Economic managers nix proposed wage hike

By Richmond Mercurio (The Philippine Star), September 17, 2016

MANILA, Philippines – The government’s economic team is unlikely to back the Department of Labor and Employment’s proposed P125 across-the-board wage hike for workers in the private sector as this would impede economic growth and bloat unemployment, Trade Secretary Ramon Lopez said.

Citing data from the National Economic and Development Authority (NEDA), Lopez said the planned P125 across-the-board wage hike could slow the pace of the country’s economic acceleration placed at 6.5 percent to 7.5 percent to somewhere between 5.5 percent to 6.5 percent.

He said the proposal would also expand the country’s unemployment rate to about 7.3 percent from a baseline of 6.1 percent.

“Definitely overall, what this shows is inflation will go up. That is also one percentage point down for our gross domestic product. And unemployment rate would increase one percentage point more or less because obviously once prices go up, (companies) would cut on their workforce,” Lopez said.

“So in other words it does not look good, so even NEDA does not support it. We (in DTI) will not support it definitely,” he added.

DOLE Secretary Silvestre Bello has earlier ordered all the Regional Tripartite Wages and Productivity Boards to conduct nationwide consultations on the legislative measures proposing for a P125 across-the-board general wage increase for workers in the private sector.

The Labor chief said nationwide consultations are aimed at studying legislative measures on the P125 general wage increase for workers in the private sector which will be filed in the 17th Congress.

The Foundation for Economic Freedom (FEF), for its part, has likewise expressed concern over the plan of DOLE to seek a national minimum wage, saying the country already has one of the highest minimum wages in the world relative to average wages.

“Seeking to impose high minimum wages in the entire country irrespective of local conditions of unemployment and cost of living will only drive investments and jobs away from the countryside,” the group, which includes former senior economic ministers and undersecretaries as members, said.

“A national minimum wage policy will further deepen poverty and unemployment in the countryside, contrary to the administration’s policy to rebalance growth away from the National Capital Region,” it added.