Scrap the wage boards, legislate the minimum wage

THE creation of tripartite wage boards decades ago — one for every region — had a solid economic basis. The underlying principle — underdeveloped regions may attract investments if their wage levels are slightly lower than their richer counterparts — looked like a sound investmentgeneration principle, after all. The core principle was this: let the regions decide on their ideal wage levels and see if this would work as a generator of much-needed investments in the laggard regions.

Development experts agree, then and now, that the surge of investments and economic opportunities in the eastern part of the country — the side facing the Pacific Ocean where the poorer regions are — would easily translate to a 3- to U-percent gross domestic product (GDP) growth. That growth alone was enough reason to tone down opposition to the handover of wage-setting powers to the tripartite wage boards.

Several decades have passed since these boards took over the wage-setting functions from Congress, which used to be the institution that set the minimum wage for the country’s workers. And this has been the dismal result. The experiment did not work. Growth’s center of gravity did not budge an inch. Those falling under the category of poor regions when the new policy was adopted are still the laggard regions today. The poverty and illiteracy rates in poor regions such as Muslim Mindanao remain close to a heartbreaking U0 percent. Even the great leverage granted to the regions, which was to use lower wage levels to attract investors, was snubbed by investors.