The Bangko Sentral ng Pilipinas (BSP) said the timing and amount of wage increase is crucial to revisiting its baseline inflation forecast for this year and 2011.
BSP Governor Amando Tetangco Jr. said monetary authorities had incorporated a lower wage increase during the last meeting of the Monetary Board, the policy-making body of the central bank.
In April, the BSP had revised the baseline inflation forecast to 5.1 percent from 4.64 percent this year and 3.7 percent from 3.45 percent in 2011, assuming there will be increases in wages of P25, transport fares of 50 centavos for jeepney and P10 flag down rate for taxi, and prices of oil.
The current daily minimum wage in the country’s capital is set at P382, which was approved almost two years ago.
In March, the Trade Union Congress of the Philippines (TUCP) filed a petition before the National Capital Region Regional Tripartite Wages and Productivity Board for a P75 wage increase across the board.
The TUCP earlier said the economy can afford a new round of wage increases and appealed to private sector partners to be more considerate.
The wage board will decide on this within the week while the Monetary Board will meet today (Thursday) for its key policy rates settings.
Tetangco told reporters that the impact of the wage hike on inflation “depends on how much increase the [wage board] is going to be approved.”
He also said that if the wage board decides to approve the higher adjustments in salaries, then its impact on inflation still depends on the timing.
“If it’s, say, implemented in the second half, then the impact would be for just half of the year, so it’s both the amount and the timing. We review the forecast every meeting, if there will be a decision by the next meeting, then probably that will be factored into the new inflation forecast at that time,” Tetangco said.
Last month, the government announced that the economy grew 7.3 percent in the first three months of the year from 0.5 percent last year. –LAILANY P. GOMEZ Reporter, Manila Times
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