Why Employers are Worried About House Approval of a P200 Wage Hike Bill

Philippine private sector and employers groups on Thursday (June 5) raised the alarm over the congressmen approving a P200 across-the-board minimum wage hike for workers in the sector, as they cited inflationary risks and its impact on small businesses.

The Philippine Chamber of Commerce and Industry (PCCI) said the legislated wage hike would not benefit those in informal working conditions, who make up at least 50 to 60 percent of the population.

“The wage hike leads to higher labor costs, consequently resulting in higher costs of goods and services, and inflation,” the PCCI said in a statement. “Even as the benefit will only be enjoyed by workers in the formal sector, the inflationary effect will erode purchasing power negating the wage hike's intended benefit.”

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PCCI added that micro,small, and medium enterprises (MSMEs), which make up over 96 percent of the total number of enterprises in the country, would find it hard to comply with the wage hike.

The House of Representatives on Wednesday greenlit House Bill No. 11376 third and final reading via a 171-1-0 vote. This is the first legislated wage hike since the 1980s, after Congress enacted a law that set up regional wage boards that decide on basic wages.

The Senate last year approved a P100 minimum wage increase bill also for private sector workers.

“The unilateral wage hike sets a precedent that undermines the Regional Wages and Productivity Board, which was created primarily with the function to determine and set region-specific wages based on the local cost of living,” the PCCI said.

The Lower House approval comes at a crucial time as the 19th Congress is set to adjourn session on June 13 before paving the way for those elected in the May midterm elections.

Meanwhile, the Makati Business Club said the government should instead focus on bringing down and dampening the effect of the spiraling prices of basic goods.

“If we don't address the prices of basic goods, there will be continuing pressure to keep increasing wages, which is not only inflationary, but also makes us less competitive and productive versus other ASEAN (Association of Southeast Asian) countries,” the MBC said in a statement issued also on Thursday.

The MBC also cited the importance of leaving wage increases to the regional boards since they already take into account the cost of living in a specific area.

President Ferdinand Marcos Jr. on Labor Day, May 1, pushed for region-specific wage increases instead of P150 to P200 legislated pay hikes. These hikes were sought to help workers cope with inflation.

Inflation eased for a fourth straight month in May at 1.3 percent year-on-year, which is lower than 1.4 percent in April.