Wage-hike declaration premature?

Published by rudy Date posted on June 2, 2010

MALACAÑANG’S announcement of a wage increase—possibly “within the week”—appears to be premature because the regional wage boards are still holding consultations and deliberations on whether they will approve one.

In a phone interview, Ciriaco Lagunzad, National Wages and Productivity Commission executive director, said on Wednesday that the deliberations are done by voting and series of hearings involving representatives of the Departments of Labor and Employment, and of Trade and Industry, and the National Economic and Development Authority.

“Each region has its own regional wage boards which have tripartite members. There are regions that receive 10 petitions [for wage increase]. Each of them holds consultations and public hearings, from which they deliberate, and later make an announcement,” Lagunzad said.

For one, the National Capital Region (NCR) wage board members are still deliberating on the matter.

Since the deliberations are still ongoing, he said he could not give the exact amount of wage increase, but said he is looking forward to the announcement “soon.”

Labor groups are asking for a P75 to P125 daily wage increase.

He said several factors have to be considered in deciding on whether to approve a wage hike. These include the need of the workers, the capability of the employers to provide additional salary, the inflation and deflation rates and the employment rate.

Monetary sector’s projection

Meanwhile, the monetary authorities anticipate a wage hike much lower than the P75-to-P125 per-day rate increase sought by labor leaders, helping assure employers that the adjustments would only be enough to keep businesses going and keep inflation from kicking up.

At the sidelines of a roundtable the Rural Bankers Association of the Philippines hosted on Wednesday at the Hyatt Hotel, Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. said the BSP plotted an inflation scenario in which the wage adjustments should not top P25 per day.

“We incorporated a wage-hike increase lower than the P75 to P125 per day,” Tetangco told reporters.

He would not discuss the monetary implications such an adjustment presents to an economy that already grew by 7.3 percent in the first quarter.

What he did not say was that a daily wage hike larger than P25 could already threaten the year’s target inflation ranging from 3.5 percent to 5.5 percent.

“It all depends on the timing and magnitude of the adjustment. If that is implemented, say, in the second half, then the impact would just be for half the year,” Tetangco said.

Much earlier, BSP Assistant Governor Maria Cyd Tuano-Amador said inflation this year should average only 5.1 percent on the basis of within-forecast wage, as well as transport-fare hikes.

Next year’s average inflation, Amador said, should also average only 3.7 percent on the same basis. But without the wage increase, inflation this year should not top 4.4 percent and only 3.2 percent next year.

Published reports, however, do not seem encouraging for both business and regulators like the BSP given the strong labor lobby for a wage hike as high as P125 per day.

Officials said the BSP incorporated a wage increase of only P25 per day, plus a hike in transport fare by another 25 centavos, which imply an inflation rate averaging 5.1 percent or within the government’s target range.

(S. Fabunan and J. Vallecera)

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