UP Economist - "No inflationary threat"

From BusinessWorld Online

Benjamin E. Diokno, University of the Philippines economist, said that there are no serious inflationary threats from the wage hike increase since it will be implemented only for minimum wage earners, who make up some 16% of the country's labor force.

"I don't see the P22 wage adjustment, representing 5.8% increase [from the current P345-P382 per day] as a serious inflationary threat, since it will benefit [only] a small segment of the work force," Mr. Diokno said.

But he added that the new wage imposition will weigh on businesses, which will try to absorb the additional cost in a bid to keep their prices competitive. Small ventures, however, will not have as much room to maneuver.

"I think [business owners] will absorb part of the burden, that is, [they] won't pass on additional labor costs to consumers," Mr. Diokno said.

"For marginal firms, some will probably close or hire less people. That [in turn] could dampen aggregate demand."

The P22 minimum wage hike ordered for Metro Manila is expected to take effect on July 1, after being published on June 16, National Wages and Productivity Commission Executive Director Ciriaco A. Lagunzad III said in a phone interview yesterday.

The new wage order's implementing rules and regulations are expected to be issued within the month.


From: Google