The gap between the rich and the poor is becoming wider and wider. Sadly, the middle class is not growing. The fast erosion of middle class have helped accelerated the growth of the poor sectors in our society. A considerable number of middle class families a decade ago identified and consider themselves now as part of the lower C, D & E class of our society better known as the poor and struggling families.
In almost all global societies, the sad reality was that the rich became richer and the poor became poorer simply because doing business is meant only for the rich.
Yes, the phrase “doing business is meant only for the rich” is highly debatable, but the hard facts of life will point out that only the rich can afford to establish a competitive business.
The rich people with its clout and resources have successfully established business dynasties and then systematically establish political dynasties either directly or indirectly. The ruling business elite through the constitution strategically limit as well the ownership rights of foreigners who wish to pour massive foreign direct investments as allowing huge foreign direct investments will mean encouraging fierce competitions that later on may change the rules of the games.
With the influence of the ruling business elite, most governments, both local and national, are imposing so many burdensome fees before one can establish a business. Procuring business permit to legally establish a business requires one to undergo so many procedural steps of which you will have to pay certain prohibitive fees for each and every steps and procedure.
Hence, any person with very limited capital will have to use up the large portion of his business capital just to process and pay for the required business license and permits. Hence, with eroded capital, the likelihood of failed business venture is very high.
That is why most small businesses or small entrepreneur do not register their business and end up in the underground economy, this situation effectively place the business of the poor sectors as illegitimate.
Marketplace and street business are dotted with business entrepreneur in the underground economy. Most of them are small business peddlers and vendors with collapsible stalls who fall prey to crooked police and or city, town and barangay officials. In most cases, these peddlers and or vendors are paying daily fees for the right to peddle and sell their products with the payment not going to the government coffers.
The underground economy is growing as the last resort of individuals who can neither afford to establish a legal business nor find suitable jobs sufficient enough to support the subsistence of their families.
To complicate matters, a minimum wage system is in effect for almost 3 decades now, but is hardly helping either the small and medium businesses or the labor sectors throughout the archipelago. Since the law for minimum wage order was enacted, the government failed miserably to effectively monitor its implementation and therefore also failed to assess its effectiveness.
The initial ill effect of minimum wage system results to massive lay-offs of regular employees and then followed by conversion and classification of the majority of the work force as contractual workers.
Unfortunately, a huge number of small and medium businesses refused to pay its workers in accordance with the system. To perpetuate the practice, they either falls prey to some crooked members of government monitoring and implementing agencies or when caught just bribe the government agency concerned and or close the business and then establish a new business again in different location.
Those small and medium businesses who abide by the minimum wage law can not expand their businesses as hiring more workers will risk the financial health of the company with adverse resultant effect of business losses and eventual closures of businesses. The minimum wage law not only discourages business expansions of small and medium enterprises but also prevent hiring of additional workers.
Unreasonable and authoritarian minimum wage law also encourages mechanization of the business process thereby depriving the growth of human labor.
On the other hand, the ruling business elites keep on expanding their businesses. They have adopted so many ways and means that puts burden to the work force like broken schedules, charging processing fees for every payroll disbursements, forcible transfers of assignments and end of contract (ENDO) means of employment.
In the Philippines, the proliferation of shopping malls, chain supermarkets and retail giants are mercilessly killing traditional public markets, nearby small groceries, sari-sari stores and ready to eat food shops.
These giant retailers are being given business permit in almost every place they want to establish even though it will disturb the regular flow of vehicles thus causing daily monstrous vehicular traffic. The government has negligently failed to regulate and or institute geographical zoning suited for commercial, industrial and residential areas. In some cases, hundreds of trees need to be uprooted to give way to malls and shopping centers.
The Philippines situation is ripe for the fast and continued growth of the poor populations. Occurrence of more hunger incidence will become apparent.
The Philippines government has failed to create sufficient domestic jobs and is proudly happy to export its people to any and all country that can offer jobs for Filipinos. Even in civil war torn countries and in countries known to maltreat foreign workers you can find huge number of Filipino overseas workers.
The Philippines government is likewise killing the middle class and its D and E class of its society as it continually and consistently increases all government and service fees in almost every possible means.
The very evident increases in SSS, Pag-ibig, Philhealth, road fees, toll fees, garbage fees, NBI, Police, Barangay clearance, drivers’ license, drug test, vehicle registrations, real estate taxes, business license and permits and even birth and death certificates are putting very heavy burdens to the working class and to the small and medium businesses not to mention the unreasonably high cost of electricity, water and other utilities.
The Philippines is so unique that even a Birth Certificate indeed has an expiration date.
If government can reduce red tapes, simplify the business registration process, make business permits and business taxes affordable to small and medium businesses and at the same time scrap the minimum wage law, more people will engage themselves in business.
In a democracy where majority of its people as well as foreign direct investments are encouraged to do business, jobs availability will not be a problem. Both labor and business will freely negotiate how much wage is appropriate to receive and or to pay. More members of the families will get employment. People do not have to travel long and far away from their families just to find employment.
Hence, if so many businesses will flourish and majority of the people will be employed, the government will benefit not only in terms of more tax revenue, but will also be able to reduce expenses meant for other services as most of the people will have the money to spend for their basic needs particularly on education and health care services. The government can now afford to increase its budget to increase the salary of government workers and transform its police and military to become a decent and respectable force both domestically and internationally.
The labor sector on the other hand must allow small and business enterprises to flourish. It is the responsibility of the business entrepreneur to pay appropriate wages, whereas, the labor sector must oblige themselves to do the task properly and increase their productivity and efficiency. Poor performing and unreasonably demanding workers encourage mechanization of the business process.
Labor strike, sit downs and deliberate reduction of efficiency and productivity simply aggravates business environment conditions.
Finally, government must be innovative, creative and sensitive to the needs of the people it governs. Good governance is not simply providing dole out to its citizens like the Cash Conditional Transfer Programs.
Government must empower its people. Government must and should improve the climate of doing business. Government must encourage and support small and medium enterprises and or to provide help (financial, marketing and distribution) in establishing and maintaining community livelihood and cooperative programs.
The biggest support the government can do to its people and the business community is to establish sufficient and efficient transportation and distribution infrastructure as well as to reduce the cost of electricity, water, transportation and communications utilities.
Indeed, doing business should be for all and not just meant for the rich people.