Central bank sees modest wage hikes

THE BANGKO SENTRAL ng Pilipinas (BSP) expects a modest increase in daily minimum wages this year despite fresh petitions for such pay hikes.

BSP Deputy Governor Diwa C. Guinigundo has said that monetary authorities’ latest estimates factor in an P18- 20 increase in daily minimum wages to be approved by regional wage boards, following new petitions submitted by labor groups.

“In terms of demand for higher wages, there were only four out of 17 (regions) that have filed petitions for higher wages [so far],” Mr. Guinigundo told reporters recently.

“Normally, in our baseline, we have already incorporated a historical increase in wages… So we factored in between P18 to P20, so in case there are additional adjustments in minimum wage, maliit na lang ‘ yun.”

Mr. Guinigundo said this is broadly in line with the amounts approved by the Labor department in previous years.

Labor groups may file requests for pay hikes with their respective Regional Tripartite Wage and Productivity Boards one year after a previously approved salary increase has taken effect.

Pending petitions include proposed wage hikes in Western Visayas (P130-150), Central Visayas (P120-155.80) and Davao (P104).

Petitions for higher salaries came as labor groups have cited the impact of Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion ( TRAIN) law, beginning January this year which has eroded the purchasing power of workers given higher prices of basic goods and services.

TRAIN, coupled with the impact of rising global oil prices, have been cited as the reason behind faster inflation that averaged 4.1% from January to April. The pace is expected to quicken further and average 4.6% for the entire year, which is well beyond the central bank’s 2-4% target for 2018.

Proposals for transport fare hikes have also been sent to the Land Transportation Franchising and Regulatory Board, Mr. Guinigundo noted.

Central bank officials have said that they are watching out for such second-round effects of the tax reform law on overall inflation.

The BSP raised key interest rates by 25 basis points last week in the face of inflation that has spread to more widely used goods and services. The move was also designed to manage inflation expectations among market watchers.

Mr. Guinigundo said measures like the cash transfers, as well as the expected approval of rice tariffs to replace import quotas, are seen to temper the impact of quickening inflation.

The daily minimum wage in Metro Manila increased by P21 in October last year, compared to petitions for P184 and P259 to be added to the daily floor pay. —