A good week for the little people

IT is unfortunate that the antics of America’s Tangerine Tyrant have turned the term “populism” into a slur, because when it is being practiced with sincere intent, its potential to solve some deep- rooted economic problems quickly is actually quite impressive. Three to the top of the news cycle stew this week in the Philippines hold some promise and are worth a second look.

- due update of the Social Security System ( SSS) charter, which was signed into law by President Duterte. The new law repeals the 21-year-old Social Security Act, and expands the powers of the SSS to increase penalties, and exercise more flexibility in its investments, among other things.

Of course, how the SSS uses its enhanced authority will determine the effectiveness of the updated law, but provided it is managed well, it could result in - cially healthier pension system. Under the old law, many basic critical functions of the SSS, such as adjusting monthly pension payments, were micromanaged by Congress, with the predictable result that changes have been few, infrequent and unsatisfactory.

The only potential snag in the new SSS charter is its mandate that overseas Filipino workers (OFWs) be covered by the the workers’ point of view — most OFWs now have to make their own contributions to the retirement program, and many are discouraged by the red tape of doing so — but might have a negative impact on overseas employment as some foreign employers may balk at the additional requirement.

The second measure, not yet implemented but soon to pass the final step in the legislative process, is the so- called “Murang Kuryente” ( cheap electricity) Act, the brainchild of Sen. Ralph Recto. Senate Bill (SB) 924 has passed the upper chamber, and a counterpart measure has also been approved by the House of Representatives; only the work to mesh the two versions into a single law remains to be done, which is expected to take place sometime before the end of the month.

The Murang Kuryente Act, assuming Duterte signs it (and he should, lest he wants to see his front lawn full of torches and pitchforks), will use the government’s royalties from the Malampaya gas field to pay the universal charges that now appear on every electric consumer’s bill: Stranded debt and stranded contract costs of the National Power Corp. (Napocor), the missionary fund for the environment fund, and feed-in tariff pass-throughs to subsidize renewable energy development. The only difference between the House and Senate versions of the bill is how much of the estimated P207-billion Malampaya Fund will be earmarked for it; SB 924 proposes to use the entire amount, while the House version sets aside about half, or P120 billion. Presumably, the amount somewhere between those two recommendations.

The relief that each electric consumer will see on his bill is modest, but not insubstantial; a household using 200 kWh of electricity per month would see a savings of about P127, or about P1,500 per year. Nevertheless, it is a win for the consumer; one of the sticking points in the Philippines’ persistently high electricity costs is the large number of additional charges levied on consumers by the Electric Power Industry Reform Act (Epira) of 2001. The high costs of generation and distribution are still a matter that needs to productively, and number of non-consumption related charges has always seemed to undermine any attempt to lower or rationalize electricity costs. Taking the universal charges out of the equation provides a bit of practical immediate relief, and removes them as an excuse for not doing more to address the bigger problem.

And finally, although its passage is far less certain, there is the sweeping overhaul of the country’s minimum wage system proposed by Sen. JV Ejercito in SB 2205, which would do away with the regional wage-setting boards and replace them with a national system. The basis for setting minimum wages would also be altered from regional cost of living estimates to industry within whatever categories are generalization is inevitable.

Minimum wages are at best a problematic policy area, because they are economically irrational; it is virtually impossible to satisfy all stakeholders, with the usual result being new system, if Senator Ejercito can sell it, will make a couple of significant improvements over the demonstrably ineffective, 30-year-old system in place now. First, it will help to reduce regional disparities in income levels, which have been aggravated by the current system and as a result have contributed to extreme disparity in poverty levels among regions. Second, it will potentially more accurately value labor than the current broad categorization of “agricultural” and “nonagricultural” work.

People being what they are, it is too much to hope for that anyone will be completely sat - bor advocates will undoubtedly complain it does not provide for high enough wages, while employers will fret over the added burden to labor costs. Focusing the determination of