Business groups buck P200 legislated wage hike
Credit to Author: Louella Desiderio| Date: Thu, 6 Feb 2025 00:00:00 +0800
MANILA, Philippines — Business organizations yesterday expressed their opposition to the proposed legislated P200 across-the-board daily wage increase, warning of its damaging effects on the economy if implemented.
In a joint position paper, the Employers Confederation of the Philippines, Philippine Chamber of Commerce and Industry, Philippine Exporters Confederation Inc., Philippine Hotel Owners Association, Philippine Association of Legitimate Service Contractors, Philippine Retailers Association, Federation of Filipino-Chinese Chambers of Commerce and Industry Inc., Philippine Constructors Association Inc., People Management Association of the Philippines and the Semiconductor and Electronics Industries in the Philippines Foundation Inc. said they strongly oppose the proposed wage increase recently approved by the House committee on labor.
“While we acknowledge and respect the desire to improve the welfare of workers, we believe that the sweeping nature of this proposal will have devastating effects on business owners, particularly small and micro enterprises, and the Philippine economy in its entirety,” the groups said.
They said micro, small and medium enterprises (MSME), which account for 99 percent of businesses in the country, are already struggling with rising operational costs, limited access to credit and the ongoing challenges following the COVID-19 pandemic and rising inflation.
“Mandating a blanket wage increase of P200 a day will disproportionately burden these businesses, many of which are operating with slim margins and lack the financial flexibility to absorb such a significant increase in labor costs,” the groups said.
With approximately 70 percent of the Philippine workforce in the informal economy, the groups said these workers would not benefit from the wage hike and may even be driven further into the margins of the economy.
Another concern raised by the group is the potential for wage distortion or the sharp discrepancy between the wages of workers with similar skill sets and responsibilities, which can cause disruption in pay structures and lead to unfair wage disparities.
“This could create an imbalance, leading to dissatisfaction among employees, complications in wage negotiations and long-term problems for employers who will be forced to re-align their compensation structures across the board. The unintended consequence could be that employers face a fragmented workforce where salary levels no longer reflect productivity, experience or job complexity,” the groups said.
The proposal could also lead to higher living costs for Filipinos as struggling businesses will be forced to pass on the costs of higher wages to consumers by raising the prices of goods and services.
Another unwanted consequence of the proposal is potential business closures, especially among MSMEs already operating on thin margins.
“Businesses that can no longer compete or cover the higher costs will be forced to downsize, reducing employment opportunities across the board,” the groups said.
They said even large enterprises, especially those in highly competitive industries, could reduce hiring or let go of some workers as the wage increase raises their costs and forces them to streamline operations.
Moreover, the groups said the proposal, which includes penalties of up to P100,000 and/or imprisonment, along with double indemnity for unpaid benefits, could further discourage business growth and the creation of new jobs.
Instead of imposing a one-size-fits-all approach, the groups said lawmakers should consider more targeted measures that address the root causes of poverty and inequality.
It cited the need for more support for MSMEs, as well as to strengthen social safety nets for workers and improve access to education and skills training.