HIGHER wages will deliver more lasting benefits if accompanied by stronger productivity, lower business costs and a more competitive investment environment, the Financial Executives Institute of the Philippines (Finex) said.
In a statement, Finex said it recognizes the wage adjustment as a response to the rising cost of living faced by workers but stressed that policymakers should also consider its broader impact on businesses, particularly micro, small and medium enterprises (MSMEs) and labor-intensive industries.
Earlier this month, the Regional Tripartite Wages and Productivity Board in the National Capital Region approved an P85 increase in the daily minimum wage, to be implemented in two tranches-P60 beginning July 19 and another P25 in January next year.
‘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 [MSMEs] and employment-intensive industries,’ the group said.
‘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,’ it added.
Finex said the discussion should move beyond the wage increase itself and focus on policies that can sustain higher incomes without undermining economic growth.
The group urged the government to intensify efforts to reduce red tape, simplify permitting processes, improve regulatory predictability and accelerate digitalization to help businesses become more productive and competitive.
It also called for measures to lower major operating costs, particularly electricity, logistics and transportation, which it said continue to weigh heavily on enterprises and consumers.
‘The country must also continue pursuing reforms that strengthen investor confidence and attract domestic and foreign capital,’ Finex said, noting that higher investment expands productive capacity, creates quality jobs, introduces new technologies and raises productivity.
The organization also encouraged authorities to closely monitor the wage adjustment’s effects on inflation, employment, business viability and wage distortion.
‘The task before policymakers is to ensure that higher wages are accompanied by policies that promote investment, productivity, competitiveness, and economic expansion,’ it said.
Business groups have also raised concerns about the possible economic effects of the wage increase.
Earlier this month, Employers Confederation of the Philippines (Ecop) Chairman Emeritus Enunina Mangio said the adjustment could add about 0.3 percentage point to inflation, although she noted the overall impact remains uncertain because many companies have yet to finalize pricing decisions.
Separately, Ecop President Sergio Ortiz-Luis Jr. earlier told BusinessMirror that the employer sector had proposed a lower increase of P50 to P60 during wage board deliberations, arguing that it would have struck a better balance between improving workers’ incomes and preserving businesses’ capacity to absorb higher labor costs.
Meanwhile, the Department of Labor and Employment (Dole) recently said there is no legal basis to suspend the second tranche of the Metro Manila wage increase scheduled for January 2027.