Business groups and at least two senators have bucked a proposed P350 legislated minimum wage hike, warning this would be inflationary and could result in shuttered small businesses.
The Philippine Chamber of Commerce and Industry (PCCI) said the proposals for a legislated wage hike may trigger an unwarranted increase in inflation as businesses that deliver goods and services will be forced to expand their operating margins to recoup additional inputs to labor.
PCCI president Enunina Mangio said the proposed P100 hike by the Senate and the even higher proposal of the House of a P350 wage increase would be detrimental to the cost of doing business in the Philippines.
“Just think about this – is the business sector even ready to absorb the effect of another round of wage increase, especially this big? A lot of them can not afford it which might endanger closure if not reduction of workforce. Some SMEs might be excused from this minimum wage increase but after a month or two, the effect on them is even worse due to the effect of inflation,” she said.
“Increase in inflation is bad to business and to our daily life. The employers will be hurt badly not only by the chain reaction of the wage increase but also by inflation,” Mangio added.
Senators Ramon Revilla Jr. and Francis Tolentino also warned small businesses might go bankrupt with the P350 legislated minimum wage hike proposal at the House.
“Other companies might go bankrupt if we are to give more,” Revilla said.
Senate Labor Committee chairperson Senator Jinggoy Estrada, however, said he will adopt the House version on the legislated wage hike if it is more than P100.
Senator Francis Escudero also welcomed the House proposal, saying this would benefit millions of minimum wage earners in the country.
But the PCCI warned the impact of the inflationary pressure on informal workers, who comprise about 84 percent of the country’s labor force, will be unbearable since they are not covered by minimum wage.
These include market vendors, bus/jeep/tricycle drivers, fisherfolk, farmers, and household helpers, among others.
It reiterated its previous proposal to have the Regional Tripartite Wages and Productivity Board (RTWPB) assess the wage issue, instead of legislators proposing infeasible solutions.
The Employers Confederation of the Philippines already warned a legislated wage hike could cause a “catastrophic effect on inflation.”
Labor Secretary Bienvenido Laguesma earlier said DOLE is not against a legislated wage hike even as he cautioned against its possible impact on MSMEs and the economy in general.
Laguesma said when there are salary increases, the prices of basic goods and transport services also increase, describing it like a chain reaction.
“That’s why the DOLE is always looking for a balance. The DOLE is looking for possible interventions to help micro and small businesses in case the minimum wage increases by P100,” he added.