P200 wage increase damaging to economy

The P200 across-the-board wage hike could spell damage to the economy, reversing recent inflation progress, missing growth targets for the year and eventually hitting the poorest of the poor, the economic team warned.

- By LOUISE MAUREEN SIMEON

In a joint position paper, members of the economic team of the Marcos administration opposed a measure that would hike the daily minimum wage of private sector workers by P200.

The House of Representatives on third and final reading approved the P200-increase. The Senate, on the other hand, has a modest P100-hike proposal.

The economic team argued that the wage hike has dangerous repercussions, be it the House or Senate versions, especially in terms of inflation, unemployment and gross domestic product (GDP) growth.

For one, data showed that inflation could increase by 0.7 to as much as two percentage points considering that any wage increase could result in higher production costs.

As such, economic managers cautioned that inflation progress could be reversed.

Headline inflation further slowed to a five-year low of 1.3 percent in May, bringing the average to 1.9 percent, well-below the two to four percent target band of the government.