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Wage hike may displace 500,000 workers – NEDA

Nothing is final yet on the proposal in Congress for a P125 across-the board wage hike, but an initial government simulation study already revealed it will lead to the displacement of about half a million workers once it is implemented.

The National Economic and Development Authority (NEDA) recently estimated the a legislated pay increase will pull up the local unemployment rate from the existing 6.1 percent to 7.3 percent, which is equivalent to 510,000 job opportunities lost.

Likewise, the proposed wage hike will lower the outlook for gross domestic product (GDP) growth rate from the 6.5 to 7.5 percent range, to 5.5 to 6.5 percent.

“We did a study on the socio-economic impact of the proposed wage hike…this is just based on the data that we have and what we know about the economy,” NEDA Deputy Director-General Rosemarie Edillon said before representatives of the business community and government officials last week.

The latest NEDA study also discussed the simulated effects of other wage hike proposals from labor groups.

This includes the P16,000 monthly national minimum wage and the P750 daily pay hike. Both are expected to displace at least a million workers if implemented, according to NEDA.

NEDA released its report after the Department of Labor and Employment (DOLE) initiated its nationwide consultation on the proposed P125 across the board wage  increase in Congress.

Labor officials earlier explained this is in compliance with President Duterte’s orders for them  to create a Nationalized Minimum wage and push for the removal of the current regional wage rates.

Some members of the business sector already expressed strong opposition to the bill and stressed that it goes against the provisions of the Wage Rationalization Act, which transferred the wage fixing duties from Congress to the regional wage boards.