Welfarism 24: Comments on the Kasambahay, Solo Parents Bills

My article on FAT-FREE ECONOMCS | Why we don't need the Kasambahay and Solo Parents bills has attracted a number of comments, I provided some reply to those comments, below. These were made on November 26-28, 2012.

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ariaanastacio All I know is that This bill is nothing but helpful. I believe that kasambahays deserve this kind of protection from the law. I really don't see how some people would even think of going against it. I can never imagine it being inefficient and non-beneficial. There's nothing to lose with this bill. So why would people even complain? This bill is a GREAT bill.

Nonoy Oplas · There is a tendency to support legislations that give mandatory welfare, mandatory high wages, mandatory price discounts. It's for the benefit of the target beneficiaries and the poor. But as shown by many rich welfarist countries who provide so many mandatory welfare to domestic helpers, the result is more unemployment. If you combine wages + contributions to PhilHealth, SSS, Pag-IBIG + food and lodging + bonuses and other perks, the cost will not be small. Then only the rich can afford to get a kasambahay and middle class couples who need to work both, one of them must drop from working and take care of the kids and households.

Antonio Perez Works at Shift Supervisor
Nakikita ko naman ang punto tungkol sa kasambahay bill na kadalasan nga naman ay mas ako pa ang nakukuha ng mga kasambahay ngayon kesa sa nakalagay sa bill subalit hindi naman yun para sa mga lumampas na ang sahod sa 2,500(o 2,000 at 1500), kundi dun sa mga nakakakuha ng mas mababa at naaabuso. Paraan lang ito ng gobyerno na makasiguro at maprotektahan ang ating mga kasambahay na hindi naipagpala ng mga mababait na amo.

Maria Mababang Loob · UST
As a solo parent myself, I beg to disagree. I have two minor kids still in school and a sick, elderly father to take care of. Although I am "gainfully employed," an assessment made by the local social worker when I applied for a solo parent ID, what I make is hardly enough to pay all the bills, tuition fees plus other school expenses, food, vitamins, and medicines when one of my kids or myself gets sick. As a result, I am neck deep in debt. Actually, what we are lobbying for is not so much the discounts but equal employment opportunities for all solo parents since some (esp private companies) are reluctant to hire solo parents, esp those with 10 yrs old below kids, even when they're qualified. True, not all solo parents in the Phils. are poor but we know for a fact that the majority are. I used to hire a part-time laundrywoman with seven kids, abandoned by her husband, and there are lots more like her out there who need government protection. What needs to be done is a comprehensive survey of all solo parents nationwide wherein the degree of assistance to be given depends on their prevailing situation. And even "rich" solo parents need a program where they can be counseled, guided and assisted to rebuild theirs and their children's lives esp after a devastating separation!

Nonoy Oplas ·
Thanks for the feedback Ms. Loob. It is true that on average, solo parents are more hard up financially than the husband-wife tandem, but forcing private companies to give mandatory discounts even to non-poor solo parents is unfair. If poverty is the problem, then give quality service to the poor, whether they are solo parents or intact husband-wife household, or even for orphans.

Your concern on equal employment opportunity for solo parents is understandable. There is big room for civil society and corporate responsibility, in helping these people, it's not all government responsibility. As the experience in the expanded senior citizens act has shown, the diswelfare to many old people who cannot buy the medicines they need in small but nearby drugstores is possibly larger than the supposed welfare of mandatory discounts they can get.

Fat-Free Econ 31: On the Kasambahay, Solo Parents Welfare Bills

This is my article yesterday in TV5's news portal,

http://www.interaksyon.com/business/48867/fat-free-economcs--why-we-dont-need-the-kasambahay-and-solo-parents-bills
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State welfare is sometimes defined as “the politicians are well, taxpayers pay the fare.” This is true for taxpayers’ funded welfare and subsidy programs for the poor, like the conditional cash transfer (CCT), education and healthcare, housing and credit, train subsidy and tractors, or condoms and pills.

But there are other state welfare programs that are not funded by taxpayers. Instead, the government forces private enterprises and employers to provide mandatory price discounts to consumers, or mandatory high wages and other benefits to workers. Those caught violating will penalized. Examples of this type of welfare are the minimum wage law and mandatory discounts to senior citizens and persons with disabilities.

