Why I am NOT Favorable To Minimum Wage Increases

THIS IS WHY I AM NOT TOO PABOR IN INCREASING MINIMUM WAGE

Minimum wage increases impact the poor as an income, and businesses that hire MWE to manufacture commodities. If you’re a BPO, you’d hire a college graduate with tech and IT skills and pay them above minimum. If you’re a manufacturing company of canned goods and need only a grade school graduate to pack sardines or bake bread, then obviously the ₱33 per day per worker will drive up your costs quite a bit.

Many employees think that the ₱33 is small and not enough. But for a business that hires 100 workers at 6 days work, that’s an increase of ₱100,000 WITHOUT increasing sales/income, all things being equal.

And it’s not just your regular employees, EVERY SINGLE PART OF YOUR SUPPLY CHAIN —- where you procure your flour, how to deliver it to your factory, the invoices that you use —- all these costs will also increase since these businesses are also paying their people more.

The good thing is, Filipino workers will get almost an ₱1000 wage increase per month. The bad thing is, since everyone gets ₱1000 more, businesses have to increase prices to remain viable. If you don’t increase and keep prices low, your profits will get cut. And if you’re in a low margin business, you might die.

This is why even in my industry, I see low-priced players dying off one by one. Sad part is, they can’t afford it. Rents are increasing year on year. Materials as well. And now, labor. The logic is, since everyone earns ₱1000 more, more people can afford it if I increase my prices by 10%-15%.

Which is why I hate labor groups who keep on asking for ₱750 per day minimum wage. I strongly believe they need to take economics classes. What they want would increase prices significantly, cut headcount significantly and reduce the poor to even be poorer since they’re out of the job! I am so glad most of them didn’t get voted in this May. Napaka irresponsible and short sighted.

While I agree with the more reasonable ₱33 increase per day, I do think people should NOT BE SURPRISED that businesses are using the increased cost as a good reason to jack up their prices. Totoo naman —- tumaas talaga costs nila. Kaya talagang kailangan nila magtaas ng presyo.

WHO IS THE LOSER?

Well, those who are unemployed are the losers. Dati, a household can get away with one breadwinner, and everyone else —- the wife, the brother of wife, and the kids —- can all benefit from one carabao working for the entire family.

Now, such formula do NOT work anymore.

If husband earned ₱13,800, with a ₱33 per day increase, he now earns ₱14,820 per day. But everything else goes up.

What he needs to do is stop complaining because this really happens when wage hikes are announced, and to ask UNEMPLOYED BROTHER IN LAW to actually start working so that the family of 3 adults and 2 kids will not only have ₱15,000 to spend and spread, but to have ₱30,000+++ since more than one abled adult is working for the entire family.

This is the best solution —- Let able bodied adults work instead of wasting their day playing computer games and freeloading from the sole breadwinner. Vices will go down and society will be healthier in terms of mind, values and effort.

This has been the solution talaga to increase family income regardless of the rates, be it at ₱537 per day or ₱570 per day. Even with Sidney and I, we both work. Because it’s a good hedge and it’s good to create jobs for others.

So don’t complain.

You want to increase minimum wage, expect most industries to increase their prices especially those with basic manufacturing. Inflation goes up, and everyone tiis. Because hey, didn’t you want wage increase in the first place?

Mind you, it’s not for all industries. If you’re getting ₱60,000 of pay, you won’t care if minimum wage is increased by ₱1,000. But if you see bread is now ₱45 a loaf instead of ₱35 before, chuck it to rising costs of materials AND labor, which is what labor groups demanded in the first place.

Just a thought.

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3 thoughts on “Why I am NOT Favorable To Minimum Wage Increases

  1. I think this is similar to what the government want, increase the taxes! How about collecting first what should be paid? In the news, it is admitted that BIR and customs office are one of sources of corruption. If only we can minimize, if not eradicate, the corruption, I believe that we will be able to get enough funds for our government to work to the people.

  2. Actually feeling ko dapat government should erase corruption and then they shoulder cost of labor increases and absorb gas increass instead of always pushing the problems to businessmen. Businessmen always absorb cost and loses. It is very irresponsible for them to push all the problems back to businessmen.

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