Minimum Wage Initiative Off To A Good Start

When President Boko held his first presser a few minutes after his swearing-in on November 1st, one of the first questions he had to inevitably field was the P4,000 minimum wage campaign trail and manifesto promise. In his response, Boko said the minimum wage would initially apply to government employees.

For the private sector, Boko had said that the requirement would be mandatorily effected once the economy allows and that if the country gets to that point and companies were still unwilling to pay the minimum wage, their privilege to operate in the country should be considered.

What has since happened is that the private sector has pretty much taken ownership of the minimum wage initiative and led it. After Choppies, the country's largest retailer announced the P4,000 minimum wage commitment, at least two other companies have come forward to support the initiative, starting as early as early December. Additionally, these companies have said that the implementation of the minimum wage will not lead to any job losses to accommodate the larger payroll.

For those concerned about the minimum wage's impact on the economy, who include citizens and the opposition, their point is that it might push up prices for goods and services, also known as inflation, and lead to a massive wave of retrenchments as companies to manage the growing payrolls, and even lead to the closure of some companies. These are all fair, legitimate and warranted concerns.

However, it seems like the concerns were premised on a situation in which the government would impose a minimum wage requirement on private companies. Although it's still very early days, the opposite seems to have happened, in that by private companies voluntarily paying minimum wage, they actually put pressure on the government to expedite the change of its own remuneration structure. They also put pressure on their peers in the private sector to also follow suit.

The question of whether private companies would be able to sustain paying employees at least P4,000 is gradually being answered by these voluntary pledges. Companies like Choppies, which recorded a profit of P207 million per its latest financial results, can afford to pay if they want to. But are all companies in a position to pay if it comes to a point where the government requires private companies to pay the P4,000 instead of it being voluntary? That is a hard question to answer because we simply do not have the books of all private companies in the country.

Regardless, the private sector taking the lead in the minimum wage initiative is a good start. Companies coming to the realisation that their workers and fellow citizens deserve so much better is a welcome development. Hopefully, this will result in a snowball effect of other private companies coming to the fore with their own voluntary P4,000 minimum wage.

What will be interesting is what happens next. Will we see more private companies commit? If more companies do not pledge, will we eventually see those who did renege on their pledge? Will government also join its pledge to pay the public service, including interns, the P4,000 minimum wage? If more private companies pledge, will government push for a bill to make the minimum wage mandatory instead of voluntary?

All these possible combinations and permutations will have an impact on the economy and future prospects of the country and it will be interesting to see how they turn out. In the meantime, for those who will be getting their P4,000 roost, enjoy it because you deserve it!