Sometime ago, as the prices of basic commodities continue rising, President Gloria Macapagal Arroyo ordered the Regional Wage Boards all over the country to determine if salaries could be increased. We wondered how those boards would respond to the order. Wage increase is a complex matter. It does not only provide more cash in the pockets not only those of the labor sector but all those in the field of earning, which includes the management, whether low, middle or top.

With more money on hand it would not be assurance of acquiring enough goods necessary for a decent existence. With more money in our pockets, we expect that more goods could be purchased. However, it does not always work that way.

It depends on the purchasing power of the money. There is no assurance that the purchasing power of our money will remain the same when there will be more money in circulation. It may or it may not. Some economists contend that the value of the money depends upon production.

At the end of the First World War, defeated Germany was destitute. Her economy was in shambles. As a vanquished nation, she has to pay for war damage.

Unemployment was high. Adolf Hitler, the Chancellor of Germany at that time was of the opinion that as long as economy is based on money, those who have the control of the money can impose their will on those who lacked it. He said that the community of nations does not have to live by the value of money but of real production, which in turn gives value to money. He contended that production is the real cover of the currency and not a safe or vault full of gold.

He decided to base the German currency on production. The nation obtained imports by direct exchange of goods, subsidized exports when necessary and to create money only when men and material were available for production instead of running into debt by

borrowing it. From 1933 to 1936, Hitler reduced German unemployment from six million to one and the prosperity that followed alarmed the democratic countries.

Since international finance depended on money the economics of Hitler spelt their ruin so he must go.

We do not advocate substituting production to cover the value of our currency Instead, we try to point out that a more permanent solution to our problem is production rather than rely upon the fluctuating value of money. If production lags behind, we cannot hope for a strong purchasing power of our money. There are countries, which import raw material and convert them to finished products for export. Japan is one of them. In industrialized countries, wage increase is tied to production. The more one produces, the bigger is his take home pay. In such a way the value of his money is tied to production.

Our money is imported, that is we export labor and expertise to earn money. Take for example our market for maritime manpower. Philippine seamen are enjoying premium wages abroad. However, shipping companies are starting to eye maritime personnel from China, India and other countries, though of lesser competence but will accept lower salaries. If we raise the price of our labor without raising the quality, we might be pricing our goods out of the world market. Ultimately, we will be edged out in that field.

. The Regional Wage Boards would have a hard time convincing labor to go easy on increases. Wage increase without increase of production is counterproductive.

We will have money but the purchasing power will be low. We would not like it at all.