That a wage hike is not possible and untimely because it will increase the cost of production in the country and will cause businesses to go bankrupt, to close shop, be forced to retrench employees, and that a wage hike will cause runaway inflation that will further increase the prices of commodities are big worn-out lies peddled time and time again by big businessmen, greedy investors and capitalists to reject any justified demand for an increase in wages and salaries. They are nothing but mere imagined threats and boogeymen.

The matter is quite simple for millions of ordinary wage earners. The minimum wage (P404 at the National Capital Region/NCR, much lower in other regions) is a wage that is far from enough to meet the basic demands of the family (average cost of living for a family of six in NCR is almost P1,000 a day), not even when both parents are working. It is a wage of starvation.

But since dogmatic neoliberal economists and the present government insist on harping bankrupt economic doctrines to frustrate any demand for wage hike, let us indulge in them in some rebuttals and statistics:

(1) Businesses in the Philippines can afford a P125 wage hike without going bankrupt nor having to resort to lay-offs or shutdowns

You only have to read the business section of newspapers to see how profitable big businesses in the Philippines have become the past years, earning record billions of pesos year after year. You only have to read the papers to realize how the government harps on economic growth and progress every quarter (Government even claimed that the economy grew by more than 7% last year). If such is the case, why are the masses getting poorer and hungrier (read: Hunger incidence up – SWS)? Where is the wealth going? Your guess is as good as mine.

Here are some facts from research group IBON:

IBON noted that the economy actually has more than enough profits to support workers’ call for a Php125 wage increase. Government data show that establishments in the country with total employment of 20 and over had combined profits of Php895.2 billion and 2.74 million employees, according to the preliminary results of the 2008 Annual Survey of Philippine Business and Industry (ASPBI) of the National Statistics Office (NSO). (from: IBON: Wage increase justifiable, possible)

Here are another set of facts from former Presidential economic adviser Joey Salceda:

[The Philippines' top 1,000 corporations'] total earnings amounted to P3.1 trillion of which P2.1 trillion were pocketed as dividends or earnings of the stockholders and only P1 trillion were re-invested (from: Economic growth in 9 years did not touch poor)

Economic growth is not immediately felt because the proceeds are held by corporations, [Salceda] said… “Whew! They never had it so good. All the while I thought the primal reason for business is to provide for the nation” (from: Salceda cites GMA term as most pro-business)

Companies are, indeed, far from being bankrupt. It is their excuses which are bankrupt!

(2) Companies only have to yield a cut in their profits to avoid the imagined threat of runaway or spiraling inflation

Granting an across the board wage hike of Php125 means workers will receive an additional PhP3,802 per month, and that employers will spend an additional Php49,427 per employee per year (assuming 13 months of pay). The total cost of the proposed wage hike will only be Php135.6 billion which, subtracted from total profits, will still leave establishments with Php759.6 billion in profits. This is only a 15.1% cut in their profits. (from: IBON: Wage increase justifiable, possible)

All businesses have to do is to accept a meager 15% cut in profits to prevent inflation. Inflation will only be caused if capitalists pass on to consumers the wage hike and the cut in their profits. There is no need for them to increase the prices of their products or services if they simply yield. (It’s not as if they will go hungry. Probably one less overseas vacation for their families, but it definitely won’t hurt them.)

This is essentially giving back to the workers the wealth that they create. No Corporate Social Responsibility (CSR) gimmick can beat the just and equitable distribution of the wealth. Workers are not even asking for the dismantling of the capitalist exploitation inherent in the privatization of the collective mode of production. The immediate demand is simply a P125 across the board nationwide minimum wage hike which will provide economic relief to millions of families and which employers can very well afford.

(3) It is the high cost of privatized energy, other utilities and petroleum, the liberalization of the economy, and government corruption and red tape that bankrupts some enterprises and pushes cottage industries to the margins

Big businesses like to invoke the sorry state of our small and medium enterprises and cottage industries to avoid wage hikes, as if they are on the same level. Companies should stop acting like fledgling cottage industries. They are not.

