Wage hike need not result in inflation, says analyst


Posted at May 29 2018 04:46 PM | Updated as of May 29 2018 07:08 PM

Protesters picket in front of Shell Philippines' main office in Makati City on Tuesday following another round of oil price hikes. They claim the oil price hikes, the TRAIN Law, rising prices of goods, and low wages are weighing heavily on workers. Mark Demayo, ABS-CBN News

MANILA - An analyst on Tuesday disagreed with the view that the proposed increase in minimum wage nationwide would result in higher prices of goods. 

Rosario Bella Guzman, IBON Foundation executive director, said increasing the minimum wage would only result to price surges if companies choose to protect or maintain their profits.

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"Hindi dapat tumataas ang presyo ng bilihin. Ang mangyayari, kapag itinaas ang sahod ng gumawa ng produkto, liliit 'yung tubo ng nagnegosyo," she told DZMM. 

Guzman said increasing the minimum wage of workers would actually give consumers and workers more purchasing power, which would result to a better economy.

"Kapag humingi ng pagtaas ng sahod ang manggagawa, ang hinihingi lang naman niya ay bawasan nang kaunti 'yung kinikita ng negosyante. Hindi yun dapat naipapasa sa merkado," she said.

UP School of Economics professor Cielo Magno, meanwhile, said that while it's true that a wage hike would boost consumers' buying power, it may also lead to unemployment or inflation, especially if the companies involved are small and medium enterprises (SMEs).

Magno believes Congress should push for the lowering of Value- Added Tax from 12% to 10% to cushion the increase in prices of goods and services. 

Makabayan bloc lawmakers recently filed a bill seeking a P750 minimum wage hike nationwide to ease the people's burden amid the rising cost of living due to higher oil prices and the tax reform law.