More labour regulation could motivate businesses to reduce reliance on cheap workers and be more INNOVATIVE

Businesses should increase focus on innovation and automation as workers become bigger pains in the ass.

Tightened labour contracting laws is good. It will force businesses to rely less on labour and be more reliant on technology and capital solutions to improve productivity. When the process of hiring workers is convoluted and highly-regulated, well, why bother, right? Tighter labour regulations and higher minimum wages could therefore kill lazy entrepeneurs and reward innovative ones. Businesses that find a way to do away with workers altogether will win.

The trouble with those “activists” supposedly “representing” the “plight” of Filipino workers is that they seem to have it in their pointed heads that the most important input into the economy is labour. It isn’t. That’s just the Kool Aid doing an inception job on snowflakes who are too lazy to think. Labour is nothing without capital. Without the SM Group, without those branded food chains, without those vast mining operations, without rich people’s big mansions to clean, without chi chi private school “influencers” patronising “trendy” beach resorts, without the First World’s rich ageing retirees, vast armies of Filipino workers will still be pushing karitons around collecting old newspapers, knocking on doors begging for kaning baboy or selling cigarettes by the stick on Manila’s traffic-clogged intersections.

The core issue with Philippine labour is that there are just too many workers. When you have an enormous supply of a commodity and not enough buyers, guess what: prices fall. Why do prices fall? It’s because starving throngs of people looking for work are willing to take anything. For their part, employers who are spoilt for choice feel no pressure to pay more. What labour “activists” are essentially asking for is to legislate against the law of supply and demand.

Over the short-term business will comply.

In essence, laws that pander disproportionately to “works’ rights” and set arbitrary “minimum wages” are all short-term solutions. Eventually, the market will recover.

Here’s how…

The ill-effects of these anti-business labour laws are not necessarily all bad. They could be good for an entirely new class of capitalists and workers — the smart ones. When it gets simply too hard to hire workers and the ones you already have become such big pains in the asses because of their new-found sense of entitlement, it creates incentive to cut low-added-value labour out of the business equation. This is good news for smart workers — those who contribute sustained productivity gain to business operations.

The 21st Century offers vast opportunity for businesses to reduce their exposure to the messy world of labour relations. One just need be creative and imaginative enough to come up with less labour-intensive business models, apply more technology solutions to increase automation in operations, and find innovative ways to tap modern skills available in the vast market of skilled freelance workers.

Capital should not be cowed by rabid and infantile labour activism. The biggest weakness of labour “activists” is that their ideology and mindsets remain imprisoned by half-century vintage Cold War rhetoric. They fail to appreciate how fluid capital is today and how it easily flows around, over, underneath and even through any manner of unreasonable regulation governments presume to implement. The key therefore is to focus more on competing and less on whining. This goes out to both capital and labour. Innovate more, whine less. Compete like adults and leave the need for coddling to the “temperamental” ones.

benign0

benign0 is the Webmaster of GetRealPhilippines.com.