On effects of minimum wage on the Philippine economy

by Kira Jorgio (@_kiraxj)

Leonardo A. Lanzona, Jr. said in his article that the Labor Code aims to protect the workers. We can achieve that by these three objectives, namely: 1) Prohibit the termination of the private employees except for just or authorized causes as prescribed by the Articles 282-284 of the code; 2) recognize the right to form a trade union expressly and the right of insisting of closed shops of a union; 3) Allow strikes as long as they comply with the strict requirements under the code, otherwise the workers who organize or participate in illegal strikes may be subjected to dismissal.

Therefore, by these methods, we can successfully establish a peaceful relationship between minimum wages and employment. We can also establish protection of the employees. The study showed graphics that suggest that minimum wage policy reduces employment.

Moreover, negative effects have shown up from the study that completely affects the small enterprises. And positive effects to large enterprises.The infographics showed that firms plan to decrease wages to maximize profit and force their employees to work to a competitive level, resulting to higher employment.

However, these large firms attract employees not because of the salary they are offering, but the possibility of promotion to a non-production level, giving large compensations. This kills small firms for small firms can not compete with the size of production the large firms offer.

Poorer and probably desperate workers often fall for the bait of the small firms, so they gamble their chances within the small firms rather than gambling it to the large firms. Consequently, small firms may offer larger wages but still can not compete to the salary given by larger firms, making employees transfer to the larger firms.

Usually, young, less-educated and women are considered for a job in the small firms to minimize costs and wages.

In conclusion, these results may have a negative effect in the way the Labor Code affects the workers, as well as their protection. To resolve this, the policies given in one area should also be the policy given to the other.