Inflation makes NCR family living wage rise to Php1,087

May 5, 2022

by IBON Foundation

Research group IBON said the spike in the National Capital Region (NCR) inflation rate to 4.4% in April 2022 has driven up the family living wage (FLW) in the region to Php1,087. The NCR minimum wage is falling even further behind the FLW and a meaningful increase is more urgent than ever for genuinely inclusive recovery, said the group.

The Philippine Statistics Authority’s (PSA) reported the NCR inflation rate increasing substantially to 4.4% in April 2022 from just 1.3% at the start of the year in January, especially on the back of rising global and domestic oil prices. April 2022 inflation is already at its highest since the 4.6% rate in January 2019.

With prices rising more and more rapidly, the stagnant NCR minimum wage of just Php537 has fallen to less than half (49%) the NCR FLW of Php1,087, IBON said. This means that wage-earning households are continuing to suffer losses in real incomes and purchasing power even as the economy reopens.

IBON said that the real value of the NCR minimum wage has fallen by 9.6% since the start of the Duterte administration. If the government does not give a large wage hike in its twilight weeks it will be the only one of the six administrations in the past 36 years which will see a decline in the value of real wages over its term.

There have only been two wage hikes in September 2017 and November 2018 at Php21 and Php25, respectively, said the group. These minor increases have not been enough for the nominal wage to even just keep up with the continuous increase in the prices of goods and services. The NCR inflation rate has averaged 3% monthly since the start of the administration which results in an almost 21% increase in the overall price level, looking at trends in the consumer price index (CPI).

IBON pointed out that the government should stop seeing high wages as a barrier to economic development and, on the contrary, consider this a sign of progress because it indicates that the fruits of economic growth are becoming more equitably distributed. Wage hikes, including further government support to smaller enterprises to be able to afford this, will substantailly boost aggregate demand and economic recovery, the group stressed.

IBON also said that it supports the petitions of various labor groups to increase the NCR minimum wage to Php750 up to as much as Php1,037, noting that this will bring wages much closer to the FLW.