|
THE
chief economist of German lender Deutsche Bank said on
Labor Day the bigger threat to inflation was not soaring
rice or oil prices, but unwarranted wage hikes granted
by politicians.
An
overreaction could stoke already-elevated fears of price
increases and make them permanent by enacting a
disproportionately high wage increase, Michael Spencer,
the chief economist, explained.
The fear
surfaced in discussions on rice with former budget
secretary and academician Benjamin Diokno, who said the
regime of low inflation averaging 3 percent or better
was now history.
This, as
Senate leaders assured, also Thursday, the early passage
of a bill granting tax exemption to minimum-wage
earners, as part of a Labor Day package of benefits now
being crafted by congressional committees.
“This
will provide workers the much-needed relief from the
spiraling prices of rice and other basic necessities,”
Senate President Manuel Villar said. “There should be no
more hurdle to its passage as every peso added to the
pockets of our minimum-wage earners means so much in
alleviating their plight.”
Sen.
Edgardo Angara, at the same time, moved to immediately
amend certain provisions of the Labor Code to increase
national productivity and employment.
The twin
moves are seen as sober reactions by senators to the
rising clamor for wage hikes, apparently in recognition
of the point that legislated or haphazardly conceived
wage hikes might hurt more than help workers because of
the inflationary impact.
“The
liberalization of international economic trade has led
to the advent of a global economy that is fast becoming
one integrated unit,” Angara said. “As a result of
better communication and transportation facilities,
business opportunities abroad are now within closer
reach of local business entities.”
However,
he warned that these opportunities may be lost if the
local economy fails to adjust and cope with the new
demands of the international market.
“It is
imperative that the government creates a business
environment that allows the local economy to be more
competitive in the global market,” Angara added. “With
this, I am for the overhaul of the Labor Code so the
country’s labor rules can adapt to the dramatic changes
brought about by technological strides and outsourcing,
and the challenges brought about by globalization on the
workplace.”
As
proposed by Angara, amendments to the existing Labor
Code will include:
• A
compressed workweek or flextime arrangements;
•
Revision of the doctrine against the
elimination-diminution of benefits under certain
conditions;
•
Restructuring of the visitorial and enforcement power of
the labor secretary to allow for self-regulation; and
•
exception from the night-work prohibition on women in
such industries or establishments operating on a
continuous 24-hour schedule.
Once the
amendments are adopted,
Angara said businesses are expected to become more efficient,
competitive and flexible in responding to client needs,
while protecting labor’s interest by providing for an
enhanced work-life balance.
“The old
standard of working eight hours a day for a working time
of 40 hours a week is becoming obsolete. We now have
24-hour, seven-day-a-week schedule, mostly employing
hard-core of basic information-technology skills, more
women work at night and the bulk of migrant workers are
now women. Some work at home with flexible schedules,”
he said.
The
labor sector is agitating for wage hikes ranging from
P80 to P125 a day, far more than what the economy is
believed capable of absorbing.
Deutsche
Bank’s Spencer was more concerned about how the
government would react to the perceived rice shortage
by, for example, giving in to populist sentiments and
enacting a wage increase without relating it to
increased productivity.
“The
real danger lies in how the government responds—if
politicians press the panic button and respond to the
temporary shock with measures that permanently increase
costs—i.e. legislated wage increases that outstrip
productivity growth.
“They
run the risk of triggering a supply chain reaction that
will be almost impossible to reverse,” the bank
economist said.
A wage
hike deemed “reasonable” by experts is one that grants
daily wage earners additional compensation no more than
P25, based on computations provided earlier by the
Bangko Sentral ng Pilipinas (BSP).
One that
is more than P25 a day would do more harm than good to
the economy, deputy BSP Governor Diwa Guinigundo said.
Diokno,
however, observed that the bulk of the country’s work
force is employed in the informal sector which is not
covered by wage legislation.
Diokno
also said interest rates would rise gently over the
medium term to signal an end to the three-year easing
cycle in which domestic interest rates fell rapidly
between 2004 and 2007.
The
91-day Treasury benchmark currently yields around 4.75
percent in the secondary market, representing an
increase of around 110 basis points from year to date.
Diokno
and Spencer agreed that 12 percent of some 90 million
Filipinos benefited from the higher price of rice in
recent months.
“The
consensus, though, was that the net effect on the
economy would be negative as practically everybody,
including the rice farmer, is a rice consumer,” Deutsche
Bank said. |
