To Amend or Not To Amend: That is the Question. A Debate on Charter Change.

Wednesday, May 01, 2024

Salary increase is not a solution, here's why

When Senator Risa Hontiveros said that the salary increase is good news, she thinks that she's already brilliant if she finally gets want she want? She thinks that she's doing her job in the Senate? Even if we add thousands of pesos for the minimum wage in the whole country, nothing much will change. The unfortunate workers and the public in general will still be stuck in the vicious restrictive economic environment.


The move to this increase in the minimum wage will result to the reduction of manpower of local businesses that can't afford the increase. Hontiveros, being a co-sponsor needs to hear the side of small entrepreneurs first.

In our country where competition is limited, simply increasing salaries may not be an effective solution for several reasons. Proponents of this measure should consider these reasons why:
  • Cost Constraints: Many businesses, especially small and medium enterprises (SMEs), may struggle to afford significant salary increases due to tight profit margins and financial constraints. Increasing salaries without corresponding increases in revenue could lead to higher operating costs and potential layoffs or business closures.
  • Inflationary Pressures: Salary increases without corresponding improvements in productivity or profitability can contribute to inflationary pressures. This can erode the purchasing power of consumers, especially those on fixed incomes, and exacerbate socio-economic inequalities. NEDA reported that salary increase will affect inflation.
  • Lack of Productivity Gains: In a market with limited competition, businesses may not face sufficient pressure to improve efficiency, invest in innovation, or enhance productivity. Without productivity gains, increasing salaries could strain company resources without yielding commensurate benefits.
  • Skill Mismatch: Simply raising salaries may not address underlying issues related to skills gaps or mismatches between the qualifications of workers and the demands of available jobs. Investing in education, training, and workforce development programs may be more effective in addressing these challenges.
  • Competitiveness Concerns: In industries where international competition is a factor, unilaterally increasing salaries without corresponding improvements in productivity or quality could erode the competitiveness of Philippine businesses in global markets. Our country should focus reforms in the economic policies, specialy in opening our country to foreign investors who can bring job opportunities and higher salaries here.
Instead of relying solely on salary increases, policymakers (like Risa Hontiveros, Juan Miguel Zubiri, etc.) and businesses should pursue a multifaceted approach to address labor market challenges and promote sustainable economic growth. This may include improving the business environment to foster competition, investing in infrastructure and technology to enhance productivity, promoting skills development and education, and implementing targeted social welfare programs to support vulnerable workers.

To present a better solution to this, is to have our economy open to Foreign Direct Investments (FDIs) through economic charter change. NEDA said that we could have attracted investments if only Philippines is more open. Doing so, the increase in salary comes naturally even without legislation which is just a waste of people's tax money. This will make our country attrative to foreign investors. Doing so, the increase of salary will follow naturally without making a legislation. It's just simple as Law of Supply and Demand, in case these Senators don't know it.

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