Employment effects of changes in real minimum wage in the Philippines: 1994-2001
Date
2006-01
Journal Title
Journal ISSN
Volume Title
Publisher
Abstract
The minimum wage legislation in the Philippines has undergone several amendments since the establishment of R.A. No. 602 in 1951. To account for regional differences attached to the centralized system of minimum wage fixing, RA 6727 or the Wage Rationalization Act was enacted in June 1989 and legislated the determination and minimum wage setting using a regional perspective. This paper aims to determine the effects of growth in real minimum wages on aggregate employment growth, by industry (agricultural and non-agricultural) and by region. The basic factor demand-supply theory is followed to examine the relevance of minimum wages here in the Philippines. Other variables included in this study are growth in GRDP and in the proportion of Wage and salary workers to the labor force. Employment by class of workers is also analyzed to explore the effects of minimum wage both on the covered and uncovered sectors of the economy. The statistical results revealed a negative relationship between changes in minimum wages and employment growth, with a greater impact on the non-agricultural sector.
Description
Keywords
Labor market, Labor force, Wage, Wage policy, Labor economics, Employment effects