Saturday, February 27, 2021

NEDA stops P125 wage hike proposed by DOLE


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The Department of Labor and Employment’s proposed P125 across-the-board wage hike in all regions will not push through after it was opposed by the National Economic and Development Authority (NEDA).

Socioeconomic Planning Secretary Ernesto Pernia said Labor Secretary Silvestre Bello agreed with the NEDA position paper that spelled out the adverse impact of the proposal to the overall economy at this point.

“That’s not going to pass. We already talked with Secretary Bello, and he agrees with our position,” Pernia told reporters at sidelines a business forum on Wednesday.

Pernia, who is also the NEDA director general, said the position paper explained that different regions have different conditions, inflation, and cost of living so an across-the-board wage increase cannot simply be implemented.

“This policy will definitely impact adversely these three major economic concerns: the economy, employment, and inflation,” he said.

The NEDA did impact analysis and found that the wage increase would affect employment as higher wages would render to hiring and keeping employees unaffordable.


Micro, small and medium enterprises (MSMEs) will be hard put with higher wages, while pushing further the economic gap across regions, Pernia said.

“It’s going to dampen investors from investing in the regions, especially those seeking lower minimum wages. As I’ve said, MSMEs will be affected,” he said.

A NEDA study noted the proposed across-the-board pay increase of P125 would create inflationary pressure, with the inflation rate estimated to accelerate by 5.5 percent from less than 2 percent in August.

The same study supposedly point to a 1 percentage point drop in the gross domestic product and a 1 percentage point increase in unemployment, while placing a drag on economic growth.



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