Warning of worsening inflation, potential job cuts, and severe strains on small businesses, economic policy advocacy group Foundation for Economic Freedom (FEF) has called on the government to suspend the implementation of the newly mandated P85 daily minimum wage hike in Metro Manila pending a comprehensive review.
The appeal follows the issuance of Wage Order No. 27 by the Regional Tripartite Wages and Productivity Board (RTWPB) and the Department of Labor and Employment (DOLE), signed on July 9. The order mandates a historic P85 increase to the daily minimum wage in the National Capital Region (NCR), structured in two tranches: an initial P60 starting July 25, 2026, and a secondary P25 taking effect on January 20, 2027. Once fully implemented, the non-agricultural daily minimum wage in Metro Manila will rise to P780.
While the labor department highlighted the wage hike as a vital cushion for low-income workers against living costs, the FEF expressed deep concern over its long-term economic consequences.
“While intended to support workers, an abrupt daily wage increase of this magnitude will trigger severe unintended consequences that disproportionately harm the country’s most vulnerable populations,” the FEF said in a statement.
Key Concerns Raised by the FEF
The non-profit economic advocacy organization outlined several critical risks associated with the wage adjustment:
Triggering a Wage-Price Spiral: FEF cautioned that the P85 increase far outpaces productivity growth and general inflation rates. To compensate for steep labor costs, companies are likely to raise prices on basic goods and services, neutralizing the wage gains for poor households and eroding broader consumer purchasing power.
Disproportionate Strain on MSMEs: Micro, small, and medium enterprises (MSMEs)—which comprise the vast majority of local businesses—operate on thin profit margins with minimal capital cushions. Already struggling with weak consumer demand and volatile global oil prices, many MSMEs may be forced into insolvency, widespread layoffs, reduced working hours, or total closures.
Impact on Employment and Hiring: Beyond immediate job cuts, the group warned that higher operational overheads will discourage businesses from expanding, making it significantly harder for unemployed Filipinos to secure job opportunities.
Deterrence to Industrial Investment: Unpredictability in wage adjustments and regulatory mandates could disincentivize investments in labor-intensive sectors such as manufacturing and agribusiness, harming long-term industrial growth and regional competitiveness.
Macroeconomic and Policy Risks: Unlike fluctuating commodity prices (such as oil) that can eventually decline, wages are "downwardly sticky" and permanently embedded into business cost structures. The FEF warned that persistent cost push inflation could force monetary authorities to tighten monetary policy through higher interest rates, further dampening broader economic growth.
Call for Evidence-Based Tripartism
The FEF emphasized that Wage Order No. 27 was issued despite dissenting votes from employer sector representatives, questioning whether the nation's tripartite wage-setting framework under Republic Act No. 6727 is functioning as intended.
The organization urged the government to halt the scheduled rollout and return to evidence-based dialogue that balances worker welfare with the survival of MSMEs, macroeconomic stability, and long-term economic growth.
Maki-balita sa Philippines Today sa Facebook, Twitter, Instagram at YouTube!
0 Mga Komento