The Department of Finance (DOF) warned that the proposed across-the-board minimum wage increase may further raise consumer prices and discourage employers to hire more staff.

During the weekly Chat with SBED briefing, Finance Secretary Benjamin E. Diokno said the optimal level of wage hike should be determined by the Regional Wage Boards, rather than a nationally mandated increase.

Diokno cited an International Monetary Fund study, affirming that the Regional Wages and Tripartite Board is the “superior system” in the minimum-wage-setting process.

The DOF chief’s pronouncement comes as Senate President Juan Miguel Zubiri pushes a legislated P150 daily wage increase nationwide for all sectors.

Diokno cautioned that the proposed P150 wage increase would be counterproductive because it may disrupt the market for labor and fuel inflation.

According to the DOF, the Bangko Sentral ng Pilipinas’ implied assumption for a wage hike was only four percent, thus anything above that rate could be inflationary.

Diokno said that if Zubiri’s proposal is enacted into law, it will result in a 1.4 percentage point increase in inflation.

Aside from higher inflation, he said that it may result in greater competition in the local labor market as employers opt not to hire additional workers to cut costs for higher minimum wages.

"We have to explain to the policymakers, what will be the implication of the higher-than-expected wage increase,” Diokno told reporters. “Let’s continue the current system.”

Diokno, meanwhile, said that the Marcos administration will continue its inflation-mitigating measures, such as fuel subsidies, and targeted cash transfers.

If needed, the finance chief assured that the government would provide additional provision of fuel subsidies, and implement another round of targeted cash transfers.

Last May 10, the Senate Committee on Labor, Employment and Human Resources has “approved in principle” the bill seeking a P150 across-the-board wage increase for all private sector workers in the country.

The panel, headed by Sen. Jinggoy Ejercito Estrada, will now discuss the proposed graduated increase scheme for micro, small and medium enterprises (MSMEs) in a Technical Working Group (TWG).

Zubiri, who is one of the authors of the bill, said the last legislated minimum wage increase was in 1989, at P89, before the passage of the Republic Act 6727, which created the Regional Wage Boards.