PCCI, ECOP oppose legislated wage hike

- Advertisement -

Business groups yesterday urged Congress to leave the determination of wage setting to the tripartite regional wages and productivity boards.

“We view the legislation of a minimum wage hike with much concern,” Philippine Chamber of Commerce and Industry (PCCI) president Enunina Mangio said in a statement issued yesterday.

Mangio was referring to the recent committee approval by the House of Representatives of a bill granting a P200 daily minimum wage hike for workers.

- Advertisement -

Sergio Ortiz-Luis, president of the Employers Confederation of the Philippines (ECOP), said politics should not be involved in wage setting.

“The wage boards were instituted by Congress precisely to ensure (wage adjustments) are shielded from politics,” Ortiz- Luis said, adding that it has been less than a year wage adjustment had been granted.

Ortiz-Luis said the Department of Labor and Employment has issued several wage orders that increased minimum wages for private sector workers in the Philippines. These increases affected workers in different regions, including Eastern Visayas, Zamboanga Peninsula, Western Visayas, Calabarzon, and Central Visayas. 

PCCI’s Mangio said the tripartite RWBs — comprised of business, labor and government — were created to set region-specific rates based on the local cost of living.

Mangio warned that a blanket increase in the minimum wage could lead to business inefficiency and stagnation as this does not take into account the differences in the cost of living across regions as well as the unique needs of businesses based on specific industry, location, and type of labor they need.  

“Cities have higher costs of living versus rural areas.  Legislating a single wage for all areas can harm businesses in lower-cost regions and removes the flexibility of the RWBs to set wages that are aligned with the situation in the local areas,” she added.

Based on the Regional Tripartite Wages   and Productivity Boards, the daily minimum wage is P610 as the  the  national average, with Metro Manila (NCR) region at P645 as of January 2025. The last wage increase amounted to P35 and took effect on July 17, 2024 in the NCR, with rest of the regions following suit between August 2024 and January 2025.   

These rates factor in the poverty threshold, prevailing wage rates as determined by the Labor Force Survey, and socio-economic situation in each region.

Mangio said a legislated minimum wage hike not only worsens the already rising cost of goods and unemployment but also fails to provide long-term solutions for productivity and competitiveness.

“Instead of legislating wages, our wage policy should have a comprehensive approach that balances the needs of workers with the capacity of businesses and ensure that micro, small and medium enterprises (MSMEs) continue to thrive while still providing fair wages, “Mangio said. 

For wage policy to be meaningful, it should prioritize economic growth and stability, business productivity, secure and quality jobs, and real purchasing power for workers, Mangio added.

Mangio also warned of the inflationary effect of an across-the-board wage increase.

She said businesses, especially MSMEs, and those in low-margin sectors such as retail, hospitality, and agri-food, will have to pass on the additional cost of the wage hike to consumers.

“The inflationary effect could further erode purchasing power negating the wage increase’s intended benefit and reduce jobs in the market. Making everyday items more expensive will simply offset the benefits of a higher wage especially on workers in the low-income brackets.  But the inflationary effect will bear down more on workers in the informal sector who are not bound by the minimum wage law,” Mangio added.

Mangio warned of the possibility that micro-enterprises in the formal sector will shift some of their operations to the informal sector to avoid the legislated wage and cut costs, further undermining efforts to expand the country’s formal economy and contributing to jobs insecurity.

Citing government statistics, Mangio said approximately 25 to 30 percent of the total employed workforce in the country, equivalent to around 10 to 12 million workers, is in the formal sector.  

The informal sector accounts for about 40 to 50 percent of the total employed population or 15 to 20 million workers.

- Advertisement -spot_img

Author

- Advertisement -

Share post: