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By Darwin G. Amojelar, Reporter
A P20 wage hike in the daily minimum wage is not
enough to improve the buying power of Filipino consumers,
particularly in Metro Manila, that has shrank over the years because
of surging prices, economists said.
The peso purchasing power fell six centavos to
P0.65 in April this year from P0.71 in the same period last year,
based on a computation by The Manila Times using data from the
National Statistics Office.
The purchasing power of the peso gives an
indication of the real value of the currency in a given period
relative to the peso value in the base period. It is computed by
dividing one unit of currency by the consumer price index (CPI)
under review multiplied by 100.
CPI measures the change in the average retail
prices of goods and services commonly purchased by a particular
group of people in a particular area. As a rule of thumb, for every
increase in the prices of goods and services, the quantity that a
consumer could buy lessens and the currency’s purchasing power
weakens.
In April, the country’s inflation rate rose
8.3 percent from 6.4 percent in March owing to higher food prices.
This was the highest inflation rate since May 2005 at 8.5 percent
and above the Bangko Sentral ng Pilipinas estimates of 6.4 percent
and 7 percent. A year ago, it was 2.3 percent.
Besides the rising food prices, consumers will
also bear the increase in minimum fares for public utility jeepneys
to P8 from P7.50 starting Wednesday, while fares of ordinary buses
will be raised to P9 from P8.
Minimum fares of air-conditioned buses will also
increase to P11.50 from P10.
President Gloria Arroyo last week announced that
the National Capital Region wage board has approved to increase the
daily minimum wage for workers in Metro Manila by P20 to P382. In
northern Mindanao, the minimum salary will go up to P256 per day,
and in CALABARZON (referring to the provinces of Cavite, Laguna,
Batangas, Rizal and Quezon) to P320.
Economists told The Times that the additional
P20 wage hike is inflationary.
Victor Abola, economics professor at the
University of Asia and the Pacific, estimated that the additional
inflation that will be generated by a P20 increase in minimum wage
is 2 percent.
“But since increases in other regions may be
lower, the average increase in inflation will be lower also,” he
said.
Myrna Assuncion, officer-in-charge of the
National Economic and Development Authority’s national and policy
staff, said the effect of the additional wage hike to inflation is
minimal. “I hope there is no spiral effect on inflation,” she
said.
With the increase in the daily wage believed to
be inflationary, the question is, is it enough to counter the
shrinking purchasing power of consumers?
In Metro Manila, the consumers’ buying power
dropped by five centavos to P0.65 in April from P0.70 in the same
period last year. For consumers living outside Metro Manila, the
value of their peso is P0.60 in April, lower by 12 centavos from
P0.72 in the same period last year.
In Calabarzon, the peso’s buying power dropped
to P0.67, and P0.64 in northern Mindanao during the period.
Given this, the real value of the P382 salary of
the daily minimum- wage earner in Metro Manila is only P249.30,
while the increase to P320 in Calabarzon is P214.40, and in northern
Mindanao, P163.84.
Benjamin Diokno, economics professor at the
University of the Philippines, said he cannot see any improvement in
the purchasing power of the consumers, as few workers will benefit
from this out of the 36-million labor force. Of the total labor
force, around 33 million are employed and three million are
unemployed.
The government reported that about 2.7 million
minimum-wage earners will benefit from the recent wage hike.
“What can you buy for P20, one kilo of NFA
[National Food Authority] rice,” Diokno asked.
Abola agreed with Diokno saying the P20 wage
hike is not enough to improve the purchasing power of the consumers.
“We see [peso’s purchasing power] to continue going down because
of the rising oil and food prices.”
Labor groups have rejected the P20 adjustment
for Metro Manila, saying this was not enough to compensate for
higher food and fuel prices.
Based on National Statistics Office data, the
highest average price increase among commodity groups was in the
food, beverages and tobacco, which rose 11.4 percent in April from
the same time last year. The power of the peso to buy items in this
group declined by 8 centavos to P0.67 from P0.75.
The fuel, light and water group came next,
which grew 8 percent from last year. The peso purchasing power for
this group declined by three centavos to P0.52 from P0.55.
The power of the peso for services fell P0.57,
down by four centavos from P0.61. The power of the peso to buy items
for housing and repairs fell 2.9 centavos in August to 75.4 centavos
from 78.3 in the same month last year. But the decrease was less
than last year’s drop of 3.8 centavos.
The peso capacity to buy items in the clothing
group dropped three centavos to P0.77 and miscellaneous items to
P0.79 from P0.82.
For housing and repairs items, the purchasing
power of the peso went down by two centavos to P0.72 from P0.74.
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