BSP chief says P30 COLA won't stoke inflation

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) said the decision of the wage board granting a P30 cost of living allowance (COLA) instead of a direct wage hike won’t stoke inflation in the country.

In a text message to reporters, BSP Governor Amando Tetangco Jr. said the wage increase was already incorporated in the central bank’s latest inflation forecast for the year.

“This is broadly in line with the wage assumptions that have been incorporated in our central forecast,” Tetangco stressed.

The BSP has set an inflation target of three to five percent this year and next year. During the last policy rate setting meeting of the Monetary Board last April 19, the BSP set an inflation forecast of 3.1 percent for this year and 3.4 percent for next year.

“We continue to expect average inflation to be within target this year. Nevertheless, we remain watchful of developments in the global front that may cause inflationary impulses domestically,” he said.

Last Friday, Labor Secretary Rosalinda Dimapilis-Baldoz announced that the Regional Tripartite Wages and Productivity Board-National Capital Region (RTWPB-NCR) has approved a new wage order for workers in the region.

The wage board approved Wage Order NCR-17 providing for a P30 daily COLA and integrating the P22 COLA under the previous Wage Order NCR-16 into the basic pay of all minimum wage earners in the private sector in Metro Manila,

The decision of the RTWPB-NCR to issue the wage order came after several consultation and public hearing on a petition of the Trade Union Congress of the Philippines for a P90 across-the-board daily wage increase in the NCR.

The P30 daily COLA is payable in two tranches wherein the first tranche of P20 would be given upon effectivity of the wage order while the second tranche of P10 would be paid starting November 1.

Upon effectivity, the daily minimum wage rate for workers in the non-agricultural sector will be P446, while the new wage rage for the agricultural sector; private hospitals with bed capacity of 100 or less; retail/service establishments employing 15 workers or less; and manufacturing establishments regularly employing less than 10 workers, will be P409.

On Nov. 1 2012, the 2nd tranche of the COLA shall be added to the minimum wage, making the daily minimum wage rate of covered workers in the private sector in the NCR as follows: P456 for workers in the non-agriculture sector; P419 for workers in the agricultural sector, private hospitals with bed capacity of 100 or less, retail/service establishments employing 15 workers or less, and manufacturing establishments regularly employing less than 10 workers.