Gov’t rejects PHP 125 daily minimum increase

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By William Casis | FilAm Star Correspondent

Economic Planning Secretary Ernesto Pernia said the government rejected the proposed PHP 125 increase in the daily minimum wage, saying this could displace workers, increase inflation and affect the economy.

He said NEDA conducted an impact analysis and found that the proposed wage hike would affect employment because many small companies would not be able to afford to keep their workers or hire more.

“Especially micro, small and medium enterprises will be hard up with that kind of an increase,” Pernia said.

Inflation is projected to rise to 5.5 percent from less than 2 percent in August if the suggested wage hike is imposed.

The same study said the salary increase would result in a 1-percentage-point drop in the country’s gross domestic product and a 1-percentage-point increase in unemployment.
It could slow the pace of economic growth from a range of 6.5 percent to 7.5 percent to between 5.5 percent and 6.5 percent.

He said this would also worsen inequality across regions and dampen investors from investing in the regions especially those seeking lower minimum wages. MSMEs will be affected.

Pernia, who serves as the director-general of the National Economic and Development Authority, said Labor Secretary Silvestre Bello agreed with the position paper prepared by NEDA.

“I mean that [PHP 125 wage increase] is not going to pass. We already talked to Secretary Bello, and he agrees with our position,” said Pernia.

Pernia said the position paper contained the explanation that different regions had different conditions, inflation, cost of living and that one could not just enforce a uniform increase across all regions.

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