Business groups in the Philippines warn of job losses amid wage hike

Approximately 10% of retail jobs could be at risk if the wage hike is mandated into law, says Bobby Claudio, President of the PRA.
By: | August 17, 2023
Topics: Compensation and Benefits | Job Cuts | News | Philippines

The Philippine Retailers Association (PRA) has voiced its apprehension regarding proposed legislation aiming to increase the minimum wage. Bobby Claudio, President of the PRA, cautioned that mandating a minimum wage hike through legislation might lead to labour issues in the industry.

Claudio explained that compelling organisations to increase wages through law might force financially strained organisations to cut jobs. He estimated that around 50,000 positions, approximately 10% of the retail workforce, could be at risk. This could also impact the dependents of affected employees, potentially impacting up to 2.5 million people.

Micro, small, and medium enterprises (MSMEs) within the retail sector could face even greater job losses, potentially another 300,000 to 500,000 positions. Claudio suggested that labour unions, often present in many organisations, could be a viable alternative to legislated wage hikes.

In June 2023, the National Wages and Productivity Commission approved a P40 (US$0.70) increase in the minimum for private sector employees in Metro Manila. However, Claudio noted that organisations are already adapting to this recent wage hike, and any further increase could lead to job cuts instead of benefits.

READ MORE: Nationwide wage hike remains on track in the Philippines

Business groups have expressed concerns over Senate bills proposing wage hikes, cautioning that such a move might adversely impact MSMEs. They pointed out that only a small percentage of the formal workforce would benefit, around 16%, or eight million individuals out of 50 million Filippino employees.

Senators Juan Miguel Zubiri, Loren Legarda and Bong Revilla introduced Senate bills seeking to legislate wage increases. 98% of organisations affected are MSMEs, which have already suffered due to the pandemic. The business groups stressed that inflation and the pandemic’s effects could lead to higher product prices, job reductions, or business closures if further wage increases are approved, reported Philstar.