The Impact of Legal Minimum Wages on Employment, Income, and Poverty

Incidence in the Philippines

Vicente B. Paqueo, Aniceto C. Orbeta Jr. and Leonardo A. Lanzona

Abstract

It is commonly believed that mandating higher legal minimum wages (LMWs) is needed to help
the poor earn a level of income that would allow them healthy and dignified lives. It is also seen
as a tool to protect the weak against exploitation. This popular belief motivates and justifies the
recurrent demands for hefty increases in LMW. But what is the empirical evidence behind this?
This article seeks to address this question. It finds that in the Philippines, higher LMWs: (i) are
likely to reduce the work hours of average workers; (ii) can be disadvantageous against the very
groups that LMWs are intended to protect; (iii) decrease the employment probability of the
young, inexperienced, less educated and women laborers; and (iv) tends to ironically reduce
average income and raise household poverty rate. These results illustrate how rapid rises in
LMWs can be counter-productive and can go against the spirit of equal protection principle of
the Constitution. If the goal is to help the poor and protect the weak, then these findings
warrant the need to think more deeply and prudently about the use of LMWs and to consider
other tools for achieving decent wages.

Paqueo, V. B., Orbeta Jr., A. C., & Lanzona, L. A. (2016, December). The impact of legal minimum
wages on employment, income, and poverty incidence in the Philippines.
https://www.econstor.eu/bitstream/10419/173575/1/pidsdps1654.pdf

A Philippine Setting: Work Motivation of Employees and Motivational Strategy

Evaluation in an Industrial Establishment

Gizelle Lou Cabahug-Fugoso

Abstract

The study sought to determine the work motivation of employees in an industrial establishment
in the Philippines and how the motivational strategies that the company carries out are
effectively translated into their workforce. The data was taken from a consented establishment
and the employees were asked to answer the multi-dimension work motivation
questionnaire. Qualitative data was also collected to determine the motivational strategies
done by the company through an interview with their human resources department. Results
showed that the workers in the industrial establishment were moderately motivated. This was
constituted by the motivational dimensions with the majority of the respondents having a low
amotivation score, low to moderate extrinsic regulation score, high introjected regulation score,
identified regulation and intrinsic regulation score. Likewise, there was a significant prediction
with three variables from the demographic data, which include the number of years in service,
educational attainment and pay grade. The latter variable had the only negative predicting
factor against the motivational score. The motivational score was, by theory, affected by the
motivational strategy that was implored by the human resource management of the company.
These strategies are categorized as work environment, rewards, punishment, leadership, and
non-monetary incentives. Thus, the study recommended that there is room for additional
strategies that can be made and added to current practices in industrial management, especially
in the implementing department, to increase the motivation of workers.

Fugoso, G. L. (2019, October). A Philippine setting: work motivation of employees and

motivational strategy evaluation in an industrial establishment. 7ISC.
https://jurnal.unai.edu/index.php/isc/article/view/2093

The effect of minimum wages on employment in emerging economies: a survey

and meta-analysis

Abstract
Abstract

Using both qualitative and quantitative (meta-analysis) methods, this paper reviews the
growing evidence on the impact of minimum wages on employment in 14 major emerging
economies (Argentina, Brazil, Chile, China, Colombia, India, Indonesia, Mexico, Poland, the
Philippines, the Russian Federation, South Africa, Thailand and Turkey). Overall, minimum wages
are found to have only a minimal impact on employment, and there is evidence of reporting
bias towards statistically significant negative results. More vulnerable groups (e.g. youth and the
low-skilled) are marginally more negatively affected, and there is some indication that higher
minimum wages lead to more informal employment.

Forti, A. & Vandeweyer, M. (2017, January 23). The effect of minimum wages on employment in
emerging economies: a survey and meta-analysis. Taylor & Francis Online.
https://www.tandfonline.com/doi/full/10.1080/13600818.2017.1279134?
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Do Minimum Wages Reduce Employment and Training?

Guntur Sugiyarto and Benjamin A. Endriga

Abstract

This paper examines minimum wage effects on employment and training provision for various
workers in different kinds of firms using unique firm-level data. The results show negative
effects on unskilled workers but not on skilled ones, with the adverse effects more severe in
small firms. Minimum wages also reduce in-house training for unskilled workers while the effects
on skilled workers are mixed. The findings suggest that having been forced to pay higher wages
because of binding and increasing minimum wages, firms reduce hiring and training of unskilled
workers, leaving them unemployed and untrained. This should be of utmost concern as firms
seem to adopt a short-term policy at a long-term cost for unskilled workers, further
exacerbating unemployment and poverty. Moreover, the crucial role of firm characteristics in
determining the adverse effects of minimum wages has raised reservations regarding previous
studies that have used data from household or labor force surveys, which do not take this issue
into account.

Endriga, B. A. & Sugiyarto, G. (2008, May). Do minimum wages reduce employment and
training?. https://www.adb.org/sites/default/files/publication/28371/wp113.pdf