NEDA has reservations on proposal to raise minimum wage

MANILA, Philippines — The National Economic and Development Authority (NEDA) has warned against proposals to raise the minimum wage, saying it would lead to a higher inflation that would affect all sectors.

NEDA Director-General Karl Chua said inflation or the rate by which the level of prices of goods and services is rising, has a huge effect on the economy and that a higher inflation rate is "a tax on all."

If the daily minimum wage in Metro Manila, which is now at P537, is raised by 6% or by P39, the country's inflation would increase by one percentage point, he added.

"This will affect all Filipinos. Perhaps the minimum wage earner will benefit from it. But the informal workers who are not earning the minimum wage, for instance, those with piecemeal pay or those whose pay is lower than the minimum wage, would also be affected," Chua said during a meeting with President Rodrigo Duterte and some Cabinet members last Tuesday.

"We should be concerned not only for one sector or one type of worker. We should be concerned about everybody. If we raise the minimum wage and if the fares in jeepneys and buses also increase, our inflation rate will rise by 1.4%," he added.

Chua said such adjustments would raise the inflation to 5.1%, higher than the 3.7% expected by the central bank. He explained that a higher inflation leads to a higher interest rate, which would affect sectors that are borrowing money like the government, businesses and people who source funds from cooperatives.

"We are watching the inflation. We do not want it to be high because everyone is affected. It's like taxing all Filipinos. Those who borrow money will be affected through a higher interest rate," the socioeconomic planning secretary said.

"Because of the crisis, the prices of goods are increasing. If we do not pay attention to it, it wmay spiral. This means not only the prices of oil and gas will increase. The prices of food, electricity, water and other items may follow," he added.

Last week, Labor Secretary Silvestre Bello III urged the regional tripartite wages and productivity boards across the country to speed-up the review of the minimum wages, citing the rising oil prices caused by the Ukraine crisis.

The Trade Union Congress of the Philippines has filed a petition seeking to raise the daily minimum wage in Metro Manila by P470, citing the need to help workers cope with the rising prices of goods.

Wage subsidy

The labor department, for its part, is proposing the giving of a P24-billion subsidy for about one million minimum wage workers from April to June.

"With the current wages, Mr. President, now extremely inadequate particularly for the minimum wage earners and the government’s economic recovery in full swing, subsidies may still be extended to vulnerable workers particularly those most severely affected by fuel prices and its domino effect on prices in food and basic goods and services like those in the transport sector," Labor Assistant Secretary Dominique Rubia-Tutay said.
 
Tutay noted that the labor department proposed the giving of wage subsidies to private sector workers affected by COVID-19 last year.

"At this time, and given the indirect impact of the global tension (on) the Philippine economy, we see...that the wage subsidy remains important to Filipino workers," she added.
 
Tutay said the subsidies can be given while the wage boards are assessing the wage petitions filed by labor groups. She noted that eight wage hike petitions have been submitted in six regions, two of them requesting for a P750 daily minimum wage.  A new wage order may be issued in May or June, the labor official added.

"Any adjustment in the minimum wage at this time shall focus on the recovery of erosion or lost purchasing power of workers, and closing of minimum wage and poverty threshold gaps," Tutay said.

Tutay also called for the immediate appointment and reappointment of the nominees for the employers and labor sector representatives to the National Wages and Productivity Commission and the regional tripartite wages and productivity boards, saying this would allow the hearings on wage hike petitions to move forward.

Acting presidential spokesman Martin Andanar said Malacañang is looking into the recommendations of the labor department.