality and the skills they badly need. Simply put, there are more mismatches than hires. Why? This sector employs not only the well-educated but the best among them. Thus, they don’t directly give opportunities to individuals who are among the unskilled or the inadequately educated.

If there is something we should learn, this industry (BPO) reveals that wages always boil down to supply and demand. It simply means, when labor (with quality and skills) is scarce (as in the case of BPOs), the wages are high. When there is oversupply of labor (especially those not highly skilled), as in the case of the other sectors, wages are low.

Therefore, there is a need for more investments in all sectors. When that happens, the demand for labor will absolutely increase. As these companies scramble for manpower complement, wages will likely increase.

So that, the most logical thing to do is for the labor sector to help create more jobs by encouraging more local and foreign investments in all sectors (not just BPOs). How? By being reasonable in their demands for wage increases.