Legislated P200 wage hike will harm small firms, hurt jobs, fuel inflation — PCCI

The Philippine Chamber of Commerce and Industry (PCCI), the country’s largest business group, has expressed concern over the House of Representatives’ approval of a P200 daily minimum wage hike, urging Congress to leave wage adjustments to the Regional Wage Boards (RWBs) instead of implementing a national mandate.

Key takeaways:

• PCCI warns against a legislated P200 daily wage hike, citing risks to MSMEs.
• Wage hikes should be determined by Regional Wage Boards, not through legislation.
• Higher labor costs may drive inflation, negating the intended benefits for workers.
• Job losses and shifts to informal employment could result from the mandated wage hike.
• PCCI urges a balanced wage policy that considers economic growth and business stability.

Concerns over blanket wage increases

PCCI president Enunina Mangio warned that a legislated nationwide wage hike fails to account for regional cost-of-living differences and could disrupt business operations, especially for micro, small, and medium enterprises (MSMEs) which make up the bulk of the business organization’s 30,000 member firms.

Enunina Mangio

The PCCI president urged that wage increases be made via regional wage boards tyo better account for local variables.

“A blanket national minimum wage does not take into account the differences in the cost of living across regions as well as the unique needs of businesses based on specific industry, location, and type of labor they need,” Mangio stated.

She emphasized that wage boards were specifically designed to set wages that reflect economic conditions in different regions. A single mandated national wage could harm businesses in lower-cost areas, reducing their ability to hire and expand.

Impact on MSMEs, inflation risks

Mangio highlighted the significant financial strain on MSMEs, which make up a large portion of the Philippine economy and already operate with thin profit margins.

“MSMEs are already operating on tight margins. The mandated wage hike will force these small enterprises to shoulder higher payroll expenses. For some businesses, particularly those in low-margin industries like retail, hospitality, and agri-food, the wage increase forces them to pass on the cost to consumers,” she added.

This increase in operating costs, she warned, could contribute to higher inflation, which would undermine the intended benefits of the wage hike by reducing workers’ real purchasing power.

Job losses and shift to informal employment

PCCI also raised concerns that the wage increase could lead to job losses and push businesses toward informal employment arrangements to cut costs.

“There is also the risk of micro-enterprises in the formal sector shifting some of their operations to the informal sector to cut costs, further undermining efforts to expand the country’s formal economy and jobs in the labor market,” Mangio said.

According to government statistics, the informal sector already accounts for 40-50 percent of the country’s workforce, with 15 to 20 million workers.

Call for balanced wage policy

Instead of a legislated wage hike, PCCI is advocating for a comprehensive wage policy that balances worker needs with business sustainability.

“For wage policy to be meaningful, it should prioritize economic growth and stability, business productivity, secure and quality jobs, and real purchasing power for workers,” Mangio emphasized.