Following the approval of the recent minimum wage increase in Central Visayas, Wage Order No. ROVII-25, the National Economic & Development Authority explained that the recent inflation rate in the Region was one of the factors considered in determining the P33 to P43 increase.
NEDA-7 Regional Director Jennifer Bretaña, who is also vice chair of the Regional Tripartite Wages & Productivity Board, said the recent inflation rate in the Region was at an average of 3.6 percent from January to August this year.
“So what we did, yung 3.6 percent average from January to August, pinasok natin sa labor sa sweldo natin, P468 last year, more or less kaya natin mag-increase ng more or less P17.00 Kaya lang, pag inflation lang ang i-consider, P17 ngayon, pareho parin ang purchasing power pa rin ng mga labor workers natin kasi kinonsider lang natin ang inflation, kung anong nabili niya last year, yun pa rin ngayon,” Bretaña explained.
(So what we did, the 3.6 percent average from January to August, we included it on the labor sector salary, which was P468 last year, so more or less we can increase by P17. That’s why, if inflation is the only factor considered that is P17 pesos, the purchasing power of our labor workers is still the same because we only considered inflation.)
In the socio-economic conditions presented in the Wage Order No. ROVII-25, the current purchasing power of the peso is P0.83 as of August 2024, which is slightly lower than the P0.847 in October 2023, coinciding with the implementation of previous minimum wage increase.
“Yung sa increase natin last year, (P468 in Class A), yung nabibili ba ng mga empleyado natin mabibili pa rin ba this year?” Bretaña said.
(With the increase we had last year, [P468 in Class A], will our employees be able to buy for the same amount this year?)
Bretaña also explained the reciprocal relationship between inflation and minimum wage adjustments, where inflation influences wage increases, and wage adjustments, in turn, can impact inflation.
“In making decisions, you need to make a balance duon sa tatlo (among the three) because increases in labor which is an input to production, being the labor market, would eventually increase the production cost of the businesses,” she said.
‘Inflationary pressure or impact’ is highly considered in the minimum wage adjustment.
The increase triggers higher spending and eventually increases the demand.
The inflationary pressure or impact will drive businesses to adopt measures either in investing in technology to increase their productivity to sustain the operations in spite of the higher labor cost, or reduce their profit margin.
However, the potential immediate adoptive measure for the businesses is to add on the labor cost to their products or services.
“At the end of the day, yung napakahirap is kung pa’no ibalanse (the most difficult is how to balance), how to ensure that we arrive at a figure that will consider all other factors para magkaroon ng (to have an) economic balance, and that the impact to the economy would be good for the entire region and for the country,” Bretaña said.
Bretaña said the government only comes into the market when there is a ‘market failure,’ which is more likely to happen when there is undue practices or unfair wages.
“We have to remember first that minimum wage setting is a social protection toolto protect the most vulnerable workers… to ensure that protected yung mga lowest income natin na workers,” Bretaña reminded.
Unless a retail or service employer regularly employs not more than 10 workers or employer affected by natural calamity or human-induced disasters, employers are mandated to comply with the minimum wage adjustment effective Oct. 2.
If under the exemptible categories, ‘application for exemption’ shall be done on or before Nov. 30. (JJT/PIA 7-Cebu)
