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Jobs and wages present a tough balancing act

In a world that often seeks to pit business interests against the welfare of workers, finding common ground can be an uphill battle. In my work in the Private Sector Advisory Council (PSAC), at Go Negosyo and at one of the country’s largest food manufacturing companies, I find myself at the intersection of several groups, where I am given a wider view of the issues at hand. These roles might lead many to assume that I would naturally prioritize business concerns over wage increases. However, I find that the issue is far more complex.

The issue of wage increases is a sensitive one, touching the lives not only of workers but also business owners. While some companies can address wage concerns through Collective Bargaining Agreements (as we do in RFM), many workers remain unrepresented. This presents a significant challenge for both employer and worker.

I believe the Philippine economy will do better in time for the Christmas season – when consumer spending will no doubt liven up economic activity and pull up our numbers. However, many businesses, particularly those in the tourism sector, are right now still in the process of recovery. The ability to afford wage increases varies widely among enterprises and across industries. Some have done better than others, while others are still struggling. When businesses thrive, I find that there’s no reason to keep wages low. But as I said, some businesses are still trying to get back on their feet.

As some of the business chambers have pointed out, a wage hike at this time will be hard on smaller businesses because they might be forced to close shop and people will lose their jobs. On the other hand, paying people only enough to live from day to day could dampen confidence and the economy might lose its momentum, especially as the holiday season draws near and spending is expected to pull up our numbers. That is why timing can make all the difference here.

We must approach the wage issue with caution, considering that increasing wages too rapidly could lead to inflation and unintended consequences, while not paying people enough might cause the economy to stall. As we strive to recover, it’s crucial to ensure that wage hikes are sustainable and do not hinder job creation; job generation should remain a top priority.

Wages and jobs are intricately linked, but not just in the obvious sense that wages are paid in exchange for jobs performed. For businesses to remain viable enough to keep people employed, they must be able to strike a balance between paying fair wages and getting to stay financially healthy. Not all MSMEs have turned the corner and become cash-positive; the vulnerable ones are still grappling with debt while some larger companies still have to recoup their losses. What is clear to me is that we must keep our eye on the long game and make job creation our primary focus.

There are consequences, both intended and unintended, associated with wage increases. While higher wages can benefit workers, they may also lead to increased costs for consumers. Striking the right balance is essential.

This is why the signing of the Trabaho Para sa Bayan Act is a promising development. This legislation addresses issues like underemployment, informal labor arrangements, the reintegration of overseas Filipino workers into the workforce, worker upskilling and the role of MSMEs in job creation. I have touched on several of these issues both in my work in Go Negosyo and in my role as the lead for the PSAC jobs cluster.

MSMEs in the Philippines and throughout ASEAN play a significant role in job generation, especially for marginalized groups like out-of-school youths and women. By growing MSMEs, especially in the agriculture sector, we can create jobs away from the city centers and to where they are needed the most.

Entrepreneurship is a promising avenue for reintegrating OFWs into the local economy. I have seen several returning OFWs bring capital and technical expertise as they establish their small businesses in their communities.

Worker upskilling is another critical component of this equation. Market forces dictate the demand for worker skills, and those with unique skills can command higher wages. Workers need to see themselves as products, and continually improve their skills to remain competitive in the job market. If a worker is without any differentiating skill, he will be competing in a crowded market, where the prices (wages) will tend to be driven down by the supply.

Naturally, if few are skilled in a particular line of work, the price (wages) go up for that skill and if a skill is common, there will be more people competing for the few available jobs. A waiter can upskill and one day become a chef. A farm laborer can learn to operate heavy machinery and eventually command a higher salary. A receptionist can learn a second language and become indispensable.

That’s why upskilling, particularly through the collaboration of the private sector with schools and the promotion of entrepreneurship from a young age, is vital. I find that improving one’s skill is not unlike having an entrepreneurial mindset: there is a drive to improve, differentiate and expand one’s market.

The debate over wage increases is complex, with valid points on both sides. However, our focus should always be on job creation. Without jobs, not everyone will benefit from a wage increase. It’s a tough decision, but we must prioritize the economy’s growth and the welfare of all. Striking the right balance will ensure a brighter future for both businesses and workers.

Source: Go Negosyo -


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