ECONOMIC managers of the Marcos administration yesterday warned that increasing the country’s daily minimum wage by P150 would slow down economic growth, increase unemployment, and accelerate inflation further.
A P150-wage hike would cause the gross domestic product (GDP) to slow down by 0.2 to 0.9 percentage points, and the unemployment rate to increase by 0.3 to 1.0 percentage points, according to National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan.
“Obviously, we understand what the problems are — high cost of energy, poor infra, high cost of business,” Balisacan said during the briefing of the Development Budget Coordination Committee (DBCC) with the Senate.
The NEDA chief added: “We’re trying to address those, but what I’m trying to say is that if we (do) address the problem of low incomes by raising the wages by legislative (measures)… then these other factors that are required by investors to come will happen much later.”
This comes as Senate President Juan Miguel “Migz” Zubiri is pushing for a P150 wage increase for all private sectors across the country, a measure that has already been approved “in principle” by the Senate committee on labor, employment, and human resources.
“In principle, the Senate Committee on Labor has already approved our Across-the-Board Wage Increase Act, and a Technical Working Group (TWG) is set to discuss a proposed graduated wage increase scheme for our MSMEs (micro, small, and medium enterprises),” Zubiri said in May.
We expect that the Committee Report will come out in about two weeks, and we hope to pass the bill before we adjourn in June,” he added at the time.
Economic growth
The second-quarter economic growth stood at 4.3%, slower than the 6.4% in the first quarter and the 7.5% in the same quarter last year, marking the fifth straight quarter of deceleration and the slowest showing in nine quarters since the COVID-induced recession.
Meanwhile, inflation clocked at 4.7% in July, down from 5.4% in June and 6.4% in July 2022, but still higher than the government’s target range of 2.0% to 4.0%.
For his part, Finance Secretary Benjamin Diokno reiterated that the P150 wage increase would increase inflation by 1.4 percentage points.
During its latest policy meeting in June, the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) projected inflation to average 5.4% this 2023, slower than the 5.8% recorded in 2022, but still above the target range.
“The proposed P150 increase could bring the country’s inflation rate further away. Right now, baka tumaas ulit ‘yung (this could accelerate) inflation and also that kind of increase will have a second-round effect, which would mean that wages could be passed on by businesses, industries, and other institutions to consumers,” Diokno said. (GMA Integrated News)
