Director General Augusto Santos of the National Economic and Development Authority has stressed the importance of minimum wage setting, saying it is a protective social policy measure for the unskilled adult workers entering the workforce for the first time.

Santos, who spoke at the recent National Tripartite Policy Conference on Wages and Productivity in Manila, said in a statement that the minimum wage policy shields unskilled workers from exploitation and poverty.

It also offers legal support to low-wage earners in their bargaining with their employers, he said. Santos said that in setting the level minimum wage for the regions, the Regional Tripartite Wages and Productivity Boards should consider 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, he said, adding that neither can the minimum wage be set too low, leaving the unskilled vulnerable.

Santos further said that the minimum wage level affects labor productivity and high wages cut into profit, which may affect the companies' incentives to make new investments thus, weaken the link between performance and pay.

But a mere minimum wage on workers with experience and skills, on the other hand, could undermine productivity, he said, adding that the NEDA remains supportive of Republic Act 6727 or the Wage Rationalization Act.*

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