Wage hike harmful to economy – NEDA
An increase in minimum wages amid rising prices would hurt the economy in the longer term, the National Economic and Development Authority (NEDA) said.
During the Development Budget Coordination Committee’s briefing for the House committee on appropriations yesterday, NEDA Secretary Arsenio Balisacan said forcing increases in minimum wages by way of legislation amid rising inflation would be harmful to the economy.
“We can’t do that. It does more harm to the economy in the longer term than it benefits,” he said.
He said the safest way for the country to increase wages is by expanding economic activity, which would involve making investments to complement labor.
“We have got to make the demand for labor, expanding faster, increasing faster than the supply of labor,” he said.
If wages would increase not because of high demand for labor and improved productivity, Balisacan said the country’s exports would become more expensive or less competitive in the international market, impacting economic activity.
As the country’s high inflation rate has been driven by food, he said the government is working on improving the agriculture sector’s productivity.
“The plan of this administration is to address this very low productivity in agriculture by investing in the right places, in irrigation, in farm-to-market roads, in technology, in access to markets and so on,” he said.
Balisacan made the comment after House Deputy Minority Leader France Castro asked if the government is considering increasing wages as a solution to raise the purchasing power given the continued increase in prices of goods.
Last month, the country’s headline inflation rate hit 8.7 percent, the highest since the 9.1 percent in November 2008.
The latest inflation reading was driven by faster increases in both food and utility costs.