Wage hike to hurt MSMEs – NEDA

Louella Desiderio - The Philippine Star
Wage hike to hurt MSMEs � NEDA
Trade unions march from España Boulevard to Mendiola Peace Arch in Manila to commemorate International Labor Day on May 1, 2023, the first under the Marcos Jr. administration. Labor groups continue to call for wage increases and respect for the right of workers to organize.
Philstar.com / Kaycee Valmonte

MANILA, Philippines — The National Economic and Development Authority (NEDA) is opposing the proposed P100 legislated wage hike, saying this would hurt the country’s micro, small and medium enterprises or MSMEs.

NEDA Undersecretary Rosemarie Edillon told reporters yesterday the agency was asked to make an assessment on the proposed wage increase for private sector workers.

Edillon said the NEDA looked at the savings from the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act and the affordability of the wage increase.

“But we saw there for the micro, small and medium, they can’t afford it. The savings from CREATE will not be enough to cover the additional wage increase,” she said.

The CREATE Act reduced the corporate income tax (CIT) rate to 20 percent from 30 percent for those earning P5 million and below.

As for large corporations, the CIT rate was brought down to 25 percent from 30 percent.

Earlier, the Foundation for Economic Freedom (FEF), composed of top economists, former and present Cabinet secretaries and undersecretaries, leading figures in the academe, opinion makers and prominent members of the business and finance community, also voiced opposition to the proposed measure, citing damaging effects on the national economy.

In particular, the FEF said the wage increase would push up inflation as companies would be forced to charge higher prices.

The group said the higher inflation rate would lead to interest rate hikes that would reduce investments being made and jobs created by companies.

As the national wage increase does not consider the varying situations across regions, FEF also said many small- and medium-sized enterprises would be forced to close or lay off workers.

Instead of a wage hike, FEF is proposing reducing tariffs on rice and abolishing or expanding the import quotas for corn, chicken, pork and fish to make food more affordable.

Counterpart measure

Following the Senate’s passage of the proposed P100 legislated daily minimum wage increase for private sector workers, labor groups are pressing Congress to swiftly act on counterpart measures.

The Federation of Free Workers (FFW) yesterday called on the House of Representatives to immediately pass a bill granting pay hike.

“Ideally, one that surpasses the Senate’s proposal, to reflect the real economic pressures faced by Filipino families more accurately,” the FFW said in a statement.

The group asked Congress to merge the proposed P750 wage increase with the P150 pay hike proposal.

FFW president Sonny Matula said workers intend to meet with Speaker Martin Romualdez and other congressmen to seek their support for the swift passage of the counterpart measure.

The P100 wage hike approved on third and final reading by the Senate does not fully cover workers’ needs, according to FFW vice president Jun Ramirez.

“It is a critical move toward rectifying a wage system that has, for too long, failed to ensure justice and equity for the Filipino working class,” he said.

Labor groups led by the Kilusang Mayo Uno are staging a protest to pressure lawmakers to pass the counterpart bill.

Youth organization Samahan ng Progresibong Kabataan criticized House members for opposing a legislated wage increase, while their counterparts in the Senate unanimously passed the measure.

The group accused Reps. Joey Salceda of Albay and Stella Quimbo of Marikina as well as Deputy Speaker David Suarez of using MSMEs as “a shield against wage hikes.” — Mayen Jaymalin, Mark Ernest Villeza

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