Today, we have a fixed minimum wage that almost nobody observes. It is enforced without regard to the affordability of the employer to pay. It is more of a political appeasement that stultifies the income of our workers and nullifies our long-range economic development goal. Legislated wage has no consideration to the workers’ length of service much that it applies irrespective of whether one is regular, permanent, casual or temporary. It is costly because employers are forced to make wage adjustment to prevent wage distortion without considering the skill, experience and productive output of the individual worker to merit the grant of adjusted wage.
Legislated wage is now proving to be expensive because employers engaging the services of contracted-out workers remain solidarily liable for the payment of backwages and other benefits to contracted-out workers illegally terminated through their crafted two-tier contracting system before six months to prevent them from becoming permanent.
Whether it is a case of illegal termination or for violation of the minimum wage and incremental and accumulated benefits, employers engaging the services of labor-only contractors must pay the monthly premium fee just the same. Because competition is cutthroat, instead of deducting their premium fees from employer-beneficiaries, they deduct it from their contracted-out workers for fear of losing their contract for manpower services. This reduces further the contracted-out workers’ net earnings because this is in addition to their withholding tax, SSS contributions, PhilHealth, and other money-making insurance.
Notorious labor-only contractors make their double killing by charging both employer-beneficiaries and their contracted-out workers without their knowledge or for the fact that the agency is a front of the corporation engaging the services of contracted-out workers.
The high value of the dollar and other currencies against the peso is only incidental. Overseas employment is more stable and secure as they offer incentives of increased salary for length of service, merit rating and other benefits for which they are able to remit sufficient amount to afford them to buy house and lot, send their children to college, provide them little savings for hospitalization and other emergency needs, and to enjoy simple amenities as gesture for their labor.
This explains why we have a continuing diaspora of Filipino workers. Our overseas workers pay a terrible price of broken families and eroded moral values.
Worse, the Department of Labor and Employment has allowed cooperatives fronting as workers’ cooperatives to openly supply labor on the naive belief that the workers themselves benefit from such unusual endeavor. It is those that control the cooperatives that make profit but cleverly calling it dividend. This modus operandi should be prohibited because cooperativism is contrary to the rights of labor. Their right cannot be delegated without infringing their status as free men.
Wage deregulation is a win-win solution because workers will be assured of their security of tenure until they reach the retirement age. The only variation is that the accumulated and incremental benefits like the SSS, Philhealth, employee’s compensation, Pag-Ibig Home Fund, and other non-wage benefits must continue to increase, counted on the day they were employed and registered with the system up to the time of their retirement. Contribution to the system will be based on their length of service.
Accumulated and incremental benefits should be controlled by the state much that as the workers grow old, their need for such benefits becomes more urgent. Through this method, the state will be able to save and provide a more comprehensive health care, hospitalization, medical service and pension funds for our retirees, most especially if they are disabled.
Workers should not begrudge their reduced take-home pay because they will get more than the equivalent of what they initially lost as a result of wage deregulation. Foremost, it will result in the revival of trade unionism and give them the opportunity to become regular, recover their lost amount of wage through collective bargaining agreement, enjoy added incentives of seniority rights and length of service, merits rating, and other non-wage benefits employers are willing to offer.
Employers, on the other hand, will be forced to revert back to the old system of direct hiring because deregulated wage means they can hire workers at cheaper cost to economically defeat the purpose of labor-only contracting. Besides, labor-only contracting is anachronistic to the system of deregulated wage. Employers now will find the payment premium and placement fees as added expenses
Deregulated wage is fair because it will operate within the parameter on what the economy dictates, and not on what the law says. The only instance where the state should be allowed to intervene is when unions are engaged in a cabo system or is promoting an ideology which has nothing to do in improving the welfare of the members.
The effect in the reduction of wage will have great impact in the cost of production. Residually, it will increase our competitiveness, commonly referred to by David Ricardo as “comparative advantage.” As production increases, employers will hire more workers. Our locally manufactured goods will be able to ward off imports through lower production cost, not through tariff that made a double kill of reducing our customs revenue. Our exports will likewise have a chance to increase because we would now be able to compete in the world market.
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