FINEX says P85 wage hike needs broader reforms to deliver lasting gains

Insider Spotlight

• Higher pay could backfire if inflation, slower hiring and weaker investment erase workers’ gains.
• FINEX wants lower business costs through less red tape, faster permits and cheaper power, logistics and transport.
• The group says stronger investment and productivity—not wage orders alone—are the key to sustainably higher incomes.

The country’s top financial executives warned the newly approved P85 daily wage hike in Metro Manila could end up hurting workers if the government fails to follow through with reforms that lower business costs and attract investment.

The Financial Executives Institute of the Philippines (FINEX) said the increase recognizes the growing pressure on Filipino families from higher prices of food, transportation, housing, utilities and other essential goods.

“While higher wages provide immediate relief to workers, FINEX believes that the magnitude and timing of the increase underscore the need for government to carefully assess its absorptive impact, particularly on micro, small, and medium enterprises (MSMEs) and employment-intensive industries. The challenge now is to ensure that the gains from higher wages are not diminished by higher prices, reduced hiring, lower investment, or slower economic activity,” the group said in a statement on Wednesday. 

Beyond the wage hike

FINEX said the focus should now shift to policies that support higher wages through stronger productivity, a more competitive business environment and lower structural costs for businesses.

The group urged the government to reduce red tape, streamline permitting, improve regulatory predictability, accelerate digitalization and bring down electricity, logistics and transportation costs, saying these reforms would help businesses absorb higher labor costs while remaining competitive.

Protecting jobs and growth

FINEX also called for reforms that strengthen investor confidence and attract more domestic and foreign capital, saying investment expands productive capacity, creates quality jobs, introduces new technologies and provides the most sustainable foundation for higher wages and improved living standards.

The group also urged policymakers to closely monitor the wage hike’s impact on inflation, employment, business viability and wage distortions to ensure higher incomes are accompanied by sustained economic growth.

—Edited by Miguel R. Camus