Calamitous

This is how calamity happens: a wrong-headed and discredited economic idea becomes profitable to enact.

- ALEX MAGNO

Congress legislated wage increases in the early 90s despite strong objections from business groups and economic experts. The politicians promised this was the last time such a calamity would be inflicted by law. Instead of legislating wages, the matter of adjusting pay would be left to tripartite regional wage boards.

The worst outcomes happened because Congress decided to legislate wages then. Small and medium businesses that employed over 90 percent of our workforce suffered. Workers companies could not afford to retain were laid off. Unemployment rose. Inflation spiraled. Poverty deepened.

Today our politicians are threatening to inflict the same calamity all over again. Remember the classic definition of insanity: doing the same thing again and again, expecting different outcomes.

An insane Senate passed a bill raising the minimum wage by P100 across all the regions and regardless of industry. This week, an insane House of Representatives, trying to put one over their colleagues in the Upper Chamber, passed on third reading a bill raising minimum wages by P200.

Last month, our economy managed to bring down the inflation rate to 1.3 percent, owing to lower food prices and reduced tariffs on food imports. But unemployment edged higher.

Our economy continues to labor with a missing middle. Small enterprises are struggling to survive. There are hardly any thriving downstream industries. Our value chain is broken. Legislated wage increases will break the chain all the more.

We have difficulty attracting investments into our economy. There are many reasons for this: corruption and unpredictable policies among them. A major reason is that our labor is costly.