THE Marcos administration’s economic team has warned of the negative economic repercussions of the proposed across-the-board minimum wage hikes of P200 and P100 that are currently pending in Congress.
In a joint statement on Wednesday, the high-ranking officials said based on estimates, the across-the-board wage hike will exert substantial downward pressure on the country’s gross domestic product (GDP) growth rate by 1.6 percentage point for a P200 hike and 0.5 percentage point for a hike of P100.
In a joint position paper submitted to President Ferdinand R. Marcos Jr., the economic team said both scenarios are predicted to result in the economy missing the lower end of the GDP growth target range.
The position paper was signed by Special Assistant to the President for Investment and Economic Affairs Frederick D. Go, Finance Secretary Ralph G. Recto, Department of Economy, Planning and Development Secretary Arsenio M. Balisacan, Budget Secretary Amenah F. Pangandaman, Trade and Industry Secretary Ma. Cristina A. Roque and BSP Governor Eli M. Remolona.
The officials said a P200 increase in daily wages could raise inflation by around two percentage points, while a P100 hike may add 0.7 percentage point.
“The substantial minimum wage increase may lead to higher production costs, which could result in higher prices that may disproportionately affect low-income households,” the statement said.
“Thus, while the government has already achieved bringing year-to-date average inflation down to just 1.9 percent, as the country’s headline inflation rate further slowed to 1.3 percent in May 2025, an across-the-board minimum wage hike may reverse this progress and make high inflation rates reappear,” it added.
Additionally, the officials said when wage adjustments are not commensurate with improvements in productivity, they can exacerbate price pressures.
“A wage hike will inevitably result in higher prices in the goods sold by enterprises who will have to accommodate the wage increase. This will result in the poorest of the poor, who are mostly in the informal sector and do not even make minimum wage, bearing the brunt of the impact of the wage increase,” the officials said.
The economic team also noted that enterprises may be forced to either stop hiring or even lay off or retrench workers, resulting in unemployment.
“Employers—whether employing a lot or a few—will have to factor in the additional cost of production due to the wage hike, and may either stop hiring workers; lay off or retrench employees; or at least reduce work days,” the statement said.
The officials said this will lead to higher rates of unemployment and underemployment, with an increase in the unemployment rate of about 0.2 ppt for the P100 increase to 0.6 ppt for the P200 increase, translating to around 105,000 to 300,000 persons potentially losing their jobs.
The economic team further said the micro, small and medium enterprises may struggle to absorb the mandated wage increase per worker, which translates to P4,000 a month given a five-day work week or P4,800 a month for a six-day work week.
“To cope, some may increase prices of goods and/or services, reduce their workforce or worse shut down operations altogether, affecting both employees and the broader economy,” they said.
Lastly, the officials said a uniform wage increase across all regions does not consider differences in cost of living and other socioeconomic factors, such as regional unemployment conditions and business climate.
“The proposed bills could disproportionately affect less developed regions, which may face greater difficulty attracting investments and generating employment due to increased labor costs,” the economic team said.
The officials recommended to the President that the current system of adjusting wages through the Regional Tripartite Wages and Productivity Boards be maintained, while strengthening the implementation of the minimum wage law with a focus on having each region more adequately respond to the evolving needs of workers and increasing investments to create more quality jobs.
“Regional minimum wage setting better reflects local economies, avoids purchasing power disparities and supports fairer wage distribution. It also ensures inclusivity in the decision-making process, with the use of the tripartite wage-setting that takes into consideration the side of the government and employers aside from workers, as endorsed by the International Labor Organization,” the statement said.
The Federation of Free Workers (FFW) and the Partido Manggagawa (PM) earlier said in separate statements that there is no more room to delay the passage of the proposed law which aims to give workers a substantial wage hike adjustment.
“They must urgently convene the bicameral conference committee to reconcile the proposed wage increases,” said the PM.
“The wage hike is reasonable, fair, and needed. Let’s pass it for the people,” the FFW said.
The PM said it is part of the constitutional duty of Congress to ensure that it not only passes bills but also their timely enactment.
Last week, the House of Representatives approved the proposed Wage Hike for Minimum Wage Workers Act, which calls for a P200 wage increase.
The Senate approved its version of the P100 legislated wage hike as early as February 2024.
