Wage hike to cut GDP growth, raise unemployment – NEDA

February 23, 2024 | 12:00am

MANILA, Philippines — The proposed legislation for a P100 wage increase for private workers could shave up to 0.5 percentage point off the country’s economic growth and reverse gains made in lowering inflation and unemployment numbers, according to the National Economic and Development Authority (NEDA).

Speaking at the 2024 Economic Outlook webinar organized by SN Aboitiz Power Inc. yesterday, NEDA Secretary Arsenio Balisacan said the agency believes now is not the right time for a legislated wage hike.

“Our estimate shows that GDP (gross domestic product) growth could be hit negatively. It’s something like a 0.1 to 0.5-percentage-point reduction on GDP depending on how it is implemented,” he said.

He said the lower figure of 0.1 percentage point assumes the wage hike would only apply to minimum wage earners.

If the wage hike covers even other workers, he said the reduction in GDP could go as high as 0.5 percentage point.

Senate Bill 2534, which proposes the P100 wage hike, was approved on third and final reading last Monday.

The government is aiming to achieve a 6.5 to 7.5-percent economic growth this year, faster than the 5.6- percent expansion in 2023.

Balisacan said the 2024 growth target is being reviewed to take into consideration recent data and events.

He said the proposed wage hike would also impact inflation and unemployment.

“The inflation that will be induced by the wage hike could run from 0.2 to 0.8 percentage point, again depending on how that is implemented,” he said.

Last January, the headline inflation rate eased to 2.8 percent, the lowest level in over three years due mainly to slower food price upticks.

Balisacan said the P100 wage increase could lead to an additional 100,000 to 340,000 jobless Filipinos.

Unemployment in the country dropped to 3.1 percent in December last year, the lowest since 2005.

An estimated 1.6 million Filipinos were jobless in December 2023, lower than the 1.83 million in November 2023 and 2.22 million in December 2022.