P25 wage hike to keep inflation in check – BSP

Monetary authorities are looking at a wage increase that is significantly lower than the P75 to P125 labor leaders have asked for so as not to stoke inflation beyond programmed levels. The wage board is expected to make a decision on the issue this week. The Trade Union Congress of the Philippines (TUCP) scored Malacañang Monday for delaying a wage hike in Metro Manila. Labor groups have been clamoring for higher wages since Labor Day. On Tuesday, deputy presidential spokesperson Rogelio Peyuan said the National Wages and Productivity Commission (NWPC) was deliberating on the pending wage petitions for Metro Manila and would likely come up with decision this week. At the sidelines of a roundtable discussion the Rural Bankers Association of the Philippines (RBAP) hosted Wednesday, Bangko Sentral ng Pilipinas Gov. Amando M. Tetangco Jr. said the BSP plotted an inflation scenario wherein wage adjustments should not top P25 per day. “We incorporated a wage hike increase lower than the P75 to P125 per day," Tetangco told reporters. But he declined to talk about the monetary implications of such an adjustment to an economy that grew by 7.3 percent in the first quarter. "There is a significant impact on inflation and economic growth given a wage hike of that magnitude (P75 to P125 a day)," Dr. Victor Abola, economist and head of the Strategic Business Economics Program (SBEP) of the University of Asia and the Pacific, told GMANews.TV. “It all depends on the timing and magnitude of the adjustment. If that is implemented, say in the second half, then the impact would just be for half the year," Tetangco said. Abola, however, said that the timing of the implementation, would have the "same impact, more or less." Since April, the National Economic and Development Authority (NEDA) had been warning against an immediate pay increase. Earlier, BSP Assistant Gov. Maria Cyd Tuano-Amador said inflation this year should average only 5.1 percent on the basis of "within-forecast wage" as well as transport fare increases. Next year’s average inflation, Amador said, should average 3.7 percent on the same basis. But without the wage increase, inflation should not top 4.4 percent this year and 3.2 percent next year. Published reports, however, do not seen encouraging for the country's business and economic managers given the strong labor lobby to raise wages by P125 per day. Officials said the BSP incorporated a wage increase of only P25 per day, plus a 25-centavo transport fare increase, to imply a 5.1-percent average inflation rate or within the government’s target range. Inflation averaged 4.3 percent in the first four months. With the wage increase and higher transport fares, economist expect inflation to go up to 6 percent this month and next July. —OMG/VS, GMANews.TV