Minimum Wage Hike Unlikely to Impact Big Economy

Spread the love

The Department of Labor and Employment (DoLE) has recently stated that the recent minimum wage increase in the Philippines will not have a significant impact on key macroeconomic outcomes such as inflation, unemployment, and gross domestic product (GDP). This announcement comes as the country continues to experience positive economic growth.

According to the DoLE, the inflation rate in January 2024 was recorded at 2.8 percent, significantly lower than the 8.7 percent recorded in January 2023. This indicates that the increase in the minimum wage has not led to a significant rise in consumer prices. This is good news for workers who are often concerned that higher wages may lead to higher costs of living.

Furthermore, the unemployment rate has also declined to 3.1 percent in December 2023 from 4.3 percent in December 2022. This suggests that the increase in wages has not negatively impacted job opportunities. In fact, it may have contributed to a more favorable labor market, leading to a decrease in unemployment.

The DoLE also highlighted that the country’s growth targets remain on track, with the economy expected to grow between 6.5 percent and 7.5 percent in 2024. This is higher than the growth forecast of 6 to 7 percent in 2023. These positive growth projections indicate that the minimum wage increase has not hampered overall economic development.

In response to the proposed P100 wage increase for employees and workers in the private sector, the DoLE has expressed its readiness to provide technical inputs to Congress. It is closely monitoring the developments of the bill. The department emphasizes that the minimum wage rates are set above the poverty threshold but still below average wages. This allows room for collective bargaining, which remains the preferred mechanism for negotiating better terms and conditions of work, including wages.

Senate Bill 2534, also known as the “Act Providing for a 100 Pesos Daily Minimum Wage Increase for Employees and Workers in the Private Sector,” has reached the Senate plenary. The initial proposed wage increase of P150 was adjusted to P100 following the regional wage board’s increase in minimum daily wage rates.

It is worth noting that 15 out of the 16 Regional Tripartite Wages and Productivity Boards (RTWPBs) have already issued wage orders increasing the regional minimum wage since July 2023. Surprisingly, nine of these wage orders were initiated by the RTWPBs without any petitions filed by workers’ organizations. However, Region 11 is still in the process of completing the wage determination process and has yet to issue a wage order.

The minimum wage increases have directly benefited around 4.1 million minimum wage earners in the 15 regions where wage orders have been issued. Additionally, approximately 8.1 million full-time wage and salary workers earning above the minimum wage are expected to benefit from the correction of wage distortions.

In accordance with Republic Act 10361, or Batas Kasambahay, 13 RTWPBs have also issued wage orders granting monthly minimum wage increases to domestic workers. The remaining three RTWPBs are currently in different stages of the minimum wage determination process. These wage increases will benefit a total of 1,091,130 domestic workers, with 31 percent of them on live-in arrangements.

In conclusion, the recent minimum wage increase in the Philippines has not had a significant impact on key macroeconomic outcomes. Inflation remains low, unemployment has decreased, and economic growth is on track. The DoLE continues to monitor the situation and provide technical inputs to ensure that the wage increase is implemented effectively. The country’s commitment to collective bargaining allows for further negotiations to improve working conditions and wages. Overall, the increase in the minimum wage has been a positive step towards improving the livelihoods of workers in the private sector.

Source: The Manila Times

Leave a Reply

Your email address will not be published. Required fields are marked *