The primary reasons that push small and medium enterprises and cottage industries to the margins is the lack of government support in light of the neoliberal onslaught of “free trade” and “globalization” manifested through the privatization of power, water and other utilities (the Philippines has the most expensive electricity in Asia), the lack of subsidies for the modernization of agriculture, and the dismantling of trade barriers that protect our industries. The solution is not to stunt wages to starvation levels in order to cut costs, it is to implement patriotic economic policies that will harness the Philippines’ natural and human resources and the productive forces of the country for its own benefit.

Systemic corruption in the government bureaucracy also increases the cost of production in the country.

Why is labor cost always the first victim in “cutting cost in order to maximize profit”?

(4) Land reform and national industrialization are the key in spurring the economy and providing gainful employment for all Filipinos

The desperate argument by neoliberal economists and the government is the idea that we can’t do anything, we live in a globalized world and as such we have to make our labor cost “competitive”. That means developing countries like the Philippines have to compete by offering the lowest and most inhumane wages possible practically prostituting themselves to attract foreign investment, as if it is the end-all and be-all of our country’s economic survival and prosperity.

The truth is, dependence on foreign capital is an artificial condition imposed by foreign monopolies and multinational creditors. The Philippines has most of the natural and human resources it needs to create a stable and progressive national economy that will provide jobs for millions of Filipinos. The problem is that these resources are controlled by the few–the land by the landlords and the agri-corps, and the mineral-extraction and the public utilities by behemoth private multinational corporations. In short, the wealth and the resources of the Filipino people, which are actually enough to provide a good life for all Filipinos, is kept in the hands of the Filipino elite and of foreigners. Another problem is that the present government is their government, an establishment and an institution that exists to preserve the status quo that serves the interests of a few.

If economic prosperity is what Filipinos want, government only has to take genuine steps to democratize the resources of the country through genuine land reform and agrarian modernization, and national industrialization.

Land reform will lift majority of Filipinos (who rely on agriculture) in the countryside from centuries-old poverty and boost food production and the production of other raw materials necessary to create national industries. Government then has to support and strengthen national industries with resources extracted by state-owned utilities, and created by land reform and agrarian modernization in order to provide employment to millions of Filipinos. And because land reform will provide higher income for majority of the people, there will be a domestic market for Philippine-made products of the national industries.

(Ah, those goddamn communist proposals, they will say. This is not even a communist demand! This is exactly how countries like South Korea and Japan pursued “economic prosperity”, through land reform and national industrialization.)

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To end this blog entry, let me invoke a statement by militant labor center Kilusang Mayo Uno (KMU):

“Workers have long been suffering from the rising prices of basic commodities and services, we deserve a fair share from the fruits our labor. Our sweat and blood brings billions a month to these companies while we get leftovers in return!” [KMU Chairman Elmer] Labog said.

Even the 1987 Philippine Constitution afford workers the right to a living wage, not merely a survival wage, but a meaningful living wage. It even has a provision for the equitable share of the fruits of labor for workers. The wage hike fight is not only possible and timely, it is just. It is a broad campaign for social justice.

Lastly, it is very important to realize that for much of human history, never has a ruling class yielded to the demands of workers, peasants and the vast majority of the people by simply giving in or offering the demands on a silver platter. It has to be fought for in Congress, in the streets, and in the countryside.

Let us join the thousands of Filipinos who will troop to the streets on May 1!

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Some further reading:
(1) IBON: Wage increase justifiable, possible
(2) Beyond word wars: the struggle for substantial wage hike by Carlos Maningat
(3) Kilusang Mayo Uno: Threats of retrenchment, inflation due to wage hike mere blackmail
(4) Let the people’s outrage against the US-Aquino regime explode this First of May
(5) Kung bakit ayaw ni Noynoy sa makabuluhang dagdag-sahod