Wage rate and local migration correlation:

addressing rapid urbanization in Metro

Joseph G. Taluban Jr.

According to a report by Economist Intelligent Unit (EIU), population of Metro Manila could

balloon to 29.3 Million by 2030, from an estimate of 23.2 Million in 2015. Metro Manila

population is overwhelmingly growing and driving to this rapid growth is the persistently

high rural-to-urban migration flows, despite declining fertility rates (UNESCAP 2016).

Why are people flocking to Metro Manila/ NCR? These are because of obvious reasons

1. Jobs are available in the Metro City and fewer and limited opportunities are in the rural

areas. 2. People want to get away from poverty in the province, the lure of “ciudad

concept” amongst Filipinos where all grand, glamour and promises of better life are all

found in the Metro. 3. Good Education and Healthcare are mostly available in Metro

Manila and other reasons like unproductive land in the province.

However, the reality is that some of those who move to the City (NCR and adjacent to

Metro Manila) aren’t guaranteed of these opportunities and end up becoming jobless,

homeless (slums) and actually do not get to have a better quality of life as what they have

hoped for. They even contribute to the detrimental growth & development of Cities

(informal settlers blocking areas for planned site developments), housing issues and

concerns where these settlers waste go directly to canals, rivers and add up to existing

air, land and water pollution problems. Crime rates are up due to hostility of these areas

due to joblessness. Hence, becoming a cyclic problem.

Urban Migration or Urbanization is an inevitable and irreversible process; it is an

intrinsic dimension of social development. It is basically defined as the population shift

from rural to urban areas. It is not merely a modern phenomenon; it could be tracked to
historic transformation of human social roots from Nomadic settlers down to the modern

times. A simple model for explaining the reasons why people move has been formulated

in terms of the “pull-push” hypothesis where those living in the rural areas who long for

opportunities transfer to urban areas where these are accessible and those residing in

urban areas who wish to get away with the effect of city life (pollution, deterioration) then

move back to the rural areas. These patterns tend to repeat depending on individuals’

desires and given opportunities in a period of time.

Another Theory that could explain this trend is Harris-Todaro model, where migration

decision is based on one expected income differentials between rural and urban areas.

As Metro Manila currently offers a higher income or wage rate in the country, flocking to

the National Center is truly inevitable.

Given these premises and that of Urban Migration is due to economic and lifestyle pursuit,

are those who move qualified to land in Metro jobs? The scary answer is that majority of

these seekers are under qualified and lacks the necessary educational background.

Human Capital Theory explains the role of Education in improving an individual’s

economic state & quality of life which in turn will contribute to the overall Economic

Development. Without proper education, the problem of Unemployment and

Underemployment will prevail.

What about other regional opportunities and provincial strengths? Does this mean there

are absolutely no available job opportunities and Educational institutions in our vast

countryside lands? We know that there are emerging Regional Centers spread all

throughout the country that are being developed and no longer is Metro Manila the only
City Center in the Philippines. Our current policy of wage rates isn’t supportive either.

NCR still holds the highest wage rate in the whole country (DOLE NWPC, as of May 2019)

and that is why workforce still flock the Metro. Inflation rate in NCR and Areas outside

NCR (AONCR) is relatively the same at 5.1 and 5.3 percent respectively (PSA), therefore,

cost of living in the Metro and in the Province is almost the same.

Therefore, there should be steps to alter or deconcentrate the rapid urban migration

process happening in Metro Manila. Currently, there is an unbalance affecting our

Country in terms of opportunities and growth.

The outcome of this research will help in policy making, establishing the correlation

between compensation and urbanization happening in Metro Manila. It will also seek

solutions and alternatives to further decongest NCR where one of it is the establishment

of a National Minimum Wage (NMW).

Research Question:

Is setting a comparable compensation rate for Rural Areas or a National Minimum wage

be the solution related to local migration happening specifically in Metro Manila?

Sub-Question:

What are the implications when a National Minimum wage is set? Will it affect their

decision to stay in the Metro or go back to the province?

1. To know if comparable compensation rates for Rural and Urban areas or a

proposed National Minimum wage will be a major consideration for Metro Manila

local migrants to come back or settle in the Province.

2. To identify other factor to consider in addressing Urban Migration.

3. To identify patterns of in city migration, socio economic considerations and

implications.

