The government rejected the proposed P125 increase in the daily minimum wage, saying this could displace workers, increase inflation and affect the economy, Economic Planning Secretary Ernesto Pernia said Wednesday.
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 [P125 wage increase] is not going to pass. We already talked to Secretary Bello, and he agrees with our position,” Pernia told reporters at sidelines of the 42nd Philippine Business Conference & Expo at Marriott Hotel in Pasay City.
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.
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.
Pernia said Neda was in charge of economic policy, promoting employment and keeping inflation under control. “This policy will definitely impact adversely these three major economic concerns,” Pernia said.
He said the wage hike would also worsen inequality across regions.
“It’s going to dampen investors from investing in the regions especially those seeking lower minimum wages. MSMEs will be affected,” he said.
A study by Neda showed that the proposed across-the-board pay increase of P125 would have inflationary effects.
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.