President Marcos' chief economist cautioned that the implementation of the proposed P100 wage hike could result in heightened unemployment rates, a further acceleration of consumer prices, and a deceleration in economic growth.

National Economic and Development Authority (NEDA) Secretary Arsenio M. Balisacan on Thursday, Feb. 22, said that “it’s not the right time” to increase the salaries of minimum wage earners, as such a decision could worsen, rather than improve, the welfare of Filipinos.

Balisacan explained that the negative consequences of the proposed legislated wage increase will vary depending on how the increase in salaries ripples through other wage levels.

"The lower number assumes that the wage hike will only apply to minimum wage earners, but if there is a cascading effect on other workers… [then the impact could be] quite substantial,” Balisacan said during the virtual SNAP Conversations 2024: Economic Outlook event.

In terms of employment impact, he said the wage increase could lead to approximately 100,000 Filipinos losing their jobs in the best-case scenario and up to 340,000 individuals becoming unemployed in the worst-case scenario.

“The 100 wage hike would negatively affect unemployment rate, raising the unemployment number by 0.2 percentage point to 0.7 percentage point,” the NEDA chief said. “That's quite substantial.”

The suffering of these newly unemployed Filipinos would be compounded by inflation, as higher-income individuals increase their spending, driving up the demand for goods and services in the country.

And when supply fails to keep pace with this heightened demand caused by the P100 wage hike, businesses raise prices, resulting in inflation.

Balisacan noted that depending on the cascading effect, the inflation stemming from the wage increase is estimated to be between 0.2 and 0.8 percentage points.

He said that a rise in inflation would then impede economic activity and growth, potentially causing the country's gross domestic product (GDP) to decline by 0.1 percentage point to 0.5 percentage point.

“The last thing we want is to reverse the gains we have achieved over the past several months. The proposed P100 wage hike would have a negative impact on the inflation outlook. Our estimate indicates that GDP growth would be adversely affected,” Balisacan said.

Meanwhile, Balisacan clarified that NEDA is not opposed to wage increases, but emphasized that petitions should go through a review process by the Regional Tripartite Wages and Productivity Board.

Finance Secretary Ralph G. Recto earlier said the proposed legislation for a P100-daily minimum wage increase for private sector workers could potentially contribute to an increase in inflation.

Recto also added that “It may be expensive for small entrepreneurs to pay higher wages.”

Micro, small, and medium-sized enterprises represent over 99 percent of business establishments and employ 63 percent of the country's workforce.