THE P40 INCREASE in the daily minimum wage in the National Capital Region (NCR), which will take effect on Sunday (July 16), is unlikely to drive inflation beyond the central bank’s target band, the National Economic and Development Authority (NEDA) said.
“We estimate that the inflationary impact from the approved wage order would be minimal and is unlikely to push inflation above the central bank’s (2-4%) target range,” the NEDA told BusinessWorld via e-mail.
The National Capital Region Tripartite Wages and Productivity Board approved a P40 wage hike in NCR, bringing the daily minimum wage to P610 for workers outside the agriculture sector.
The minimum wage was also increased to P573 for those in the agriculture sector, service retail establishments with 15 or fewer workers and manufacturing companies with less than 10 workers.
Headline inflation slowed for a fifth straight month in June to 5.4% from 6.1% in May, as food and transport prices eased. Year-to-date inflation settled at 7.2%.
The BSP sees inflation returning to the 2-4% target range by October before averaging 5.4% this year.
However, NEDA said that a wage hike without an increase in labor productivity may drive up production costs that would be passed on to consumers through higher prices of goods and services.
It also noted that a wage hike in NCR would usually lead to other regions following suit, “which may amplify the overall economic impact.”
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