The proposed P100 increase in the daily minimum wage for private sector workers, once implemented, will negatively affect the country’s economic growth, inflation and unemployment rate, according to the National Economic and Development Authority (NEDA).
“Well, our position at NEDA is, it’s not the right time that you see we are trying to work very hard to sustain the momentum in reducing inflation to a target of 2 to 4 percent and the last thing we want is to reverse those gains we have achieved for the last several months,” said NEDA Secretary Arsenio Balisacan.
“For sure any proposed P100 wage hike would negatively impact inflation prospects. Our GDP (gross domestic product) estimate shows that GDP growth could be hit negatively,” he added.
The Senate recently approved the proposed “P100 Daily Minimum Wage Increase Act of 2023” on its third and final reading.
“The P100 wage increase is actually not enough. But we have to strike a balance between the employers and the employees,” Senator Jinggoy Estrada, principal author of the bill, said in a radio interview.
Given this, Balisacan said the wage increase, depending on how it is implemented, could have a 0.1 to 0.5 percentage point reduction in the GDP.
“If the lower number assumes, the wage will be applied to minimum wage earners. But if there are cascading effects on that to other workers, then it would go as high as 0.5 percentage point reduction in our GDP and that’s quite substantial,”Balisakan explained.
The across-the-board minimum wage increase could also increase unemployment rate by 0.2 to 0.7 percentage point any
Aside from these, Balisacan said the inflation that would be induced by the wage hike is around 0.2 to 0.8 percentage point.
“We are not saying that we are against any increases in wages, in fact, … we would want some improvement in wages, but we would rather have those wages negotiated on the regional level because we have established regional tripartite discussions between government, firms and workers and the situation across the country are so different,” he said.
Under the proposed bill, establishments with less than 10 employees, establishments utilizing a capital of P3 million and below, and establishments registered under RA 9178 are exempted. IMT (with reports from PNA)
