Despite High Education Levels, Filipinos Workers Among The Lowest Paid

From the Yahoo news

The ILO's "Global Wage Report 2010" also noted a paradox in Philippine wage trends: Higher education did not correlate with higher wages, contrary to the pattern in many other parts of the world.

The ILO's "Global Wage Report 2010" also noted a paradox in Philippine wage trends: Higher education did not correlate with higher wages, contrary to the pattern in many other parts of the world.

In the Philippines, low pay--particularly among domestic workers--"is partly caused by the lack of proper wage protection, notably the common practice of excluding such workers from the application of minimum wages," said the latest report.

And while low wages are correlated with low educational attainment in most parts of the world, the Philippine case seems to be the opposite.

"Surprisingly, the Philippines seems to represent an interesting exception to this common pattern, registering a high incidence of low wage employment among those with a primary and secondary education," the report said. (all bold emphasis mine)

So what does all these suggest?

Here are some:

In contrast to common wisdom, education per se does not automatically translate into jobs or employment.

There is a great deal of mismatch between the educational output and the jobs demanded in the marketplace. The shift towards the information economy is likely to enhance the requirements for work specialization as niche markets expand.

The investment environment likewise determines employment conditions. Excessive government intervention only serves to reduce opportunities by distorting investment and labor markets.

Low wages does not translate to more employment.

Of course all these have policy ramifications.

Mass (free and compulsory) education and low wages are not optimum policy options that deal with socio-economic development.

Interventionism (via manifold regulations and inflationism) only makes good instruments for the promotion of the interests of politicians and to the specific groups they implicitly represent than of the general public. This applies to public education as well.

Professor Barry Simpson explains,

Public education, with the added feature of compulsion, reduces the cost to politicians of making wealth transfers. The cost of making transfers is diminished by reducing the opposition to transfers. If politicians can reduce the cost of transferring wealth by reducing the opposition to them, then they can continue to authorize transfers to interested parties for a price.

At the end of the day, good intentions don’t square with economic reality. And the Philippine experience is a demonstration of such unintended consequences.