Economic Liberalization Is Necessary To Raise Up The Minimum Wage

It was just a past few days or maybe it's been a week or two since I heard that ALU-TUCP demanded that the minimum wage to be increased to PHP 700+ for basic labor per day. These activist groups are really that stupid. How can the Philippine law comply with a sudden increase in minimum wage if the economy is incapable of increasing salaries and lowering down the prices of basic commodities no thanks to economic protectionism. These labor support groups have backwards thinking because they don't understand basic economics. Their demand for higher wages while going against economic liberalization is just as stupid as asking for an end to the labor export policy while embracing protectionism.

Why can't the basic minimum wage be increased? As said, it's because of the economy and the basics lie with the natural law of supply and demand. Can you increase the minimum wage as the labor unions demand if there's a high demand for jobs and a low supply for jobs? If they want to know why first world countries can increase their salary it's because they have a high supply of jobs to fulfill the high supply of demand. Allow me to write the minimum wages for some first world countries in peso.

Here's some facts that you'd like to get about minimum wages (check the references down there though as Wikipedia is prone to vandalism) from developed countries though for more details you can check Wage Indicator for more information:
  • Although China may pay you for PHP 7,330.25 per month but the minimum wage can increase to PHP 558.16/day in Guangxi which results to PHP 13,395.84 a month and Shanghai's minimum wage would be up to PHP 1,116.32 per day. 
  • Japan can pay from PHP 320.81 up to PHP 418.95 per hour.
  • Singapore has PHP 35,920.00 per month as a salary. If we break that down to 24 working days that would be worth PHP 1,946.67 a day.
  • South Korea has PHP 285.20 for an hourly minimum wage in contrast to North Korea's daily wage of PHP 1,935.87 per day. If you think about it an eight hour work in South Korea is equivalent to PHP 2281.60 per day. Oh please don't give me that North Korea can still pay high for daily work excuse not to remove protectionism!
  • Taiwan pays PHP 207.83 pesos per hour meaning you get PHP 1,662.64 as a daily minimum wage.

Why are these countries able to pay higher wages per day than the Philippines average of PHP 300+ to PHP 400+ minimum per day? One could take a look at the difference that Japan, Singapore, South Korea and Taiwan have in common? They are all proponents of economic liberalization. Taiwan for one is a good example of how economic liberalization made it go from poverty to prosperity. It's because by accepting foreign investments and placing them under reasonable restrictions we fill in the supply and demand gap. Allowing foreign investors fills in the supply/demand gap between people demanding for jobs and job opportunities. The only way to protect local businesses should not be by economic protectionism but by leveling the playing field. Foreign investors will be given a set of rules and regulations to follow even if they will be allowed 50% to 100% ownership. That's the only protection for Filipino-owned businesses. It's protection for both foreign businesses and local businesses by giving no special treatment when it comes to enforcing the rules. 

Let's think about North Korea and South Korea as more recent examples. Do you know that North Korea ends up getting heavily dependent on China while South Korea enjoys a better quality of life thanks to the fact it welcomes foreign investors as part of their economic cycle? Just the fact alone that North Korea heavily depends on China proves that the pambansang industriya is just a sick man's fantasy. In truth, I'd like to ask those people on whether or not they are willing to test that ideology on an uncharted island first to prove to the world that their theory works. But as said it's a sad reality that history just keeps repeating itself and these labor unions still want to dream of the pambansang industriya that will never become a reality because it's just impossible.

Should I also mention that economic liberalization plays in its role in the war against drugs? If people can also have higher salaries thanks to a better economy then what reasons do drug cartels have to recruit Filipinos who want instant yaman if they can get higher paying jobs with less risk? If more jobs with better pay were available then they will also serve as a huge competition against drug cartels and their promise for biglang yaman will be challenged. It would be even better because more and more Filipinos can stay in the Philippines and have bigger pay without having to leave the country too often just to get paid. 

Comments

Popular Posts