Wage hike in the Philippines stalled as businesses seek alternatives

Officials of the House of Representatives in the Philippines are cautious about supporting the Senate-approved P100 (US$1.79) legislated wage hike, citing concerns about its impact on employers.

House Deputy Majority Leader Representative Janette Garin highlighted the significance of ensuring that employers could sustainably bear the increased salaries. Garin emphasised that while the bill is well-received and popular, its implementation must consider the capacity of organisations, particularly micro, small and medium enterprises (MSMEs), which constitute a significant portion of the country’s business sectors.

Garin underscored the prevalent issue of the majority of organisations being MSMEs, raising questions about the potential consequences such as business closures due to the added financial burden. She also suggested the possibility of streamlining personnel to meet the requirements of the proposed wage hike.

Echoing Garin’s sentiments, economist representatives Joey Salceda and Stella Luz Quimbo, along with Deputy Speaker David Suarez, expressed reservations about approving the bill, citing similar concerns about its potential adverse effects on organisations, particularly MSMEs.

Salceda emphasised the existing mechanisms in place through regional wage boards, emphasising the need for responsiveness without unintended consequences. Quimbo warned of potential inflationary pressures resulting from organisations passing on the increased costs to consumers, thus nullifying the intended benefits of higher wages.

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Labour Secretary Bienvenido Laguesma acknowledged the importance of increasing employees’ purchasing power but stressed the necessity for a comprehensive study of the proposed legislated wage hike. He highlighted potential effects on employment levels, inflation rates, and GDP growth, underscoring the need for careful analysis.

However, various business groups, including the Philippine Chamber of Commerce and Industry (PCCI), opposed the measure, arguing that wage adjustments should be determined objectively by regional wage boards. The business groups cautioned against the potential negative impact on informal employees and MSMEs, urging policymakers to focus on comprehensive approaches to economic inequality, reported Philstar.