“How many enterprises can afford that?” This is the private sector’s reaction as they warned of more job cuts and company bankruptcies ahead in the wake of the approval on third and final reading of a House of Representatives bill mandating a P200 across-the-board minimum daily wage hike for workers in the private sector.
Sergio R. Ortiz-Luis Jr., president of the Employers Confederation of the Philippines (ECOP), in a Thursday (June 5) interview with ONE News said the approval of the bill by the Lower House appeared to be “political” and probably related to “promises [made] during the election.”
He said that while it’s “politically nice” to hear, “imagine how many enterprises will be able to afford that? How many will close down?”
Ortiz-Luis explained that 98 percent of industries in the Philippines are micro and small enterprises that won’t be able to pay the wage adjustment since as it is they can hardly make enough to pay current wage rates.
“You increase them [wages] by 40%? There’s no way. What will they [businesses] do?” he said, pointing out that the only options left to small enterprises are raise prices, cut jobs, or close their business.
Ortiz-Luis, who is also president of the Philippine Exporters Confederation, Inc., added that this probably puts President Ferdinand Marcos Jr. “in a quandary” as he had been advised that the proper way to review wages is through consultations with the regional wage and productivity boards.
The executive also pointed out that mandated wages only affect 10 percent to 16 percent of the 52 million workers in the country, which leaves out the majority of the workforce, such as those in the informal sector like the farmers, fisherfolk and jeepney drivers, from enjoying the salary increase.
“Eighty four to ninety percent will be suffering because of the yearly benefits we’re giving to the minority,” he said.
Ortiz-Luis further warned that the legislated wage hike will only be seen as bad news by investors since the Philippines already has the highest labor rates in the ASEAN region.
House Bill No. 11376 or the proposed Wage Hike For Minimum Wage Workers Act was approved on June 4 after 171 lawmakers voted in the affirmative and one in the negative, with no abstention.
“Upon the effectivity of this Act, the daily rate of all minimum wage workers in the private sector, regardless of employment status, including those in contractual and sub-contractual arrangements, whether agricultural or nonagricultural, shall be increased by two hundred pesos (P200) per day,” Section 3 of the proposed measure said.
In the Senate, a counterpart bill mandating a P100 hike had been approved in February 2024. The two chambers will have to reconcile the amount in a bicameral conference before transmitting the bill to Marcos for signing.
If signed into law, this will be the first legislated nationwide wage hike since 1989.
