Legal Wage Not of Much Help
Written by: Angela Celis of Malaya Business Insight, Date Published: September 1, 2014
A senior fellow of the Philippine Institute for Development Studies said in a recent report  present policies   such as the guidelines on the minimum wage, have failed to reduce unemployment..
The research fellow, Aniceto Orbeta,  presented the results of a labor policy analysis which shows  minimum wage regulations have generally been unhelpful and even “detrimental to the welfare of the common man.”
Smaller firms, for instance, are being forced to slow down  hiring, and are losing out to larger firms.
“Legal minimum wages have a negative impact on smaller firms, which dominate, the economy in number,” he said.
Orbeta also said that the minimum wage hurts the employment probability for  the young, female, and inexperienced workers. Data also indicate a legal minimum wage cuts down  the average proportion of working-age family members who could be hired.
He said that there should be flexibility in hiring and firing.  The poor and jobless should also be represented in  tripartite wage-setting programs..
“We are not anti-worker. What we are saying is our old tools are not benefiting the workers, ” he said.
Trade Assistant Secretary Rafaelita Aldaba, formerly a senior research fellow of PIDS, said the automotive industry is expected to generate 300,000 jobs under a new industrial policy which aims to revive the manufacturing sector.
Aldaba  said the revival of the manufacturing sector will help achieve inclusive growth and create better-paying jobs.
“We’re looking at auto investments for broad-based industrial growth to happen. Auto has a large multiplier effect. We have an auto program and that is  being finalized,” she said.
Aldaba pointed out the manufacturing sector has stagnated in the past two decades, leaving the country dependent on services for growth and job creation. However, she said that the structural transformation of the economy is needed as services won’t be enough, given the entry of 800,000 new workers to the job market annually.
An estimated three million Filipinos of working age do not have jobs.
“Competitiveness is crucial. We need to upgrade our manufacturing capacity,” she said.
Two Japanese car makers have threatened to leave the country unless the auto road map is issued with clear definitions.  Ford earlier dropped out of the car manufacturing program in its plant in Sta. Rosa, Laguna.
Its compound was taken over by Mitshubishi.  There is an increasing reliance on cars imported from Thailand.  Production cost in that country is between $120 and $200 lower compared to the Philippines.
The participants in the industry have been complaining of lack of locally-made vital components for automobiles.  It is estimated that the industry uses only about 17 percent of such components.
Aldaba said that the government’s role is to ensure   a conducive environment to industrial upgrading. The private sector on the other hand would need to execute the roadmaps.
“They will be the proximate cause of growth, investment, and entrepreneurship,” she said.
The goal of the Manufacturing Roadmap, which incorporates 20 industry development plans  is to hike manufacturing value added contribution to 30 percent of gross domestic product, and a 15 percent increase in employment.
“We want to move workers from informal to formal jobs, low-productivity to high-productivity jobs,” Aldaba said.

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