‘Wage hike should be minimal to stem inflation’

MANILA, Philippines — Wage hikes should only be “minimal” to prevent a steep rise in prices as well as massive job loss, Trade Secretary Ramon Lopez said yesterday.

In a press briefing at Malacañang, Lopez said a wage increase that is more than necessary is “dangerous” as it could create “strong pressure” on inflation.

“The reality is not everyone is a wage earner. If we increase the wage, costs will increase. Once the costs increase, this may push prices also to increase,” Lopez said.

“If you ask me, there can be a minimal adjustment but that should not be more than what is necessary,” he added.

Lopez said he was also against the national minimum wage proposed by labor groups. Members of the Makabayan bloc at the House of Representatives have filed a bill seeking a P750 national minimum wage, to allow workers to cope with rising prices of commodities.

The Trade Union Congress of the Philippines, the country’s largest labor group, is pushing for a P320 across-the-board increase in the daily take-home pay of workers in Metro Manila.

Lopez said he is leaving it up to the regional wage boards to set the adjustments, which he said should be dependent on the price movements in their respective areas.

“There should not be any wage adjustments if there is no inflation in some regions,” the trade chief said.

“The inflation in each region can be a basis for adjustment, again just to give consolation to those in affected parties. But if you ask me, I hope there is none. I am not against the labor (sector), but the entire nation may be hit,” he added.

Pressure on businesses arising from a steep wage hike, he pointed out, might pressure many of them to lay off workers.

Lopez said peace and order, strict adherence to rule of law and good business environment are the factors that could encourage businesses to invest more and create jobs.

He also cited the need for skills training for workers to make them more employable.

President Duterte has ordered regional wage boards to convene and discuss possible wage adjustments in response to rising prices of goods. 

But for employers, raising wages is not the solution and would even be useless unless the cost of living is reduced.

“We should do everything we can to lower the cost of living,” Employers Confederation of the Philippines (ECOP) president Donald Dee said.

“If every year we will just increase wages, every year we are going to find our unemployment rate go up. Why? Because we are not producing the jobs – the good jobs needed by our workers,” Dee said.

Joint effort

Dee said the government and the private sector should work together to reduce the cost of living in the country.

Instead of spending on higher salaries, Dee suggested that companies invest in dormitories for their workers so they could save on transportation  fares and have more time for rest and to spend with their families.

But Dee stressed the government should continue improving the country’s mass transportation and providing cheaper financing to everyone.

“Even if we increase wages, as long as other factors are also rising, nothing will happen. This is never ending. We just have to do the whole thing. We cannot control wages if we do not control the cost of living,” he said.

“So let’s do cost of living first, then we attack the wage issue if this area is not able to completely solve the problems of the workers,” he added.

Dee also said ECOP continues to support the government’s tax reform package even if it is widely blamed for the continued rise in the prices of basic goods. – With Catherine Talavera, Richmond Mercurio