Philippine Standard time

Minimum Wage: Should it be the Weapon of Choice for Inclusive Growth?

The minimum wage is a classic example of a price floor, the lowest price set by law with which to pay a commodity. The idea is to prevent wages from going too low. Historically, societies have used the minimum wage to achieve their social justice objectives. Internationally, there is no consensus on the effect of minimum wages on employment. In the Philippines, a study by Lanzona (2014) established a negative relationship between minimum wages and employment. Paqueo et al. (2014) meanwhile challenges the idea minimum wages and other labor regulations should be the "weapons of choice". Other alternatives such as better education, increased labor-intensive manufacturing of tradable goods, and greater opportunities for training on the job should be considered.


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Sep 30, 2014