Persistently high inflation and bloated wage increases could lead to job losses nationwide, local economists warned on Tuesday. Know more:
PERSISTENTLY high inflation and bloated wage increases could lead to job losses nationwide, local economists warned on Tuesday.
“We sense a resilient and upbeat consumer demand even as the holidays have come and gone, especially among the middle and higher classes. However, the probability of job losses due to higher production costs cannot be discounted easily. The question of whether this inflation surprise will stick [or is a one-off] may have yet to unfold, and the answer will definitely weigh on job generation or otherwise,” Asuncion said.
University of the Philippines School of Economics head of research Renato E. Reside Jr. said the government should keep minimum wage from increasing too much to prevent inflation from leading to job cuts. “At best, wage increases must be accompanied by significant increases in labor productivity.” “If inflation continues to outpace GDP growth, it could dampen consumer spending and trigger a wage-price spiral,” Peña-Reyes told this newspaper. “Maaaring magbawas ng trabaho [Jobs may be shed] if wages [production costs] go up.”Peña-Reyes said much of the country’s inflation woes are “self-inflicted.” He said external factors have little to do with the recent increase in commodity prices.
He added that it also depends on “the efficacy of efforts to reduce market power along the supply chain and farm productivity.” He said some rate increases in utilities such as electricity and water have to go through the government. However, there are “unsettled supply issues between Meralco and SMC [San Miguel Corp.] that would entail future electricity costs.”For its part, the National Economic and Development Authority said higher agricultural productivity, food supply augmentation, and energy security are top priorities of the government to temper upward price pressures.
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