Financial experts warn of the economic effect of the recently approved SSS pension hike.
Economists explain the negative and positive effects of the soon to be implemented pension hike of the Social Security System (SSS).
The P1,000 increase in pension will hugely help in the expenses of more than two million pensioners.
If the purchasing power of the public increases, it will have a positive effect on the economy.
One of the concepts in economics is the circular flow of income. This means that if consumers spend money it follows that production of goods and services will increase, which will then lead to additional employment.
An increase in employment rate means additional income for workers who will then spend the money they earn on goods and services. This is how money flows in the Philippines.
An economist notes that if the pension hike for retired SSS members will be considered as a government spending multiplier, and the money that retirees receive will be allocated for private use, it will result in economic growth.
“If and when the retirees will spend the money for private spending that will actually catalyze economic growth,” Economist Ronilo Balbieran told UNTV News in a phone interview.
On the other hand, the effect of SSS pension hike can be negative if the government ends up shouldering the funds that will be used for the said increase.
Meanwhile, some employers are not against the hike in SSS contributions as long as it will result in economic growth.
“Pwede naman po kami magbigay. Wala naman po sa amin ‘yun. Maganda naman para makatulong. Kaya nga lang sa sitwasyon namin, ‘yung economy natin ngayon taas nang taas ang tax, ‘yung mga bilihin. Paano ka makakadagdag?” said Maya Rosario, an employer.
(We can contribute. We don’t have problem with that. However, because of the situation now where taxes and prices of goods continue to increase, it’s difficult to contribute more.)
Some economists believe that to balance the impact of the SSS pension hike on the economy, the government should increase the contribution of SSS members. — Mon Jocson | UNTV News & Rescue
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