An increase in the minimum wages of workers nationwide amid the skyrocketing consumer prices might become harmful to the economy in the long run, the National Economic and Development Authority (NEDA) said Tuesday.
During the Development Budget Coordination Committee’s briefing for the House committee on appropriations on Tuesday, 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," the NEDA chief said.
"If wages are forced to increase by legislative, and not because the demand for labor is high compared to the supply of labor, then the whole issue of competitiveness will hurt us," he continued.
Balisacan added that increasing the mandated wages would discourage investors to do business in the country given that exports will be more expensive, or less competitive in the international markets.
Instead of increasing wages through legislation, Balisacan told lawmakers that the govenrment should work on ways to increase demand for labor.
Balisacan also noted that the government is working on improving the agriculture sector’s productivity following the increase in the country's inflation rate.
“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.
“It does more harm to the economy in the longer term than it benefits,” he added.
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.
To recall, the Bangko Sentral ng Pilipinas (BSP) said the country's inflation rate for the month of February will remain elevated, ranging between 8.5 to 9.3 percent, exceeding the record-high 8.7 percent in January.
According to BSP's forecast, February's inflation drivers will be food items, such as pork, fish, egg, and sugar as well as Liquefied petroleum gas (LPG) prices.
