MINIMUM WAGE EARNERS in Metro Manila are getting a P50 each day wage increase — the highest pay hike ever granted by the National Wages and Productivity Commission — starting July 18, the Labor department said on Monday.
The raise would profit about 1.2 million staff within the Philippine capital and nearby cities and provinces, the Department of Labor and Employment (DoLE) said in a press release.
The brand new each day minimum wage within the National Capital Region (NCR) is anticipated to extend to P695 from P645 for the non-agriculture sector.
For staff within the agriculture sector, and repair and retail establishments employing 15 or less staff, each day wages will likely be raised to P658 from P608.
Laborers working in manufacturing establishments employing lower than 10 staff may also receive a each day wage of P658.
The each day pay hike is similar to a P1,100 per thirty days increase for a five-day work week or a P1,300 increase for those working six days per week, DoLE said.
It’s going to take effect on July 18, a yr after the last each day wage hike was implemented on July 17, 2024.
The DoLE added that the NCR wage board had considered the country’s latest gross domestic product (GDP), inflation rate, and unemployment rate in approving the wage increase.
In the primary quarter, GDP grew by a weaker-than-expected 5.4%, sharply slowing from the 5.9% expansion in the identical quarter last yr but faster than 5.3% within the fourth quarter.
Inflation averaged 1.9% within the January-to-May period, barely below the central bank’s 2-4% goal range.
The unemployment rate averaged 4% within the January-to-April period, unchanged from the identical period in 2024.
The DoLE said about 1.7 million full-time wage and salary staff that earn above minimum wage “may not directly profit in consequence of upward adjustments on the enterprise level arising from the correction of wage distortion.”
It added that retail and repair establishments with not greater than 10 staff and enterprises affected by natural calamities or disasters can apply for exemption from the wage increase.
Then again, barangay micro business enterprises in NCR are usually not covered by the most recent wage order.
“The issuance of the brand new wage order is in keeping with the standing directive of President Ferdinand R. Marcos, Jr. for the timely and regular review of regional minimum wage rates to cut back uncertainty, enhance fairness for all stakeholders, and foster a stronger link between productivity and wages,” Labor Secretary Bienvenido E. Laguesma said.
Mr. Laguesma said that the DoLE will conduct an information campaign to make sure public awareness and closely monitor compliance by enterprises.
The NCR wage board was the primary to issue a wage order this yr. Public consultations on a brand new wage order for Regions I, II, III, IV-A and VII will likely be conducted between July and August.
Hunted for comment, Employers Confederation of the Philippines (ECoP) President Sergio Ortiz-Luis, Jr. said that micro and small businesses within the capital region may struggle to implement the pay increase.
“A lot of the employees (within the NCR) come from microbusinesses. Micro establishments may have a tough time with this. At the moment rate, they’re having trouble paying their employees, especially during Christmas when there may be 13th month pay,” Mr. Ortiz-Luis said in a phone call.
Philippine Chamber of Commerce and Industry (PCCI) Chairman George T. Barcelon said that the wage hike is anticipated to boost operating expenses for businesses and will be passed on to consumers.
“The prices of doing business will likely be higher and it’s going to be passed on to consumers. For (businesses affected by) weak markets, their profit will likely be lower, and for corporations already facing difficulties, they are going to incur more losses,” Mr. Barcelon said in a Viber message.
For her part, PCCI President Enunina V. Mangio said local businesses will comply but may have to seek out ways to reduce the impact of the approved minimum wage hike.
Leonardo A. Lanzona, Jr., economics professor at Ateneo de Manila University, said that the mandated wage increase may affect smaller firms and stoke inflation.
“The difficulty, nevertheless, is that this could cause inflation as aggregate demand is raised without increasing aggregate supply. Inflation may now be low, but any upward pressure may cause a spiraling effect on wages and costs,” Mr. Lanzona said via Messenger chat.
He said that any increase in wages must be an incentive for staff to be more productive.
“The federal government should mandate firms to create mechanisms that share their gains or savings with the employees in the shape of bonuses, merit increases, and productivity payments. Wages, in effect, may be allowed to extend provided that the employees are contributing to productivity,” Mr. Lanzona said.
Benjamin B. Velasco, assistant professor on the UP Diliman School of Labor and Industrial Relations, said the wage hike order will likely be a “welcome relief” for staff.
“It’s going to nudge employers paying below the minimum so as to add something to the wages they pay. Employees receiving above the minimum can file for wage distortion,” he said via Facebook chat.
Federation of Free Employees President Jose Sonny G. Matula said in Filipino that the P50 wage hike is “not enough,” adding that staff would favor a legislated wage hike.
Congress adjourned last month without approving the bill looking for to hike the minimum each day wage by P100-P200. Economic managers had warned that the proposed legislated wage hike can have “dangerous repercussions” on the Philippine economy.
“Estimates show that the across-the-board wage hike will exert substantial downward pressure on GDP by 1.6 ppts (percentage points) for a P200 hike and 0.5 ppt for a hike of P100. Each scenarios are predicted to lead to the economy missing the lower end of the GDP growth goal range,” the economic managers said last month. — Adrian H. Halili