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Who’ll advocate ‘nationalization?’ DIE HARD III Herman Tiu Laurel 05/07/2012

Monday, May 7, 2012

Who’ll advocate ‘nationalization?’

DIE HARD III
Herman Tiu Laurel
05/07/2012
The growing clamor for a minimum wage increase to allow formal sector workers to mitigate some of the many cost of living increases may be justified even while it is wrong. That’s because the real task of government is to control, restrain and constrain galloping price hikes that have overtaken consumer purchasing power by two decades forward.

The basic drivers of the economy — fuel, power, water and food — are at the base of our cost of living pyramid. In three of these, the Philippines is already the highest or thereabouts in the whole of Asean and Asia.

It has been quoted that the minimum wage in the Philippines is already at $9 per day to Cambodia’s $2.24, Vietnam’s $2 to $3.21, and Indonesia’s $3.15 to $5.27. Yet Filipinos are worst off especially in electricity and food prices. Notably, the Philippines is also the most aggressive in its economic liberalization and privatization. Surely, the connections must be obvious by now.

Minimum wage increases really punish the SMEs, or small and medium scale enterprises, which account for 98 percent of Philippine businesses and contribute at least 50 percent of all employment. The margins of SME businesses are very thin such that additional costs constantly squeeze their viability to the hilt. I should know; my family runs an SME employing a few hundred workers.

In the squeeze of power and fuel costs, municipal as well as national fees and taxes, not to mention exploitative real estate costs, additional minimum wage orders can easily tip the books into the red. Giant corporations, meanwhile, don’t have these problems. Their power, for one, is subsidized by us residential consumers and SMEs, thereby financing their costs lower by as much as 50 percent.

Worse, the wage distortion created for longtime employees is even onerous — as Chris, a texter to my radio program puts it: “I have been at my work for 15 years but the new employees coming in are almost matching my salary.”

In addition, more minimum wage increases can only push SMEs into the informal sector, which already employs 27.3 million workers as compared to the formal sector’s 5.6 million. Thus, the wage increases will constrict the informal sector workers’ ability to move up the wage ladder as formal sector SMEs are prevented from hiring them, owing to fears of violating the minimum wage law.

Besides that, other SMEs are going to be compelled to go the route of the Barangay Micro Business Enterprises Act by breaking up their formal SMEs into smaller units in order to fit the BMBE structure and offer jobs with commensurate wages — that is, if they still register at all.

Finally, the illogicality of the present system is described aptly by labor sector analyst and writer Rod Kapunan, who long ago criticized the “deregulated economy with a regulated wage regime,” which is a guarantee for a dysfunctional economic system. And, as seen by the world last week when CNN featured the “pagpag” (or recycled garbage) eaters of the Philippines, we are experiencing the damaging effects of it today.

At the root of the decades-old Philippine economic degeneration are the policies of deregulation and privatization. This is so evident in the Philippine power industry now known as having “the highest power cost in Asia” with its ironies highlighted by the recent Mindanao power imbroglio of having lowest cost hydroelectric power but force fed with high priced power, as power barges were left idle due to an ill-conceived power law.

Although so far, Mindanaoans have gotten a tentative, if not halfhearted, commitment from government that it will desist from privatizing the prized Agus-Pulangi hydroelectric complex and will limit the duration of high priced contracts with independent power producers, these measures will eventually be overwhelmed by privatization unless a reversal is made via re-nationalization, such as in Bolivia which this week nationalized generating assets of Red Electrica de España for “inadequate investment” (the same way Filipino power companies limited investment in new energy sources by merely taking over state power assets).

And while Philippine politics the past month has been frenetic, beyond the sound and fury is this question: Who among the politicians are willing to address the root crisis of our country and push for the re-nationalization (or forms of it such as consumer stock ownership or “cooperativization”) of the electric power industry without which there can be no solution to the murderously exorbitant power rates (which is also the case in the West today)?

Looking at the political alternatives, we still see no clear platform from any of the emerging candidates. That said, the United Nationalist Alliance, with Estrada’s influence, may still have more of a maverick potential and could, if empowered in 2013, craft more populist-oriented policies. Meantime, Trillanes, although on the other side, is still emphatic in calling for profit caps and for certain heads to roll. Ditto for an independent like Mitos Magsaysay, who has been aggressively criticizing the present fuel and power policies.

Besides nationalization, the other medium-term solution to our energy woes is tapping the China and West Philippine Sea fossil fuel reserves. But that will never happen if the Philippines remains in the grip of US-British clutches as BS Aquino III, Albert del Rosario, and Voltaire Gazmin are.

It’s amusing to read some Filipino opinion writers, like Babes Romualdez, say, “China pushing RP closer to US,” when we’ve long been collar and leash in the US’ hands; or Raissa Robles with her “Is China after RP oil and gas fields?” when it is the US and Britain who really control these (like in the case of Malampaya).

There should be no illusion about oil projects today under “Philippine auspices,” such as the Reed Bank with Forum Energy. These are all Western-controlled in the same way that certain mining companies are a front act.

All the conflicts being raised in our shared areas with China are motivated by the West’s intent to keep China out and garner a monopoly for itself, with mere crumbs given to Filipinos. So the real solution is to also nationalize all energy exploration projects henceforth.

(Tune in to 1098AM, dwAD, Sulo ng Pilipino/Radyo OpinYon, Monday to Friday, 5 to 6 p.m.; watch Destiny Cable GNN’s HTL edition of Talk News TV, Saturdays, 8:15 to 9 p.m., with replay at 11:15 p.m., on “Tampakan anti-large scale mining updates;” visit http://newkatipunero.blogspot.com for our articles plus TV and radio archives)

SourceThe Daily Tribune

URL: http://www.tribuneonline.org/commentary/20120507com5.html

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