Wage hike to hurt MSMEs – NEDA

MANILA, Philippines — The National Economic and Development Authority (NEDA) is opposing the proposed P100 legislated wage hike, saying this would hurt the country’s micro, small and medium enterprises or MSMEs.

NEDA Undersecretary Rosemarie Edillon told reporters yesterday the agency was asked to make an assessment on the proposed wage increase for private sector workers.

Edillon said the NEDA looked at the savings from the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act and the affordability of the wage increase.

“But we saw there for the micro, small and medium, they can’t afford it. The savings from CREATE will not be enough to cover the additional wage increase,” she said.

The CREATE Act reduced the corporate income tax (CIT) rate to 20 percent from 30 percent for those earning P5 million and below.

As for large corporations, the CIT rate was brought down to 25 percent from 30 percent.

Earlier, the Foundation for Economic Freedom (FEF), composed of top economists, former and present Cabinet secretaries and undersecretaries, leading figures in the academe, opinion makers and prominent members of the business and finance community, also voiced opposition to the proposed measure, citing damaging effects on the national economy.

In particular, the FEF said the wage increase would push up inflation as companies would be forced to charge higher prices.

The group said the higher inflation rate would lead to interest rate hikes that would reduce investments being made and jobs created by companies.

As the national wage increase does not consider the varying situations across regions, FEF also said many small- and medium-sized enterprises would be forced to close or lay off workers.

Instead of a wage hike, FEF is proposing reducing tariffs on rice and abolishing or expanding the import quotas for corn, chicken, pork and fish to make food more affordable.

Following the Senate’s passage of the proposed P100 legislated daily minimum wage increase for private sector workers, labor groups are pressing Congress to swiftly act on counterpart measures.

The Federation of Free Workers (FFW) yesterday called on the House of Representatives to immediately