‘Wage hikes may only fan inflation’


INCREASING wages to cushion the impact of high prices on workers may only fan inflation, according to the National Economic and Development Authority (Neda).

On the sidelines of the Makati Business Club forum on Thursday, Neda Secretary Arsenio M. Balisacan said increasing wages because of the availability of more jobs and/or an increase in productivity, however, would not lead to higher inflation.

Labor groups have already called for additional allowances, grants, and a new round of wage hikes due to sticky inflation. Trade Union Congress of the Philippines (TUCP) are just waiting for the latest inflation data before filing their petitions. (Full story: https://businessmirror.com.ph/2023/02/23/labor-seeks-wage-hikes-anew-amid-high-inflation/)

“Obviously it [wage hike] will impact inflation because normally, in a quite dynamic economy, wages rise as a result of increases in productivity, in tightening of the labor market and there are not so many jobs that are offered in the market and will push up wages,” Balisacan told reporters.

“But when wages are pushed up not because of the availability of more jobs, opening of more jobs or increases in productivity then that will impact heavily on our competitiveness and on the economy. So we have to be very careful about those forces,” he added.

Labor Groups such as the TUCP told BusinessMirror that they want to propose raising the Emergency Cost of Living Allowance (Ecola) given that free rides on the EDSA Carousel Bus have been stopped and food inflation has significantly increased.

They said the Ecola in the National Capital Region (NCR) is at P570 but the real value of this benefit is only P424. This means, worker’s Ecola should be increased by P130 to at least reach the P500 level.

Given this as well as taking into consideration the recent spikes in inflation, the TUCP said the Ecola should be increased by P270 to as much as P300.

“Imagine, vegetables went up by 30 percent in January [while] electricity inflation went up from 20 percent to 22 percent. How will people survive? Workers are not robots. You have to provide for them so they will have a decent meal that will sustain their health and will sustain their productivity,” TUCP Vice President Luis Corral said.

Balisacan said this is why the government aims to prioritize growing the economy faster to create not just jobs, but quality jobs that will allow Filipinos to increase their incomes.

Based on data earlier shared by National Statistician Claire Dennis S. Mapa, the country’s GDP in current prices reached P22.02 trillion in 2022 from P19.41 trillion in 2021; P17.95 trillion in 2020; and P19.52 trillion in 2019.

In constant prices, which is adjusted for inflation, GDP was at P19.95 trillion from P18.54 trillion in 2021; P17.54 trillion in 2020; and P19.38 trillion in 2019.

However, per capita gross national income in current prices reached P209,012 in 2022. This has exceeded the per capita gross national income of the country at P200,135 in 2019.

Per capita gross national income in constant prices, nonetheless, showed Filipinos only earned P188,939 in 2022. This is lower than the P198,522 per capita gross national income in 2019.“Our approach is to grow the economy quickly, make sure that the growth is accompanied by quality jobs. That’s why we are pushing very hard, working very hard to get investment coming in and to encourage our private sector to invest now because that is what will create high quality jobs,” Balisacan said.

On Wednesday, the labor group said another government intervention to provide support for workers amid the rising cost of living is a one-time P5,000 cash aid for 4 million minimum wage earners.

The Sentro ng mga Nagkakaisa at Progresibong Manggagawa (SENTRO) also echoed TUCP’s call for wage hikes and cash grants, citing the recent decision of the Senate to raise its inflation aid for its employees from P12,000 to P50,000.

Image credits: Nonie Reyes