Understanding the Supply/Demand in the Job Market, Not #SahodItaasPresyoIbaba Economics

It's really annoying when people keep up with their #SahodItaasPresyoIbaba economics. It's easy to ridicule me because I'm not using a domain, unlike sites like the IBON Foundation. However, they may be very beholden to the WordPress blog of Atty. Teodoro "Teddy" A. Casiño (which is currently not as updated as intended, presumably due to his busy schedule as a lawyer), which is a free domain just like BlogSpot. Now, I'm going to write another post on the job market. Since I'm being belittled because of my lack of degrees like the Monsod couple (I'm neither a lawyer nor an economist) or the people at IBON, I'm going to quote other sources.

Graph taken from CFI

I came across the Corporate Finance Institute (where I got the graph above) where I found a useful article on the job market. This would be to help me understand why salaries just shouldn't be increased (or decreased) at a whim. This would also help understand how allowing more MNCs to invest in the Philippines, may actually push the salaries up. Here's an excerpt that one needs to read:

Supply and Demand in the Job Market
Similar to the markets of goods and services, job markets also follow the supply-demand mechanism. When the quantity of workers demanded is equal to the labor force available (the quantity of supply), the job market reaches its equilibrium point, and wages can be determined.
The wage level rises when the demand is greater than the supply and lowers when the supply exceeds the demand for workers. However,wages cannot always move freely. There is often a floor determined by the government, which is known as the minimum wage.
When the equilibrium wage is above the minimum wage level, introducing a minimum wage will not lead to a major impact on the job market. When a minimum wage is established at a level higher than the equilibrium wage, the quantity of demand will fall as businesses will instead try to control their labor costs by reducing the number of employees.
The quantity of supply increases as there are more active job seekers motivated by the higher wage level. It forms a gap between supply and demand and thus, leads to unemployment. Despite this drawback, the minimum wage policy can provide both economic and social benefits. By increasing the wages of low-income workers, the government can reduce its spending on social programs to support these individuals and relieve the economic inequality at the same time.

Basically, a wage increase is a good thing if there's a reason to increase the wages. Now, if we're going to take a look at supply and demand, it's also applicable to people seeking jobs vs. the number of job providers. The Philippines has more supply of labor vs. a supply of labor providers. The basic middle school and high school lessons in economics are supply and demand both determine the prices. Since there's a higher supply of labor and a lower demand for labor (that is, demand provided by the supply of labor providers)--we can expect that raising salaries can cause inflation.

The Economics Help explains this principle of why a sudden wage increase isn't advisable:

Wage Push Inflation. If labour is able to push for higher wages, despite lower growth, then we could get a combination of rising inflation, but slow growth. This is especially a problem if a country is part of the single currency. If wages rise, they become uncompetitive leading to lower demand. Therefore there is an unwelcome combination of rising prices, but lower growth. If countries were not in a single currency, the uncompetitiveness would lead to a depreciation in the exchange rate to restore competitiveness and increase demand.

Why are salaries in first-world countries higher than that of the Philippines? It should be ironic to oppose accepting FDIs while sending OFWs to countries that are more FDI-friendly. Reading the late Lee Kuan Yew's book From Third World to First--I wasn't surprised LKY mentioned about the problems of the Philippines, in the post-Marcos Years. Singapore has a higher salary because it's an FDI-friendly country. By accepting FDIs, the first-world countries where OFWs are sent, are forced by circumstances to raise their salaries. It's because having more available job opportunities--will naturally lower the supply of job opportunities. Both local investors and foreign investors will compete to increase their rates. People would naturally want bigger salaries. Sure, it would increase the price of the goods and services. However, if people have higher salaries--spending more for quality isn't much of an issue. It's like how I'm willing to spend an additional few pesos for a larger serving of coffee or tea from a coffee shop. Just think that the Vietnamese Dong is the lowest in ASEAN but that Communist country is doing better economically, than the democratic Philippines!

Meanwhile, salaries in the Philippines are lower for this reason. There's an abundant supply of labor but not enough demand for labor. How can there be enough demand for labor if there aren't enough jobs. Sure, some FDIs are in the Philippines such as food industries. It's even ironic to see these idiots protest against 100% FDI then they go to Starbucks for coffee later. However, wanting to nationalize (that is, trasnfer control to the state instead of private individuals) would lead to a supply crisis. Please, for the nth time, printing more money than needed will devalue the money. Nationalizing "critical" sectors like utilities will only cause an increase in prices while reducing the quality. If they don't believe me--they need to take a vacation in North Korea. If thye want to blame South Korea for North Korea's misery--they better present empirical evidence for that!

Those who engage in #SahodItaasPresyoIbaba may come from difficult to enter-to schools like University of the Philippines and Ateneo De Manila. I confess I wasn't even allowed to take the ADMU exam anyway--my grades in high school weren't good and I barely pass. However, with the education system caring more about grades over learning--do honor students truly deserve their honors (read here)? Rep. Raoul Manuel of Kabataan Partylist even asserted his cum laude status. However, what's the use of having a cum laude, masteral, doctorate, etc. if one believes in #SahodItaasPresyoIbaba economics.

That's why I've been daring them to open their #SahodItaasPresyoIbaba stores (read here). They better open their stores that sell PHP 20.00 per kilo rice and pay their employees PHP 750.00 per day. Can they really keep up with their business? If they can make their business model succeed--I would really applaud them and accept their findings. However, with all their selling at a loss and paying their employees too high--there's really no profit at all. Long-term profits are needed to keep a business running. That's why I consider anybody who believes in #SahodItaasPresyoIbaba economics to lose credibility, prestigious degree holder or not.

