Wage hike...

“A double-digit inf lation May be felt but not directly from the minimum wage increase but . . . other factors such as supply constraints,” Lanzona said. “Inflation will creep in the coming two to three months.”

Former Labor Undersecretary Rene Ofreneo said at this point, comparing the impact of high oil prices in the international market would have a far greater impact on domestic prices than the wage hike.

Ofreneo said the elections would also play a significant role in increasing commodity prices, particularly in the second quarter. He said during and after elections, it was observed that fast food restaurants saw long queues with “consumers [paying in] crispy P500 bills.”

He said this may be attributed to vote buying with some families anecdotally able to “collect P10,000 to P15,000 or more from various paying politicians, national and local.”

“So kung tapos na ang upward swings ng oil—at the moment— and revenge spending courtesy of the politicians, e-epekto ng konti ang minimum wage [MW]. Pero konti lang ‘coz bihira naman ang covered ng MW, konti ang mga regulars these days and probably—i have not read the Wage Order—may transition pa ang implementation ng MW. Probably the issue is not the inflationary impact of MW but the limited coverage and limited impact on purchasing power of the workers,” Ofreneo explained.

This means, Ofreneo said, it is not enough that the incoming government take the advice of the outgoing and previous administrations. He advised the next administration to consult various stakeholders and consider different opinions.

That being said, Ofreneo said the increase in MW may not lead to layoffs as this only has a 6.1-percent increase in wages. However, he said companies may decide to increase wages internally to avoid wage distortions.

“Of course, good companies will try to adjust the pay scale in order to avoid wage distortions and retain the skilled and the professionals,” Ofreneo told this newspaper in an e-mail.

Job losses

LANZONA told the Businessmirror the wage adjustment could lead to layoffs, particularly among Micro, Small, and Medium Enterprises (MSMES).

Lanzona said MSMES may not have enough financial capacity, especially in the wake of a pandemic, to provide their employees the increase in wages and trigger layoffs.

To help MSMES to cope with the new labor regulations, Lanzona said the government should provide assistance to them, because providing other forms of relief such as tax exemptions will not be sufficient.

“The wage may not increase inf lation but more importantly cause an even higher unemployment. Firms may lay off workers rather than raise prices of their products,” Lanzona said.

Given the wage increase, he expected the country’s unemployment to rise to the same magnitude as 2020. This is because many MSMES may already be on their last legs and could see a wipeout of their savings because of the new policy.

Apart from laying off workers, another possibility in terms of adjustment on the part of MSMES is to reduce their production. This, however, will have a negative impact on inflation as production cuts will lead to higher commodity prices.

To cope, Lanzona said ayuda can help and remain an option for the government, especially if it is properly targeted. More than this temporary assistance, efforts must be exerted to develop new firms and industries to absorb the jobless Filipinos as a result of the increase in minimum wage.

“The problem is that the minimum wage places a burden on the firms. Raising the welfare of workers should be the responsibility of the government,” Lanzona said.

On Saturday, the Businessmirror reported that around 1.4 million workers are expected to benefit from the new round of wage hikes approved by the regional wage boards in the National Capital Region (NCR) and Western Visayas. (Story here: https://businessmirror.com.ph/2022/05/14/ncr-wage-board-orders-p33pay-hike/)

In a statement on Saturday, the Department of Labor and Employment (DOLE) said the Regional Tripartite Wages and Productivity Board-ncr (RTWPB-NCR) issued Wage Order No. NCR-23 granting a P33 minimum wage hike in Metro Manila.

Once it takes effect after its publication, the wage order will bring the daily minimum wage rate for non-agriculture workers to P570 and for agriculture workers to P533.