More warnings issued against wage hike bills

By Alyssa Nicole O. Tan, Reporter

INCREASED unemployment and higher inflation could result if Congress resorts to legislated wage hikes, economists said.

“Raising minimum wages at this time is irresponsible,” Ateneo de Manila Economics Professor Leonardo A. Lanzona told BusinessWorld in an e-mail. “While workers working permanently and regularly in corporations may benefit, the number of unemployed will increase.”

“Corporations will be forced to lay off workers and not hire additional workers,” he added.

Senate President Juan Miguel F. Zubiri has filed a bill seeking to increase the minimum wage for private sector workers by P150, pitching the bill as a relief measure in the face of the rising cost of goods and services.

If passed, Senate Bill 2002 or the Across-the-Board Wage Increase Act of 2023, will apply to the entire private sector, including agricultural workers, regardless of employer size and headcount.

“Senator Zubiri said that if the minimum wages are not raised, workers will be incentivized to leave the country,” Mr. Lanzona said. “In reality, even if the minimum wage is raised, more workers will be forced to work abroad and a greater number of workers will choose to work in informal and precarious jobs.”

Calixto V. Chikiamco, Foundation for Economic Freedom president, said in a Viber message that he expects legislated wage hikes to worsen inflation.

“It will most likely push consumer inflation further and erode the wage gains from the legislated wage increase,” he said.

“A legislated wage increase isn’t a good idea because it doesn’t account for the different unemployment rates across regions and the different productivity of various industries,” he added.

Unemployment rose to a four-month high of 4.8% in January from the 4.3% in December following the disappearance of temporary holiday jobs, the Philippine Statistics Authority said. This is equivalent to 2.37 million jobless in January, against the 2.22 million in December.

Mr. Lanzona said legislation could be effective for other measures while still meeting the objective of providing relief from the high cost of living.

“There is room for legislation but not in the form of wages,” he said. “Government should expand and improve social protection.”

“It is the government’s responsibility to ensure that workers’ welfare is not decreased in the face of economic challenges. The private sector must not carry this burden which in large measure is an outcome of poor state policies,” he added.

The three-person Makabayan Bloc at the House of Representatives has also proposed a wage increase of P750 for all private-sector workers, including those working in special economic zones, freeports, and in the agricultural sector.

Antonio A. Ligon, a law and business professor at De La Salle University, said in a Viber message to BusinessWorld that a legislated wage increase was “a positive approach,” though he warned of the need to consult with employers.

“The determination of what is reasonable must factor in the inputs of the business and entrepreneurial sector,” he said.

“Labor and capital as the foundation of the economy must maintain an equilibrium so both will benefit from any change,” he added.