What’s wrong with Malacañang’s wage hike math and investment mantra?

first published on Blogwatch.ph

Philippine slums

By consistently rejecting the labor’ clamor for P125-legislated wage increase, President Benigno Aquino III is making two things clear: One, he doesn’t really know how to count the total number of private sector wage earners in the country. Two, he wants Filipino workers to race with other Southeast Asian workers down to poverty wages in the name of pleasing financiers, the likes of those huddling at the sidelines of the ongoing Asian Development Bank(ADB) meet in Manila.

In his Labor Day speech, President Aquino erroneously demonstrated how a P125 wage hike would cost the economy some P1.43 trillion. He came up with the figure by multiplying P125 by 22 working days, then by 13 months, and by 40 million workers.

“I repeat, we’re taking out P1.43 trillion from an economy that is worth P8 to P9 trillion,” Aquino told labor leaders attending the dialogue in Malacañang.

He indeed repeated a ridiculous mathematical mistake, using the same false assumption previously dished out by Presidential spokesperson Abigail Valte to turn down calls for a significant wage hike. Supposedly, the proposed P125 wage increase would only cover wage and salary workers in private establishments, which is around 15.54 million based on the January 2012 Labor Force Survey. But the President used 40 million workers, which actually refer to the entire labor force, as multiplier.

Who are included in the labor force? All those employed – private sector workers, government employees, and even those in the informal sector (self-employed and unpaid family workers) – plus the 2.92 million unemployed comprise the country’s labor force. That’s why even the most rabid neoliberal economists would cringe at the President’s assumption that state workers, street vendors and even the jobless would stand to receive the P125 legislated wage increase.

Economist Winnie Monsod has in fact pointed out the Palace’s erroneous computation, only to put forward another wrong computation. In a GMANews.tv report, she used 12 million workers as multiplier, referring to the alleged number of minimum wage earners in the country. But a closer look at the pending wage hike bill by Anakpawis party-list would reveal that the increase would benefit not just minimum wage earners but all wage and salary workers in the private sector.

Aside from bloating the purported economic cost of a legislated wage increase, President Aquino is also conjuring an economic disaster out of what is supposedly immediate relief for workers by portraying the wage hike as a huge cut on the domestic eonomy’s P9-trillion value. It’s as if the wage hike tab is something that is flushed out of the economy, like what the Palace and business groups are repeatedly saying. In fact, increasing workers’ incomes will increase the aggregate demand, stimulate consumption and may potentially increase household savings. Even the informal sector will benefit as increased purchasing power of private sector wage earners will translate to better sales of goods among micro and small businesses.

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