3 hours ago
9
Upgrade to High-Speed Internet for only ₱1499/month!
Enjoy up to 100 Mbps fiber broadband, perfect for browsing, streaming, and gaming.
Visit Suniway.ph to learn
Helen Flores - The Philippine Star
July 22, 2026 | 12:00am
MANILA, Philippines — Despite fears of price increases and layoffs, Malacañang said the P85 wage hike in Metro Manila will proceed as scheduled.
“There is no suspension. The implementation is pushing through,” Presidential Communications Undersecretary Claire Castro told reporters yesterday.
She said the Palace has not received any request from the private sector to halt the wage hike.
The Department of Labor and Employment (DOLE) also confirmed that the wage increase implementation will push through.
According to Labor Secretary Francis Tolentino, this is the biggest wage increase in the region’s history.
Earlier, the Foundation for Economic Freedom called on the government to suspend the implementation of the wage hike in Metro Manila pending a review.
According to the group, the P85 increase far outpaces both productivity growth and inflation, raising the risk of higher prices for basic commodities as businesses pass on increased labor costs to consumers.
It also warned that businesses may reduce hiring or cut operating hours, making it more difficult for unemployed workers to find jobs.
The group added micro, small and medium enterprises or MSMEs, which comprise the vast majority of businesses in the country, would bear the brunt of the wage hike.
The Federation of Free Workers, on the other hand, questioned the FEF for opposing the wage hike. Meanwhile, labor alliance Unity for Wage Increase Now said the P85 wage hike is grossly inadequate, and has demanded a P505 salary increase instead.
BSP assessing inflation impact
The Bangko Sentral ng Pilipinas (BSP) is assessing the inflationary impact of the record P85 minimum wage increase in Metro Manila after the adjustment turned out to be twice as large as initially anticipated, according to Governor Eli Remolona Jr.
In a recent interview with Bilyonaryo News Channel, Remolona said the central bank is concerned that the wage increase could add to second-round price pressures at a time when core inflation remains elevated.
“It was a record hike. We thought it would be six percent, but it turned out to be 12 percent,” Remolona said.
“So we’re still crunching the numbers on the possible inflationary effects of that. We’re still trying to figure out what would happen in the regions in terms of their own wage hikes,” he noted.
The P85 hike, to be implemented in two tranches, will raise the daily minimum wage in Metro Manila by P60 this month and another P25 in January 2027.
The increase comes as headline inflation eased to 6.4 percent in June, although underlying price pressures continued to strengthen. Remolona said the BSP expects inflation to return to its two to four percent target range “within two years.”
Chinabank chief economist Domini Velasquez estimated that the wage hike could add about 0.19 percentage point to both headline and core inflation.
Of the total, the P60 increase in July could contribute 0.13 percentage point, while the remaining P25 adjustment in January could add another 0.06 percentage point.
Velasquez said the estimated impact is larger than those of the wage increases granted in the previous two years. She estimated that the 2025 adjustment, equivalent to about eight percent, added 0.12 percentage point to inflation, while the six-percent increase in 2024 contributed 0.09 percentage point.
“We expect the wage hike to have the strongest pass-through effects on food and beverage and restaurant services,” Velasquez said.
These industries employ a relatively large share of minimum-wage workers and account for a significant portion of household spending, making them vulnerable to both higher labor costs and stronger demand arising from increased incomes.
Velasquez said the historically large adjustment, together with pending wage decisions in other regions, supports Chinabank’s view that the BSP could raise its key policy rate again in August to help anchor inflation expectations.
However, Philippine Institute for Development Studies senior research fellow John Paolo Rivera said the wage increase would likely have a manageable impact and would not be the primary driver of inflation.
“While it may put some upward pressure on prices, particularly in labor-intensive sectors, it is unlikely to be the primary driver of inflation,” Rivera said. — Keisha Ta-asan, Rhodina Villanueva
