This was stressed by National Economic and Development Authority (NEDA) Director General Augusto Santos during the National Tripartite Policy Conference on Wages and Productivity.
The minimum wage policy shields unskilled workers from exploitation and poverty, said Santos.
"Aside from providing sufficient purchasing power for a basic standard of living, it also offers legal support to low-wage earners in their bargaining with their employers," he said.
In setting the level minimum wage for the regions, Santos advised members of the Regional Tripartite Wages and Productivity Boards to bear in mind that minimum wages cannot be set too high that might result in greater unemployment.
"Generous increases in the minimum wage will lead firms to use fewer workers as they cannot afford to pay higher wages."
Santos said that neither can the minimum wage be set too low, leaving the unskilled vulnerable.
"Workers with sufficient purchasing power supply, the effective demand, the mass market for the products and services of firms."
The minimum wage level affects labor productivity. "High wages cut into profit, which may affect firms incentives to make new investments and weaken the link between performance and pay," Santos noted.
On the other hand, a mere minimum wage on workers with experience and skills, on the other hand, could undermine productivity."
Santos also affirmed that NEDA remains supportive of Republic Act 6727, or the Wage Rationalization Act.
"It is the policy of the state to rationalize the fixing of minimum wages and to promote productivity and gain sharing measures to ensure a decent standard of living for workers and their families while allowing business and industry reasonable returns on investment, expansion and growth."
Santos urged key players to craft policy recommendations and tripartite agreements that will not only support the creation of more and better-paying employment and the attainment of gross domestic product (GDP) targets.
"These recommendations should provide the fundamentals towards a work force that reaps the benefits of a flexible and integrated global economy," he said.
The tripartite conference aims to revisit and align Philippine wage and productivity policies to the requirements of globalization, competitiveness and sustainable economic growth.
