The country’s largest employers’ group maintained that the newly approved P85 daily minimum wage increase in Metro Manila is ‘excessive,’ arguing that the wage board relied on inflation figures ‘distorted’ by temporary economic shocks rather than longer-term conditions.
Employers Confederation of the Philippines (ECOP) President Sergio Ortiz-Luis Jr. told BusinessMirror that the employer sector opposed the increase during deliberations before the National Capital Region wage board. The group said, however, that its members would respect and comply with the final decision.
‘For the first time, the employer sector dissented from the wage board. We will respect the decision and comply with it, but we felt the increase was too high,’ Ortiz-Luis said in an exclusive phone interview on Wednesday morning.
He clarified that employers did not object to the wage board’s formula, which considers inflation and other economic indicators, but argued that the current environment is ‘far from normal.’
Data from the Philippine Statistics Authority showed inflation slowed to 6.8 percent in May from a three-year high of 7.2 percent in April, while unemployment stood at 2.41 million in April, higher than a year earlier but lower than the level recorded in January.
‘We agree with the formula they use, but these are abnormal times. Inflation reached unusually high levels because of temporary factors. Those conditions should have been taken into consideration,’ he said.
Ortiz-Luis pointed to the spike in fuel prices caused by geopolitical tensions, noting that oil prices and inflation have started easing as global conditions stabilize.
Several energy reports showed that fuel prices are expected to post mixed movements as global oil prices cool, driven by easing tensions in the Middle East.
‘It’s similar to how fuel companies adjust prices based on replacement cost. The war is easing, fuel prices are coming down, and inflation is easing. Those developments should also have been considered,’ he said.
‘The problem is that once wages are increased, they cannot simply be reduced when conditions normalize. That was the reason for our dissent.’
The Department of Labor and Employment (DOLE) on Tuesday approved an P85 daily wage increase for workers in Metro Manila, the largest adjustment granted by the regional wage board in recent years.
The increase will be implemented in two tranches, with P60 taking effect on July 19 and the remaining P25 on Jan. 1, 2027.
Ortiz-Luis said employer representatives had proposed a lower adjustment of P50 to P60, which they believed would have balanced workers’ welfare with businesses’ capacity to absorb higher labor costs.
‘If you consider the current abnormal conditions, we believe P50-or at most P60-would have been a more realistic adjustment,’ he said.
He also warned that the increase could place additional pressure on micro and small enterprises, which comprise the overwhelming majority of businesses in the country.
‘About 90 percent of businesses are micro enterprises, while another 8 percent are small businesses. Many of them are already struggling, and many are already closing,’ Ortiz-Luis said.
He noted that only around 16 percent of workers are directly covered by the minimum wage, while the employers bearing the adjustment are largely micro and small enterprises.
‘Additional pressure’
The country’s business organizations said they would comply with the new wage order but cautioned that the increase comes as manufacturers and employers continue to face rising operating costs and global uncertainty.
The Federation of Philippine Industries (FPI) noted that even though the country’s manufacturing remained in expansion for a second straight month in June, business confidence weakened as firms continued to grapple with higher costs and external risks.
‘Businesses are weighing the cumulative toll of recent cost pressures,’ FPI Chairperson Elizabeth Lee said in a statement.
While the group acknowledged that higher living costs justified a wage adjustment, Lee said the increase adds to existing pressures from elevated energy and logistics expenses, tighter financing conditions and global trade uncertainty.
‘June’s PMI [Purchasing Managers’ Index] uptick shows Philippine manufacturing can still grow under pressure. However, sustaining that growth means supporting workers while preserving businesses’ ability to invest, employ and compete. We cannot treat one factor in isolation,’ she said.
For its part, the Philippine Chamber of Commerce and Industry (PCCI) urged the government to pursue policies that improve enterprise productivity and reduce business costs.
In a statement, PCCI President Perry Ferrer said wage adjustments should also consider the capacity of enterprises, particularly micro, small and medium enterprises, to absorb higher labor costs while preserving jobs and investments.
‘More than wage increases, we hope that our government will address the growing inflation – lowering the cost of basic commodities, transportation, gasoline, and other necessities- so that gains will benefit all Filipinos and not only selected sectors,’ the PCCI head said.
Meanwhile, PCCI Director for Labor and Employment Butch Guerrero warned that firms operating on thin margins may respond by delaying expansion, renegotiating supplier contracts or accelerating automation, with possible spillover effects on employment.
‘These adjustments, while necessary, may ripple across the formal and informal sectors of the economy, ultimately affecting the livelihoods of the country’s nearly 50-million workforce,’ Guerrero said.
Exemption
Labor Secretary Francis N. Tolentino said on Wednesday that small businesses can apply for an exemption from complying with the order to raise the minimum wage by P85 under existing rules.
The labor chief said Wage Order No. NCR-27 allows certain establishments to seek exemption from the wage increase.
‘There is a provision in Wage Order No. [NCR-]27 on exemptions. Businesses with 15 employees or fewer may apply for exemption. This also covers those qualified under the Barangay Micro Business Enterprises law,’ Tolentino said.
He did not immediately say how many firms could qualify but stressed that the exemption process is provided under the wage order.
Tolentino also defended the amount of the wage increase, saying the Regional Tripartite Wages and Productivity Board considered the conditions required under the law before approving the adjustment.
‘The workers’ purchasing power, inflationary pressures and other economic conditions were all taken into consideration. The consultations were very extensive,’ he said.
He said the wage board received petitions from workers across different sectors, including manufacturing, hospitals, ports and business process outsourcing firms, before issuing the wage order.
The labor chief said the board’s decision was based on the standards set under Republic Act No. 6727, or the Wage Rationalization Act, which requires regular reviews of regional wage levels.