Philippines With Metro Manila’s historic P85 daily wage increase set to take effect this week, a group of financial executives said the government’s next challenge is pursuing reforms that would prevent higher labor costs from weakening job creation and spilling over into inflation.
In a statement, the Financial Executives Institute of the Philippines (Finex) said that while the wage hike is a welcome move, it should be accompanied by measures that would help businesses-particularly micro, small and medium enterprises (MSMEs)-cope with higher labor costs.
‘The discussion should therefore move beyond the wage increase itself and focus on the broader policy measures needed to sustain both higher incomes and economic growth,’ Finex said.
‘Efforts to reduce red tape, streamline permitting processes, improve regulatory predictability, and accelerate digitalization can help businesses become more productive and competitive. Equally important are measures to lower major input costs, particularly electricity, logistics, and transportation, which continue to weigh heavily on Philippine enterprises and consumers alike,’ it added.
The Department of Labor and Employment announced on June 30 an P85 daily wage increase for around 1.1 million minimum wage earners in Metro Manila, raising the daily minimum pay to P780 from P695.
It is the largest increase ever approved by the National Capital Region’s wage board.
The increase will be implemented in two tranches, with the initial P60 taking effect on July 19 and the remaining P25 on Jan. 20, 2027.
Malacañang has confirmed the wage increase will proceed as scheduled despite calls from the Foundation for Economic Freedom (FEF) to suspend its implementation over concerns that higher labor costs could prompt businesses to raise prices or lay off workers.
As it is, the hike comes as the Philippines continues to contend with elevated inflation driven by the oil shock. Inflation settled at 6.4 percent in June, with the Bangko Sentral ng Pilipinas expecting the full-year print to average also 6.4 percent.
Finex urged the Marcos administration to continue pursuing reforms that would strengthen investor confidence and attract more domestic and foreign investments.
‘Greater investment expands productive capacity, creates quality jobs, introduces new technologies, and raises productivity-the most sustainable foundation for higher wages and improved living standards,’ the group said.
It also called for close monitoring of the wage increase’s impact on inflation, employment, business viability and wage distortion, saying higher wages should be supported by policies that encourage investment, productivity and long-term economic growth.