Pros and cons of minimum wage legislation

(Part 1)

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The frequent reference of Pope Leo XIV to the first social encyclical written by Pope Leo XIII — Rerum Novarum — has prompted economists, social scientists, philosophers, and theologians to review the teachings contained in the encyclical. This document, issued in 1891 at the height of the First Industrial Revolution, contains very valuable guidelines on a very pressing issue for which President Ferdinand Marcos, Jr. was severely criticized by workers for not mentioning in his last State of the Nation Address (SONA).

I am referring to the issue of setting minimum wages for workers, such as the move of some members of the House of Representatives to increase the prevailing minimum wages for Filipino workers by P200 monthly. Just last July, the Trade Union Congress of the Philippines called on Congress to “swiftly” approve the P200 legislated wage hike after a new survey revealed that almost half of Filipino families consider themselves poor.

Indeed, the Philippines is notorious for having the highest poverty incidence among its peers in the ASEAN. Its poverty rate of 16% compares very poorly with those of Malaysia at 0.5%, Vietnam at 3%, and Thailand at 2%. Data show, however, that close to 70% of those falling below the poverty line are in the rural areas and are non-wage workers, like small farmers, sustenance fisherfolk, and marginal workers in the countryside. The most effective means of reducing poverty then is to help these marginalized farmers and fisherfolk improve their incomes by providing them with farm-to-market roads, irrigation systems, post-harvest facilities, agricultural extension services, and access to credit.