Aquino’s wrong mathematics equals wrong economics

Ka Sonny Melencio's letter at the Inquirer

http://opinion.inquirer.net/28449/aquino%E2%80%99s-wrong-mathematics-equals-wrong-economics 

Aquino’s wrong mathematics equals wrong economics

Philippine Daily Inquirer

8:23 pm | Thursday, May 10th, 2012

President Aquino has rejected workers’ demand for a P90-P125 wage increase, saying it would cost the private sector P1.43 trillion for an economy that only produces P9-trillion worth of goods and services. This argument doesn’t hold water, for a number of reasons.

First, the computation is wrong. P-Noy based his figures on a labor force of 40 million Filipinos. But only half of this stands to gain from a wage hike; the rest are non-wage workers, such as the unpaid family workers and the self-employed (e.g., jeepney drivers, vendors, tricycle drivers, etc.).

The argument that a P125-wage increase will drain the economy of trillions of pesos is a classic capitalist claptrap. Capitalists like to argue that every peso given to workers is a waste to the economy. The reverse is true—every peso snatched by capitalists end up as a waste to the economy. An increase in workers’ purchasing power increases workers’ productivity (such that a healthy, satisfied worker is more productive than a malnourished worker). It also increases the production of subsidiary goods and services in the economy, which for one provides income for a growing number of vendors and tricycle drivers. On the other hand, capitalists do not add much to productivity and their personal expenses do not magnify economic activity, especially if they stash away their earnings in dollar deposits, or use them to buy imported luxuries.

P-Noy also said that the minimum wage in the Philippines, at more than $9, is better than Vietnam’s $2.4 to $3.2. P-Noy should know that in Vietnam, food and rent are subsidized; education is free; people have land (so they don’t die of hunger); universal healthcare is implemented; and there is a host of other benefits that workers in the Philippines do not enjoy. Even in Indonesia, the food is relatively cheaper than in the Philippines. And what about electricity costs? The Philippines has the most expensive electricity rates in Asia.

Time and again, studies have shown that the main reason investors shun the Philippines is not labor cost but the high cost of electricity, the unstable political conditions, and graft and corruption in the government. Why should investors choose Malaysia, Singapore or Hong Kong over the Philippines when wages in those places are double or triple those in this country?

Lastly, a wage increase is one way of redistributing wealth in the economy. There are now 40 Filipino billionaires in the country, according to Fortune Magazine, while 40 million Filipinos wallow below the poverty line. This is structurally obscene and something has to be done to address this sorry imbalance. The President’s rejection of wage increase perpetuates the divide between the 1 percent and the 99 percent of the population. The Partido Lakas ng Masa believes that the only way to address this imbalance is by increasing the wages of workers and expanding social welfare services, while increasing the taxes imposed on big-time capitalists and corporations.

—SONNY MELENCIO,

chair, Partido Lakas ng Masa, partidolakasngmasa@gmail.com