Source: Malaya Business Insight, 26 December 2011
THE Employers Confederation of the Philippines (ECOP) sees the employment picture in 2012 to be rosy as the government’s public-private partnership (PPP) projects come on stream.

But ECOP continues to clamor for a two-tier minimum wage setting that is based on productivity.

In an interview, ECOP president Edgardo Lacson said he expects new jobs to be created as early as the first quarter of 2012 from PPP projects and the accelerated spending of government.

Lacson said the Daang Hari connector road which was auctioned off recently as well as the Tarlac-Pangasinan-La Union expressway, among others, would be big stimuli to the employment picture.

The unemployment rate dropped to 6.4 percent, the lowest since October 2003, but Lacson suspects seasonality in the run-up to the holiday season as a factor in the lower jobless rate.

“We hope the number can be sustained. The PPP and the accelerated spending of government should help offset the seasonality. They would help recover the lost jobs, plus they have a big multiplier effect,” Lacson said.

Data from the National Statistics Office show that while employment increased, the number of underemployed also grew to 7.38 million in October from the 7.141 million recorded during the same month last year.

Lacson also cited accelerated spending by the government as having a huge influence on business to invest. “With the stimulus package of government, which is the biggest spender, if we see government spending a lot of money, that would entice us to invest. That’s the natural cycle,” Lacson said.

Under the two-tier system – which would effectively do away with the yearly minimum wage increases — a fixed minimum or floor wage would be set to protect the incomes of the vulnerable sectors and the working poor. A variable component through productivity-based industry or regional guidelines or advisories would also be set.

“But the minimum wage has to be defined or determined based on the poverty level of each region,” Lacson said.

He added that only 2 million of the 41 million salaried workers actually benefit from the minimum wage increases which also create distortions in the pay scales of companies.

Lacson said the Philippines is the only country in the world which sets the minimum wage and this has been a disincentive to big investments.

Market sources said the Philippines lost a $60-billion investment from IBM to Indonesia due this discouraging provision.

“We are shooting ourselves in the foot,” Lacson said.