4. To help in the formulation of a policy to alleviate the effects of rapid urbanization

in analyzing the socio economic sector for Urban Planning.

A. Conceptual Definition

Urban Migration or Urbanization is defined as the increasing share of population living in

urban areas (Poston and Bouvier 2010). In developing countries, it has driven the

development as explained theoretically through the Core-Periphery (Friedman) wherein

Labor is the periphery seeking opportunities in the Core—the City. This set up has

complemented each other, however, in the advent of Urbanization the City continuously

expands and labors tend to occupy the City to minimize transportation and

accommodation costs, resulting the overcrowding and depletion of the City Center.

People mainly flock to the City because of better compensations compared to Rural

areas. Compensations, in terms of wages, are being set depending on qualifications and

geographically in the Philippines. Although there are new growth centers spread

throughout the country (Subic/Clark, Cebu, Davao) which provide employment in the
countryside, governing compensations schedule per region is being implemented in these

centers.

Minimum Wage in the Philippines is standardized regionally, as stipulated in R.A. 6267

or the Wage Rationalization Act, and has been based on certain factors such as assumed

cost of living, poverty threshold and employment specific to that region. There are

currently 17 regions in the country with varying Minimum wage rates. Metro Manila or

NCR currently holds the highest Minimum wage rate.

B. Operational Definition

National Minimum Wage is a proposal that defies the existing policy on standardized

wages based on regional factors. Related variables to achieve this concept are the

following:

1. Decentralization -process of distributing or dispersing functions, powers, people or

things away from a central location or authority.

2. Regional growth- ability of a region to produce goods and services and generate

its own employment.

3. Equity- inclusive access to the resources and opportunities necessary to improve

the quality of lives regardless of socio cultural backgrounds.

C. Conceptual Framework

We then deduct that Urban Migration is brought about by the desire of people to get higher

compensations which are offered in the Metro despite the growth of regional centers,

decentralization efforts by Public and Private entities. Equity can only be achieved if there

is a Comparable or Equal Compensation rates.

D. Hypotheses

1. There is a correlation between Wage Rate and Local Migration.

- Looking at the established framework, Wage rate is the variable that

manipulates the decision to Migrate and the decision to stay in the province as

well.

2. There is a significant difference between Urban and Rural Wage earners and

in their decision to migrate.

-Urban Workers obviously have higher compensations than their Rural

counterparts and their decision to migrate or stay is due to this.

E. Proposed Methodology:

Due to the scale of the research, it will limit into a descriptive comparison- taking few case

models of migration patterns such as:

1. Whole family migrating from the province to NCR due to economic and/or

social reasons.

2. Household(s) working in NCR while their dependents are living in a nearby

province.

The research will concentrate on Minimum Wage earners and is considered as the main

parameter. It will then analyze factors that will affect their decision to return and settle in
the province if a NWM is set. The research will also limit its case to local migrants from

the Visayas and Mindanao.

The probable timeline for the study will take from 5 to 8 months depending on the success

of data gathering.
References:

1. Ordinario, Cai. “Manila’s Population could expand to 29.3M by 2030 due to

Urban Migration-EIU report” Business Mirror. 5 October 2016. Online article.

www.businessmirror.com.ph/manilas-population-could-expand-to-29-3m-by-

2030-due-to-urban-migration-eir-report/

2. Lee, E. (1966) A Theory of Migration. Demography, Vol. 3 No. 1, pp 47-57

3. Harris, John R. & Todaro, Michael P. (1970), “Migration, Unemployment and

Development: A Two-Sector Analysis”, American Economic Review, 60 (1):

126-142.

4. Becker, Gary S. (1993). “Human Capital: A Theoretical and Empirical Analysis,

with Special Reference to Education” (3rd ed). University of Chicago Press.

5. www.nwpc.dole.gov.ph

6. Summary Inflation report Consumer Price Index. Released date: January

4,2019. https://psa.gov.ph/statistics/survey/price/summary-inflation-report-

consumer-price-index-2012100-december-2018

7. Poston, Dudley Jr. L. & Bouvier, Leon F. “Population and Society: An

Introduction to Demography”. Cambridge University Press, 7 April 2010.

8. Friedman, J. ”Planning in the Public Domain: From Knowledge to Action”,

Princeton, NJ: Princeton University Press. 1987.

9. R.A. 6727 “Wage Rationalization Act” 1989.