BSP exec urges caution on wage-hike proposals

Plans to increase wages nationwide to the level of those in the National Capital Region (NCR) should be tempered by productivity gains, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo said.

The Department of Labor and Employment (DOLE) and the Regional Tripartite Wages and Productivity Boards (RTWPBs) will hold nationwide consultations for a P125 across-the-board wage hike and a proposal to put the minimum wage across the country at P454 a day, which is the level fixed for NCR.

Some lawmakers back the proposal, but others are cautious about it, citing its possible negative impact on some businesses.

To date, the BSP has a P25-wage increase assumption on its inflation forecast for this year.
Guinigundo said the central bank has not changed their wage-hike assumption, but the issue would be based on the actual timing of the implementation.

He was not optimistic on the P125 across-the-board wage increase, noting that there were lots of things to be considered first, such as labor productivity and the wage hike’s impact on employment, as well as on inflation.

He explained that “if the increase in wages is eaten up by the increase in prices, then that would be a negative for the labor sector.”

“So before any type of adjustment is considered, I think a more careful study of the numbers, particularly on the consequences of a significant nationwide adjustment in wages, should be conducted first,” he said.

The BSP official said there was also no ideal figure on the increase, since any amount should be considered vis-à-vis its impact on inflation and productivity.

He pointed out that if the wage increase would translate to higher prices of commodities, then the wage hike would become nil.

“We want a more meaningful adjustment in wages and we can do that by relating it to productivity gains,” Guinigundo added.