Home NEDA raises concerns on proposed wage hike, impact on MSMEs

NEDA raises concerns on proposed wage hike, impact on MSMEs

NEDA raises concern on wage hike

The National Economic and Development Authority (NEDA) has voiced apprehensions regarding the proposed PHP100 minimum wage increase for micro, small, and medium enterprises (MSMEs). 

NEDA’s undersecretary Rosemarie Edillon cautioned that such a hike could strain the financial capabilities of MSMEs, potentially hindering their operations.

“Ang isa na tinitingan din namin (One of the things we’re looking at) is the affordability levels, especially for the MSMEs. We looked at let’s say for instance, savings from CREATE. Kasi isa yan sa pwedeng windfall. (That’s one of the windfall). But we saw there for the micro small and medium, hindi nila kakayanin (they will not be able to afford it),” Edillon said

Edillon highlighted the recent enactment of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law in 2021, which aimed to alleviate the tax burden on MSMEs by reducing their corporate income tax to 20%. 

She warned that implementing a significant wage increase might counteract the benefits conferred by CREATE, leading to financial strain and operational challenges for MSMEs.

Moreover, Edillon cautioned against the potential distortion that could arise from abruptly increasing the minimum wage, emphasizing the importance of carefully considering the economic implications before implementing such measures.

The concerns raised by NEDA come in the wake of Senate Bill 2534, which has garnered approval from senators. The bill seeks to raise the salaries of private sector workers by PHP100, with provisions for penalties, including fines, imprisonment, and back pay for non-compliance.

While the proposed wage hike aims to address concerns regarding the cost of living and promote fair compensation for workers, NEDA’s caution underscores the need for a balanced approach that considers the welfare of both employees and employers, particularly MSMEs.

NEDA’s discussion surrounding the wage hike continues, and stakeholders are urged to engage in constructive dialogue to find solutions that uphold the interests of all parties involved while fostering sustainable economic growth.

The outcome of these deliberations will not only impact the livelihoods of workers but also the overall competitiveness and resilience of the country’s economy in the face of ongoing challenges.

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