P150 across-the-board wage hike would increase inflation: Diokno Sweden supports resumption of EU-PH free trade deal talks

Sweden’s Foreign Trade Minister Johan Forssell has underscored the need to resume talks between the Philippines and the European Union (EU) for a bilateral free trade agreement (FTA) to facilitate a freer flow of goods between the two parties.

The Philippines is benefitting from the EU Generalised Scheme of Preferences Plus (GSP+) as more than 6,000 goods were slapped with zero tariff upon entering the EU market.

“But from our perspective, we have been, for many decades, a very strong supporter of free and open and rules-based trade. So I believe that when the time is right, we should also restart the FTA negotiations between the Philippines and European Union,” Forssell told reporters during his two-day visit here on May 18 and 19.

Forssell said an EU-Philippines FTA “must be the ultimate goal” of the two parties when it comes to boosting trade ties.

It has been a decade since the Philippines and the EU launched exploratory talks on bilateral FTA.

There were two negotiations held in Brussels in 2016 and in Cebu in 2017, but talks have been on hiatus for six years now.

Meanwhile, Forssell said the economic growth, demographics, and the infrastructure program and the transition to clean energy of the Marcos administration make the Philippines an attractive destination for Swedish investors.

“The Philippines is really a key market for us, so it was important to come here,” he said.

Forssell said he aims to bring a Swedish business delegation to Manila and also to invite Filipino companies to look into investment and trade opportunities in Sweden.

He added there are currently 40 Swedish firms operating in the Philippines, including popular brands like H&M and IKEA. (PNA)

Raisingthe minimum wage by P150 across the Philippines would increase inflation by 1.4 percentage points, Finance Secretary Benjamin Diokno warned.

In his weekly press chat, Diokno warned of the potential inflationary impact of the proposed measure approved in principle by a Senate committee last week that grants a P150 wage hike for all private sector workers across the country.

“The implication of a P150 [wage] increase… It will increase inflation by 1.4 [percentage points],” the Finance chief said, citing estimates from the National Economic and Development Authority (NEDA).

“So who will benefit from that? Who will eventually suffer?” he asked.

Diokno said that if inflation is estimated at about 5.5% for 2023, the proposed wage hike could drive it up to 6.9%.

The inter-agency Development Budget Coordination Committee (DBCC) has hiked its inflation assumption for 2023 to 5.0%–7.0% from the previous forecast of 2.5%–4.5%, “given the persisting high prices of food, energy, and transport costs.”

“Let’s just continue the current system, which works naman,” Diokno said.

‘Napakababa, napakatagal’

Senate President Juan Miguel Zubiri, who proposed the bill approved in principle by the Senate Committee on on Labor, Employment and Human Resources, said that the wage increases being approved by the Regional Wage Board are too low.

“Ang nakita po natin, with due respect sa ating Regional Wage Boards, napakababa po ng mga increase nila at napakatagal bago nila aksyunan ang problema ng pagtaas ng bilihin, at ang sigaw ng tao para sa disente man lang na sahod. Kapag