MANILA, Philippines — The National Economic and Development Authority (NEDA) said a P150 increase in the minimum wage would slow down the country’s economic growth and lead to higher unemployment and inflation.
An increase in the minimum wage by P150 would slow down the GDP (gross domestic product) by 0.2 to 0.9 percentage points, increase the unemployment rate by 0.3 to one percentage point and further lead to an increase in inflation rate, NEDA Secretary Arsenio Balisacan said during the Development Budget Coordination Committee’s briefing on the proposed 2024 budget at the Senate yesterday.
Senate President Juan Miguel Zubiri is pushing for a P150 increase in wages for all private sector workers through legislation.
Balisacan said it is by improving the quality of jobs that workers would have much higher earnings, which can be done by attracting more investments, particularly in strategic areas like manufacturing.
As the high cost of energy, poor infrastructure and high cost of doing business have been cited as problems or concerns of investors, he said these are being addressed by the government.
“If we address the problem of low incomes now by raising the wages forced by legislative [measures], these other factors required by investors to come in will come much later,” he said.
The Philippine government is aiming for a six to seven percent GDP growth for this year.
In the second quarter, the Philippine economy posted a slower growth of 4.3 percent from the previous quarter’s 6.4 percent and the 7.5 percent in the second quarter of last year.
In the first half, the Philippine economy grew by 5.3 percent.
Earlier, Balisacan said the economy will have to grow by 6.6 percent in the second semester to meet the growth target for the year.
To achieve the growth target, he said the government will need to intensify interventions to sustain the downward trend in inflation, as well as ramp up spending.