Diokno: P150 across-the-board wage hike would increase inflation

Raising the minimum wage by P150 across the Philippines would increase inflation by 1.4 percentage points, Finance Secretary Benjamin Diokno warned.

In his weekly press chat, Diokno warned of the potential inflationary impact of the proposed measure approved in principle by a Senate committee last week that grants a P150 wage hike for all private sector workers across the country.

“The implication of a P150 [wage] increase… It will increase inflation by 1.4 [percentage points],” the Finance chief said, citing estimates from the National Economic and Development Authority (NEDA).

“So who will benefit from that? Who will eventually suffer?” he asked.

Diokno said that if inflation is estimated at about 5.5% for 2023, the proposed wage hike could drive it up to 6.9%.

The inter-agency Development Budget Coordination Committee (DBCC) has hiked its inflation assumption for 2023 to 5.0%–7.0% from the previous forecast of 2.5%–4.5%, “given the persisting high prices of food, energy, and transport costs.”

“Let’s just continue the current system, which works naman,” Diokno said.

'Napakababa, napakatagal'

Senate President Juan Miguel Zubiri, who proposed the bill approved in principle by the Senate Committee on on Labor, Employment and Human Resources, said that the wage increases being approved by the Regional Wage Board are too low.

“Ang nakita po natin, with due respect sa ating Regional Wage Boards, napakababa po ng mga increase nila at napakatagal bago nila aksyunan ang problema ng pagtaas ng bilihin, at ang sigaw ng tao para sa disente man lang na sahod. Kapag umaaksyon naman sila, napakababa ng increase, between P5.00 to P16.00 lang,” he said.

(What we've seen, with due respect to our Regional Wage Boards, such low increases and a long time before they take action on increasing costs and the public's cry for a decent wage. And when they take action, the increase is so small, only between P5.00 and P16.00.)

The last legislated minimum wage increase was in 1989, at P89.00, before the passage of the Republic Act 6727, which created the Regional Wage Boards.

The highest minimum wage in the country is in Metro Manila, which is currently pegged at P570.00 per day.

The lowest is in the Bangsamoro Autonomous Region in Muslim Mindanao, which is at P316.00 for non-agricultural and P306.00 for agricultural.

Minimum wages in the regions are determined by Regional Tripartite Wage and Productivity Boards pursuant to Republic Act No. 6727 or the Wage Rationalization Act of 1989.

Regional Wage Boards are composed of the Department of Labor and Employment’s directors in the respective regions as well as ex-officio chairpersons regional directors of the NEDA and the Department of Trade and Industry as ex-officio vice-chairpersons; and two representatives each from the worker and employer sectors as members. — BM, GMA Integrated News