Employers are clamoring for the suspension of the excise tax on oil in order to cushion the rising cost of transport and power.
The Employers Confederation of the Philippines (Ecop) released a statement expressing their concern over the country’s inflation jumping to 6.4 percent in August.
“On a year-to-date basis, inflation is now at 4.8 percent, well above the BSP [Bangko Sentral ng Pilipinas] target of between 2 percent and 4 percent for 2018. Among countries in Southeast Asia, we have the highest inflation rate in the region,” the statement read.
“It is expected that the BSP will again increase interest rates during its September meeting, perhaps by as much as 50 basis points. This will only escalate borrowing costs further,” it added.
Employers are also expecting an increase on the cost of transport and power due high global oil prices. Adding to their problems is the continuous deterioration of the peso, they said.
Furthermore, the group was concerned the most on the impending response of the labor sector to inflation, which is to file an increase for minimum wage.
“Further, there is anxiety on the part of business that wage boards might even grant an excessive salary hike to show compassion to labor and shift the burden to employers. Granting such a petition will hurt the very engine that fuels economic growth in this country and will not help the more than 2 million jobless, the self-employed and the underemployed,” the statement read.
“Business, too, is equally affected by the inflation arising from the high cost of production, and the wage boards must be cautioned in granting such a non-correctible salary hike. Given all these and the seeming endless distractions and noises from the political front, there is really a basis for concern among employers and investors alike,” it added.
Ecop said that if increase in minimum wage is not possible, the government can opt for non-monetary measures to cushion the impact on inflation, specifically the surging price of rice, which is a supply and logistics issue.
“Rice import restrictions have caused the price of rice over the years to remain high. Equally disturbing is that the supply, and eventually the price, of this commodity are also affected by the smuggling operation in the south,” employers told Business Mirror.
Ecop told the National Food Authority and the NFA Council ““to get its act together immediately” to resolve its rice issue.
The group wants the government to suspend the excise tax on petroleum products in the next two years. The excise tax imposed on petrol is up to P6 over the next three years: P1 this year, P2 next year and P3 in 2020.
“This will temper further increases in the cost of transport and power and most importantly, rein in inflation expectations,” employers said.