NEDA: Legislated wages could hurt small firms, stoke inflation

PROPOSALS to legislate wage increases could stoke inflation and hurt small companies, the National Economic and Development Authority (NEDA) said on Thursday.

“We are trying to temper inflation. And we don’t, at this point, want to add more sources of pain, because I do think that despite the challenges, we are doing well in guiding the economy to sustained growth,” NEDA Secretary Arsenio M. Balisacan told reporters on the sidelines of a briefing.

Headline inflation accelerated to 3.8% in April from 3.7% last month amid rising transport and food costs, the Philippine Statistics Authority (PSA) said on Tuesday.

Legislators are considering various proposals for wage hikes of between P150 and P750. In February, the Senate passed on third and final reading a P100 across-the-board wage hike.

“Conditions across industries, firms, and in the country are not the same, so a single wage would have negative implications,” he said.

“The small and medium enterprises will be hit hard. And what will be their response? They could minimize their labor (levels).

The unemployment rate rose to 3.9% in March from 3.5% in February, according to the PSA. This is equivalent to two million jobless in March from 1.8 million in February.

NEDA has said that it is not opposed to raising wages, but backed the wage-setting mechanism of regional wage boards.

“We want to strengthen the window for the bargaining strength of labor (groups) in tripartite wage boards,” Mr. Balisacan said.

Federation of Free Workers President Jose G. Matula said the present system of wage increases does not meet the daily needs of workers.

“It’s concerning that, despite recent wage increases via regional wage boards, all regional minimum wages in the Philippines remain below the poverty threshold set by the PSA and fall far short of approximating the family living wage,” he said in a Viber message.

A family of five in the capital region would need P1,192 a day or P25,928 a month to live decently, according to research group IBON Foundation.

IBON Foundation Executive Director Jose Enrique A. Africa said that a wage increase of up to P150 would be “viable even for smaller enterprises.”

“If taken from profits, they need not to lead to either job losses for workers or price increases for consumers — the key concept being that employers be more open to sharing profits with workers who were essential to the profits being made to begin with,” he said via Viber.

To support micro-, small- and medium-sized enterprises (MSMEs), the government must offer preferential tax treatment and incentives, and help in developing workers’ technical skills, Mr. Africa said.

MSMEs must also be supported as the government eases import restrictions, and be allocated more funding from the national budget, he added. — Beatriz Marie D. Cruz