Wage hike proportional to inflation rate should be considered, expert says

TomasinoWeb
2 min readJun 7, 2023

By Patricia Lumenario

Photo by Nathaniel Salcedo/TomasinoWeb

As the inflation rate continues to hike, several reform groups have called for a salary increase in view of the celebration of this year’s Labor Day on Monday, May 1.

Labor unions gathered in Mendiola to voice their concerns on contractualization, salary increases, and other issues that have been affecting ordinary workers for years.

Nine days after the Labor day celebration, the senate labor committee approved the proposal for a P150 increase in the daily minimum wage which was to be reviewed by the technical working group in consideration for the capacity of business establishments.

In proportion

Program chair of the UST Economics department, Assoc. Prof. Carlos L. Manapat said that as long as the wage is given to workers with specialized skills with quality output, it will provide incentives to workers that will improve their output.

“Workers will stay with firms and [workers] will refrain from going abroad,” he told TomasinoWeb.

Dr. Manapat emphasized that if the wage increase is proportional to inflation rate, workers will be encouraged to stay at their particular job.

He added that the salary increase should be done on a regular basis, depending on the rate of inflation and other factors that may have an impact on the quality of living

“For specialized workers, it should be around 20–25% of the net profit of the firm. For regular workers, it is equal to the inflation rate,” Dr. Manapat said.

He said that this can lead to production of quality outputs specifically for specialized workers.

When asked if the low minimum wage has an effect on the rising unemployment rate in the country, Dr. Manapat said that unemployment is simply a mismatch between the workers’ skills with the needs of the industry and wage has nothing to do with it.

“If you feel that the wage is the problem, do not apply for the job,” he said.

Dr. Manapat also noted that despite the need for salary increases depending on the inflation rate, if the government insists on increasing the wage, firms that are not earning much may be on the verge of closure or streamlining. -with reports from Alexandria Grace Magno

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