P100 wage increase for minimum earners only provides temporary relief — economists
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Two seasoned economists in the House of Representatives turned down proposals of a legislated P100 hike for minimum wage earners being pushed by the Senate.
Albay Rep. Joey Salceda and Marikina Rep. Stella Quimbo are one in saying that the wage increase will not be felt in the long run because prices of goods and services are likely to go up subsequent to the raised wage.
"What the companies will do is they will pass the wage increase on the price [of their products]... So you will temporarily satisfy our workers, who are also consumers, [but] eventually, the increase in their wages will also be eaten by the increase of commodity price," Quimbo said in a press conference at the House of Representatives.
Once the proposal takes effect, private companies would simply pass on the supplemental cost to their goods and services, which will fallout into an inflationary problem, according to Quimbo.
“We will have cost-push inflation," she said.
Salceda, chairperson of the House Committee on Ways and Means, however, posits that the upward adjustment in the wage of minimum earners will hurt micro, small, and medium enterprises the hardest and may eventually lead to the closure of their businesses.
"There are SMEs that might not afford the P600 minimum wage per day... then plus P100... they will terminate people just to afford the P700. I am sympathetic, really, on wage hikes, but one reason [to oppose] is that 99 percent of our enterprises are SMEs. Would you like to kill them?" Salceda averred.
The economists-lawmakers believe that relaxing the restrictive economic provisions of the 1987 Constitution could only address the woes of minimum wage earners.
Salceda and Quimbo made the remarks in reaction to a query if the House will pass a counterpart measure of Senate Bill 2534, which pushes for a P100 wage hike for private sector workers that has already reached the Senate's floor.
Senator Nancy Binay over the weekend said the Senate is eyeing to green-light the P100 minimum wage hike this week as a Valentine’s gift to Filipino workers.
President Sergio Ortiz-Luis Jr. of the Employers Confederation of the Philippines, the country’s biggest trade organization, was quick to oppose the proposal, arguing that this is a disadvantage to the MSMEs, which will be affected by the increase in prices but won’t be among the beneficiaries of the higher pay.
Luis forecasted that the wage hike would also hit farmers, fisherfolk, market vendors, and others in the informal sector, which accounts for 84 percent of the labor force.
In June 2023, the Regional Tripartite Wages and Productivity Board-NCR granted the P40 pay increase for all minimum wage earners in Metro Manila.
The salary hike took effect on 16 July, bringing the minimum wage in the National Capital Region to P610 from the prior P560 for the non-agriculture sector, while P573 from P533 for those in the agriculture sector.
