DUBAI: An increase in the minimum wage could have wider, negative implications that will would impact even those who will not benefit from the additional pay, the Philippines’ trade and industry secretary said on Wednesday.
“The reality is not all [Filipino workers] are wage earners,” trade chief Ramon Lopez commented during an economic briefing at Malacañan Palace.
“If we increase wages, the costs will increase which can pressure prices to go up. And of course, those who will be hit are not only the wage earners, but everyone else who did not benefit from the wage hike. They will also be affected.”
“The more sustaining solution for wage increases would be more jobs to be created and more investments to come in.”
There had been calls for the government to review current wages because of higher inflation – due to costlier oil prices and the implementation of a tax law that hit sugar and tobacco product prices – during recent months. Prices of consumer goods rose 4.6 percent last month, slightly higher than the 4.5 percent recorded in April but lower than the 4.9 percent government forecast.
Some legislators are planning to file bills aimed at increasing minimum wages across the country when Congress – the country’s legislative body – resumes regular sessions on July 23.
“Inflation (in May) was caused by oil prices and a shortage in rice,” Lopez said, while prices of sugar and tobacco products increased because of the higher tariffs imposed on them under the Tax Reform for Acceleration and Inclusion (TRAIN) law which came into force on Jan. 1.
“The shortage of rice however has been addressed with the government-to-government importation we undertook, and shipments are now being unloaded in various ports around the country to address local supply.”
Lopez, however, did not discount the possibility that regional tripartite wage boards – which formulate and review policies on regional wages – could implement additional daily salaries, although such moves must be based on the prevailing economic conditions in the specific regions granting these increases.
“There can be consideration because of inflation, so if you ask me there could be a minimal adjustment but that should not be more than what is necessary because it would really create a strong pressure on inflation,” he said. “Whatever inflation is felt in the region that could be a basis for the adjustment.”
President Rodrigo Duterte last month ordered the Department of Labor and Employment to convene regional tripartite wage boards to study the possibility of adjusting minimum wages to mitigate the effects of rising consumer prices, the peso depreciation and the implementation of the TRAIN Law. Duterte also directed trade officials to tighten the monitoring of prices of basic goods and commodities to guard against profiteering.
“But if we are successful in maintaining industrial peace, maintaining rule of law, peace and order, no corruption, good business environment, investments would come in and that will drive up wages,” Lopez said. “We have to have investments and job-creation activities so that wages and income will go up naturally because of the supply and demand for labor. That is what we should strive for.”
Philippines’ trade chief negative to legislated wage hike for Filipino workers
Philippines’ trade chief negative to legislated wage hike for Filipino workers
- “The more sustaining solution for wage increases would be more jobs to be created and more investments to come in”
- President Rodrigo Duterte last month ordered the Department of Labor and Employment to convene regional tripartite wage boards to study the possibility of adjusting minimum wages
Emerging markets brace for AI shock and weak growth, policymakers warn
ALULA: Emerging markets are entering a more volatile phase of the global economy better prepared for shocks than in the past, but face mounting risks from weak productivity growth, trade fragility and the rapid advance of artificial intelligence, senior policymakers said.
Speaking at a core panel on the second day of the AlUla Conference for Emerging Market Economies, finance ministers and global officials warned that structural challenges — rather than cyclical crises — may define the next decade for developing nations.
Kristalina Georgieva, managing director of the International Monetary Fund, said many emerging economies had strengthened institutions and macroeconomic frameworks after earlier crises, leaving them more resilient.
“What we have seen over the last decades is that many emerging market economies have taken lessons from the advanced economies… in a way that gives them a better foundation to face the shocks that are now coming more and more often,” she said.
Georgieva highlighted a “significant improvement” in growth prospects and lower inflation for countries that took a long-term view on building strong institutions. This progress has fostered a new dynamic, she noted: “We now find that emerging markets are more interested to compete with each other for who does better in this policy arena.”
Still, Georgieva said sluggish growth remains her biggest concern.
“If there is one thing that wakes me up in the middle of the night,” she said, “is that growth, although reasonable, is too low to meet the expectations of people for a better standard of living.”
She attributed the slowdown largely to stagnant productivity and warned that artificial intelligence could intensify labor market pressures.
“AI is like a tsunami hitting the labor market for emerging market economies,” she said, projecting that “40 percent of jobs over the next years would be either augmented or eliminated.”
She added that many countries lack the skills base needed to capture AI’s benefits. “The skills that are necessary to capture the potential of AI, I don’t think that we are in a good place for that.”
Ali bin Ahmed Al Kuwari, Qatar’s finance minister, said AI cannot be separated from human capital development.
“I think, you cannot ignore AI, without the human capital, the human capital is the key element,” he said, noting that many emerging economies are tightening fiscal policy in an effort to stabilize public finances.
Trade vulnerability remains another pressure point. Mehmet Simsek, Turkiye’s minister of treasury and finance, said export dependence exposes developing economies to geopolitical and regulatory risks.
“I think emerging markets rely on exports, and that’s clearly an issue. So there is more vulnerability there,” he said.
Turkiye’s network of free trade agreements, covering 62 percent of exports, provides some insulation, he added, though not full protection.
“Now that doesn’t give you a full peace of mind,” he cautioned, “but at least for now, as long as our partner stays rule based, FTA provides you with some insulation.”
From Ecuador’s perspective, Finance Minister Sariha Moya said smaller economies must compete on quality rather than volume.
“Ecuador is a small country, so our producers have understood that we need to produce quality products,” she said.
“When you produce the best shrimp, the best chocolate, the best bananas, then you are less sensitive to tariffs,” Moya added, noting that Ecuador now exports more shrimp than oil.