Filipino First Policy Linked with Crab Mentality

Having sea crab yesterday or just eating crab, I always think of that old commercial in the 1990s. It was called, "Iwasan ang crab mentality." or "Avoid crab mentality." This makes me recall a scene when I was a child. I saw a pail full of mud crabs (called alimango in Filipino) and if one crab got out, the others pulled it down. The TV commercial showed how if the crabs got together, they could all escape their grizzly fate of becoming eaten for human consumption. Chefs are just lucky crabs pull each other down. However, it also shows that the crabs would rather all be cooked together than let that crab escape. Unfortunately, crab mentality is one of the biggest problems in the Philippines. It's not all that unique among Filipinos. However, it doesn't Filipinos should ever take comfort in engaging in a crab mentality, just because other people do it . Here's an interesting excerpt from Inquirer by Jerry Peres de Tagle PhD: Studies in human behavior ...

It's a Common, Broken New Year's Resolution Among Filipinos to Do Better with Their Finances and Economic Knowledge

Happy New Year, right? There's this statement in Cebuano that says, "Sa Disyembre nag lipay-lipay. Sa Enero, naglikay-likay." For non-Cebuano speakers, it means, "Enjoying all December. Fleeing in January." It's because of the bad habits that are common during the Christmas season. I wrote an entry talking about when a Merry Christmas leads to an Unhappy New Year . After Christmas vacation, it can be common to talk about New Year's Resolutions. Sadly, there are resolutions meant to be broken or resolutions on paper only. Several people finish high school, go to college, get a job, but never gain the necessary knowledge of economics and finances. Instead, they continue to live the same habits year after year. Even worse, the same foolish behavioral patterns get passed down f rom parent to child to grandchild. Still stuck with financial habits that put one in a financial dodo The New Year starts and it can get funny. I tend to hate December because of the ...

Rejoicing Over Filipino Businesses Getting 100% Ownership Abroad While Crying Over FDIs Getting Allowed to Own 100% Ownership

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The Recent Microsoft Global Outage Should be a Wake-Up Call to the Philippines' Need to Fix the 1987 Constitution's Economic Flaws

The Express Tribune The recent Microsoft Global Outage was caused by Crowdstrike. Since I'm no IT or CS expert--it's better if I let them talk in the news. From BBC News , here's a detail from Crowdstrike that reveals the root cause of the problem has been systemic with an update: This is still a little unclear. CrowdStrike is known for producing antivirus software, intended to prevent hackers from causing this very type of disruption. According to CrowdStrike boss George Kurtz, the issues are only impacting Windows PCs and no other operating systems, and were caused by a defect in a recent update . "The issue has been identified, isolated and a fix has been deployed," he said. "This is not a security incident or cyber-attack." What exactly was wrong with the update is yet to be revealed, but as a potential fix involves deleting a single file, it is possible that just one rogue file could be at the root of all the mayhem. Thankfully, those who created th...

Is Vietnam Getting More FDI Inflows than the Philippines, Because of Its Supposedly Better Fight Against Corruption?

Discussing international marketing or world economics with boomer Filipinos can be painful. Some people still believe in the Filipino First Policy. I cite Vietnam as an example of why economic charter change (called econ cha cha) should be done. Some people cite that Vietnam's increase in FDI is because of the fight against corruption. I don't deny Vietnam has a crackdown on corruption. I don't deny that fighting against corruption helps the economy. However, fighting corruption without the proper tools and not having economic development, is useless. Fighting corruption isn't a panacea or cure-all either. Spanking is part of child discipline, not the whole of child discipline. People who only spank but never teach right and wrong, render spanking ineffective . Instead, look at Vietnam's economic policy vs. the Philippines' economic policy. Some people blame the following for the Philippines' lack of foreign investments, some things Vietnam also suffers fr...

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When the Education Cares TOO MUCH About Grades, Schools Produce Idiots Instead of Intellectuals

During the pandemic, I was left in limbo thinking about my poor performance under K+10. It was something to think about that a classmate of mine who was both a summa cum laude and an honor student, ended up posting on his wall, "Students cheat because the education system cares more about grades instead of learning." The class salutatorian of our batch even commented about the good old days. I always had that feeling of insecurity and envy towards people better than me. But as Warren Edward Buffet would say, "Don't hate successful people. Learn from them instead." One of them is currently a teacher and the other is in Canada. I thought about my insecurities especially when I used to believe I was descended from a fine scholar and my family was a family of scholars. I remembered the time I was taking MBA and got conned. I was asked, "Is that what MBA taught you?" I got touchy and ended up admitting, eventually, that I was only taking MBA for the presti...

My Personal Opinion on the Recent Universal Robina Incident

I was doing some news readings and I found out about the death of a certain Stephen Corilla. The incident happened in the Universal Robina Corporation's factory in Mandaue a few days ago. It really chilled my bones to read these details which I'll share from Sunstar : POLICE are set to investigate a food and beverage plant in Barangay Tabok, Mandaue City after one of its workers was killed on duty while cleaning a pulverizer machine Thursday afternoon, June 2, 2022. Cpl. Glenn Bordalba of the Mandaue City Police Office Station 3 in Barangay Basak who is leading the investigation told SunStar Cebu Monday, June 6, that they will visit the Universal Robina Corp. (URC) Mandaue City plant in Tabok on Tuesday, June 7, to investigate the matter. Bordalba added that they have not started the investigation yet as they were not allowed entry to the site by the URC management after the incident was reported to them. An approval from the corporation’s consultant is needed for the police to...

My Experience with Tealive Cebu at the Ayala Central Bloc

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Getting Stingy at the Cost of Fire Safety?

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