THE proposed legislated P150 across-the-board wage hike could be detrimental to the economy as it would hasten the increase in the prices of goods and services in the country, Finance Secretary Benjamin E. Diokno said.
Diokno noted that both analyses by the Bangko Sentral ng Pilipinas (BSP) and the National Economic and Development Authority (Neda) point to a faster inflation rate if the legislators’ wage increase proposal becomes a reality.
A wage hike of P150 would add at least 1.4 percentage points to the country’s inflation rate, the Finance chief added citing Neda estimates.
Diokno further explained that assumptions of monetary authorities for the country’s inflation already include an implied 4-percent salary increase.
If the wage hike goes beyond four percent, Diokno noted, it will have a “positive impact on higher inflation.”
“That is the implication. And you have to explain that to the policy makers: what are the expected implications of having higher than expected wage increase,” the finance chief said during a news briefing.
Diokno told reporters it is better to keep the current system of the country when it comes to increasing wages, which is through the mechanism of Regional Tripartite Wages and Productivity Boards. He pointed out that the International Monetary Fund (IMF) has cited that, compared to other countries, the Philippines’s regional wage board system as a “superior” system in determining wage increases.
In an end-of-mission to the Philippines statement earlier this year, members of a team sent by the IMF pointed out that the country’s regional tripartite wage setting system has “served well” and must continue “to link wage increases to productivity gains.”
The issue on wage increase was discussed in the first Economic Development Group (EDG) meeting, which was co-chaired by Diokno and Socioeconomic Planning Secretary Arsenio M. Balisacan. The EDG cautioned for a “careful review” of wage and transport fare hike petitions.
Lawmakers from both chambers of Congress have put forward proposals to legislate a measure that would mandate a across-the-board nationwide wage increase. (Related story: https://businessmirror.com.ph/2023/04/19/solons-call-for-legislated-wage-increase-amid-price-hikes/)
At the Senate level, panel deliberations have already begun on bills proposing the legislated P150 wage hike. (Related story: https://businessmirror.com.ph/2023/05/11/senate-panel-starts-tackling-legislated-wage-hike-proposals/)
Last week, major business groups nationwide have already expressed opposition to the legislation, claiming it is a “sure threat” against efforts of the country to attract more investors. (Related story: https://businessmirror.com.ph/2023/05/19/biz-groups-wage-hike-bid-may-discourage-investors)