There is a measure that is expected to become a law soon - the “Kasambahay Bill” or “Domestic Workers Act” lodged as Senate Bill No. 78 and House Bill No. 6144. The bicameral conference committee has already approved a common measure this week. Among the provisions of the unified bill are:

- Monthly minimum wage of P2,500 in the National Capital Region, P2,000 in chartered cities and first class municipalities, and P1,500 in other municipalities;
- Kasambahay entitled to other social benefits such as Social Security System, Philhealth, and Pag-Ibig Fund, with employers shouldering the premium payments if the helpers receive a monthly salary below P5,000; and
- Kasambahay should have a written contract specifying the terms of employment, a pay slip, daily and weekly rest periods, service incentive leave of five days with pay, 13th month pay, and so on.

The premise is that domestic workers are generally exploited by their employers and so must be protected by the state. This logic can be faulty. Hiring of domestic helpers is a private and often intimate contract with workers who often live in the house of the employers and know many confidential and sensitive information about the household.

It is hardly possible for employers to maltreat their kasambahay as they will be exposing themselves and other family members to danger when the kasambahay will not do their work properly. Like a nanny who fails to attend just for a minute to a baby who climbs the stairs or a high chair, then falls down.

Employers often grant salaries and other perks more than necessary to inspire their kasambahay to do their work well, and make them stay long with the family. There are many instances when a yaya would take care of a baby until he/she becomes an adolescent. The employers no longer treat them as ordinary domestic workers but as extended family members.

Lazy, inefficient or rumor-mongering workers are usually fired by their employers, rendering the mandated welfare moot and useless. In the same vein, abusive employers also lose their good workers in just a few days or months. This is a penalty worse than government-mandated penalties and fines as the household heads can hardly work in their offices since they have to take care of the kids, suffering a steep decline in productivity.

The bottom line is legislative measures like the Kasambahay Bill are generally unnecessary.

Then there are two Senate bills that want to give various mandatory discounts to solo parents. SB 2563, which Senator Manny Villar introduced, seeks to amend Republic Act No. 8972 or the “Solo Parents Welfare Act of 2000,” giving additional benefits to solo parents, including a 20 percent discount on all purchases of milk or formula products, diapers, medicines and supplements, other necessary infant items for children 0-4 years old.

SB 1439 by Sen. Loren Legarda provides the following additional benefits to solo parents:

- 10 percent discount on all purchases of clothing materials for children 0-2 years old;
- 15 percent discount on all purchases of baby’s milk, food and food supplements for children 0-2 years old; and
- 15 percent discount on all purchases of medicines and other medical supplements/supplies for children 0-5 years old.

There are serious flaws in these two bills forcing companies to give mandatory discounts.

One, they assume that all solo parents in the country are poor or financially distressed. This is not true.  Some solo parents are rich or have rich family members who can give them assistance in cash or kind.

Two, the bills assume that all shops, manufacturers and traders that produce or sell these goods are rich or financially stable and hence, can afford to give such discounts without adversely affecting their financial conditions. Again this is not true. While some companies are financially stable, others are not or may even be on the brink of bankruptcy due to various financial, economic and social challenges here and abroad.

Three, the bills assume that even financially unstable shops, manufacturers and importers of these products will continue selling these goods. This is wrong. One result of the implementation of RA 9994 or the “Expanded Senior Citizens Act of 2010” - which requires 32 percent discount on medicine purchases - is that small drugstores that cannot afford to keep selling medicines at a loss have stopped selling essential medicines to senior citizens. Senior citizens living in small and rural municipalities have to travel farther to bigger cities so they can buy at Mercury or other large chain pharmacies.

This proves again that Newton’s third law of motion - “For every action, there is an equal and opposite reaction” - can also apply in economics. This can be aptly restated thus: “For every government intervention to force welfare, there is an equal and opposite reaction that results in dis-welfare."

The economic tensions in Greece, Spain and other European economies that are limping from heavy public debts are additional proof that heavy welfarism can create more long-term harm than benefits. The bills on Kasambahay and Solo parents, as well as many other welfarist programs should be abandoned. Government should focus on promulgating the rule of law, protecting property rights and the citizens’ basic freedom, instead of forcing equality among people. 

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See also:
Fat-Free Econ 27: Sin Tax and Nannyism, October 22, 2012
Fat-Free Econ 28: Poverty, Planning and Populism, October 29, 2012
Fat-Free Econ 29: Anti-capitalism, Fanaticism and the Poor, November 13, 2012
Fat-Free Econ 30: BPOs and Obama, November 14, 2012