Inside the Headlines

Business Groups Assess the Impact of Proposed Wage Hike

Business groups in the Philippines, including the Philippine Chamber of Commerce and Industry (PCCI), the Employers Confederation of the Philippines (ECOP), and the Makati Business Club (MBC), have voiced their concerns about the proposed minimum wage increase for private sector workers. According to GMA News, these organizations warned that while the wage hike aims to uplift workers’ welfare, it could also create inflationary pressures. Higher labor costs may drive up the prices of goods and services, which could disproportionately affect informal workers and micro and small enterprises (MSEs) that are less capable of absorbing additional expenses.

The legislative process has also become a point of contention. The House of Representatives approved a ?200 increase in the daily minimum wage, compared to the ?100 approved by the Senate. This difference must be reconciled in the bicameral conference committee before the bill can be forwarded to the President for approval. While the measure promises immediate benefits to formal sector workers, business groups caution that its broader effects may erode purchasing power through inflation, leaving informal sector workers worse off since they are not covered by minimum wage laws.

From the perspective of employers, organizations like ECOP and MBC argue that the proposed wage hike could significantly increase operational costs. They fear this could trigger business closures, reduced investments, and weaker job creation, especially if rising costs are not matched by productivity gains. They further emphasized that the real solution should lie in stabilizing the prices of basic goods, as continuous inflation will only lead to recurring calls for wage hikes. Additionally, the proposal undermines the role of the Regional Wages and Productivity Boards (RWPBs), which are mandated to set wages based on local economic conditions and cost of living. Legislating a uniform wage hike nationwide could create unfair burdens for businesses in less developed or lower-cost regions.

Government officials, including President Ferdinand Marcos Jr. and Labor Secretary Bienvenido Laguesma, have echoed some of these economic concerns. They acknowledged the potential risks of widespread non-compliance with labor standards, slowed economic growth, and job losses if businesses are unable to cope with higher wages. As a result, business groups are urging lawmakers in the bicameral committee to adopt a more comprehensive approach—one that balances workers’ needs for fair wages with the economic realities and capacity of businesses to sustain growth and employment.