1 month ago
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Several business groups expressed opposition to the proposed ₱200 daily minimum wage increase, warning of its potential threats to the Philippine economy and business owners, particularly small and micro enterprises.
In a position paper addressed to Rizal 4th district Rep. Fidel Nograles, the groups said the proposed hike is “neither feasible nor beneficial” in the current economic landscape.
Nograles chairs the House Committee on Labor and Employment, which recently approved a legislative bill seeking to impose an across-the-board daily wage hike of P200 for workers in the private sector.
“Instead of imposing a one-size-fits-all approach, we urge lawmakers to consider more targeted measures that address the root causes of poverty and inequality,” the groups said.
The Employers Confederation of the Philippines (ECOP), the Philippine Chamber of Commerce and Industry (PCCI), and the Philippine Exporters Confederation Inc. (PHILEXPORT), alongside eight key business organizations, urged the House panel to reconsider the measure due to its potential adverse effects.
In particular, the groups warned the burden the wage hike will impose on the micro, small, and medium enterprises (MSMEs) sector, noting that many of which are operating with slim margins and lack the financial flexibility.
According to the Department of Trade and Industry (DTI), MSMEs comprise 99 percent of the businesses in the country.
“Mandating a blanket wage increase of P200 a day will disproportionately burden these businesses,” the position paper read.
In the same manner, the groups raised concern about the potential of widespread business closures.
With the additional cost of the wage hike, many small businesses are believed to likely undergo layoffs or even permanent closures.
“Businesses that can no longer compete or cover the higher costs will be forced to downsize, reducing employment opportunities across the board,” it added, noting that this will further destabilize the labor market.
While MSMEs are expected to bear the brunt, the business groups said large enterprises will also face challenges in absorbing increases in labor costs.
They warned that industries such as manufacturing, retail, and services could encounter delayed investments, reduced hiring, and even job cuts.
Based on their position paper, the needs of informal sector workers are still left unaddressed by the proposed wage increase.
Government figures note that around 70 percent of the country’s workforce is engaged in the informal economy. This often means that these workers lack formal contracts, benefits, and protections.
“They are not covered by the law in its current form, further deepening the divide between the formal and informal sectors,” it read.
Ripple effects
The business groups also warned of the wage hike’s inflationary pressures in the economy, pointing out that businesses will be forced to pass increase costs to consumers.
This essentially threatens the purchasing power of the very workers the bill aims to protect, they said.
“In the long run, this could undermine the purchasing power of consumers and negatively affect overall economic stability,” the position paper read.
Wage distortion is another issue brought up by the business groups, which occurs when there is a discrepancy between the wages of workers with similar skill sets and responsibilities.
This is projected to cause disruption in pay structures, further leading to unfair wage disparities
“This could create an imbalance, leading to dissatisfaction among employees, complications in wage negotiations, and long-term problems for employers who will be forced to re-align their compensation structures across the board,” it read.
With this in mind, the business groups are advocating for a consultative approach to pushing wage increases.
They emphasized that a calibrated strategy on this matter would balance the need of workers with the realities faced by employers.
Ideally, an increase in worker’s daily wage shall protect jobs, encourage business growth, and strengthen the Philippine economy.
