Tuesday, July 08, 2008 Malig: Something must be done By Jun A. Malig Cognition
IT'S very evident. Employees -- from managerial, supervisory to rank-and-file -- really need to receive higher salaries and wages. And they need it now. It won't take an economist or an economic expert to prove this.
The May and June inflation rates of 10.1 percent and 12.3 percent, respectively, in areas outside Metro Manila are clear as day that the economic burdens of Juan and Maria Dela Cruz have significantly increase.
The figure, as presented by the National Statistics Office, speaks for itself. And whenever inflation rises, the purchasing power of our money decreases.
Inflation, as defined in economics, is a sustained increase in the general level of prices for goods and services. As inflation rises, every peso buys a smaller percentage of a good or service.
But we don't really have to understand the theory. We experience it everyday. The quantities of grocery or market items we use to buy with our P1,000 have significantly reduced beyond our control. Prices of goods and services are just too high for our current incomes.
Indeed, something must be done about this situation.
The real value of money is measured in terms of its purchasing power, which is the real and tangible goods that it can buy. When inflation goes up, there is a decline in the purchasing power of money. An item that can be bought at P100, for instance, will have an actual cost of around P112 after 12 percent inflation. Theoretical? Buy the groceries yourself or compare the previous supermarket receipts with the current ones and you'd know what I mean.
Economists say that inflation is not really bad for a country's economy.
But it should not exceed two to three percent. Base on the graphical presentation of the NSO, the inflation from January to June this year was between five to 11.4 percent in the National Capital Region and higher in the provinces. It's much higher than the only about two to four percent from January to December 2007.
We understand "artificial inflation" that occur during times of disasters or calamities when some supply of goods are too few to meet consumers' demands. But an inflation triggered by manufacturers or retailers' decision to increase the prices of their products to maintain their profit margins need corresponding pro-consumers measures.
In some countries the impact of inflation is being softened by adjustment of banks' interest rates and automatic wage and pension increases, as, evidently, people with fixed income are directly affected by the decreasing purchasing power of their hard-earned money. The result: Further economic hardship and poorer standard of living.
Undoubtedly, when inflation rises at much quicker pace than the employees' wages and salaries, there's a big problem that need to be taken care of.
