Philippines’ trade chief negative to legislated wage hike for Filipino workers

There had been calls for the Philippine government to review current wages because of higher inflation – due to higher oil prices and the implementation of a tax law – during the past months. (AFP)
Updated 20 June 2018

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

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.”


Easy credit poses tough challenge for Russian economy minister

Updated 18 August 2019

Easy credit poses tough challenge for Russian economy minister

  • Measures being prepared to help indebted citizens; situation might blow up in 2021

MOSCOW: New machines popping up in Russian shopping centers seem innocuous enough — users insert their passport and receive a small loan in a matter of minutes.

But the devices, which dispense credit in Saint Petersburg malls at a sky-high annual rate of 365 percent, are another sign of a credit boom that has authorities worried.

Russians, who have seen their purchasing power decline in recent years, are borrowing more and more to buy goods or simply to make ends meet.

The level of loans has grown so much in the last 18 months that the economy minister warned it could contribute to another recession.

But it’s a sensitive topic. Limiting credit would deprive households of financing that is sometimes vital, and could hobble already stagnant growth.

The Russian economy was badly hit in 2014 by falling oil prices and Western sanctions over Moscow’s role in Ukraine, and it has yet to fully recover.

“Tightening lending conditions could immediately damage growth,” Natalia Orlova, chief economist at Alfa Bank, told AFP.

“Continuing retail loan growth is currently the main supporting factor,” she noted.

But “the situation could blow up in 2021,” Economy Minister Maxim Oreshkin warned in a recent interview with the Ekho Moskvy radio station.

He said measures were being prepared to help indebted Russians.

According to Oreshkin, consumer credit’s share of household debt increased by 25 percent last year and now represents 1.8 trillion rubles, around $27.5 billion.

For a third of indebted households, he said, credit reimbursement eats up 60 percent of their monthly income, pushing many to take out new loans to repay old ones.

Orlova said other countries in the region, for example in Eastern Europe, had even higher levels of overall consumer debt as a percentage of national output or GDP.

But Russian debt is “not spread equally, it is mainly held by lower income classes,” which are less likely to repay, she said.

The situation has led to friction between the government and the central bank, with ministers like Oreshkin criticizing it for not doing enough to restrict loans.

Meanwhile, economic growth slowed sharply early this year following recoveries in 2017 and 2018, with an increase of just 0.7 percent in the first half of 2019 from the same period a year earlier.

That was far from the 4.0 percent annual target set by President Vladimir Putin — a difficult objective while the country is subject to Western sanctions.

With 19 million people living below the poverty line, Russia is in dire need of development.

“The problem is that people don’t have money,” Andrei Kolesnikov of the Carnegie Center in Moscow wrote recently.

“This is why we can physically feel the trepidation of the financial and economic authorities,” he added. Kolesnikov described the government’s economic policy as something that “essentially boils down to collecting additional cash from the population and spending it on goals indicated by the state.”

At the beginning of his fourth presidential term in 2018, Putin unveiled ambitious “national projects.”

The cost of those projects — which fall into 12 categories that range from health to infrastructure — is estimated at $400 billion by 2024, of which $115 billion is to come from private investment.