The Philippine Chamber of Commerce and Industry (PCCI) warned that the newly approved minimum wage increase in Metro Manila could fuel inflation, squeeze exporters and eventually dampen employment as businesses grapple with rising labor costs.
PCCI Chairman Emeritus George Barcelon said the two-tranche adjustment, which will raise the National Capital Region’s daily minimum wage from P695 to P780, amounts to about a 12 percent increase that will be difficult for many businesses to absorb.
“Our concern is that this will add to inflation,” Barcelon said, noting that companies are likely to pass on higher labor costs to consumers over time.
“It may not happen immediately because businesses will first assess the impact, but sooner or later, higher wages translate into higher prices,” he said.
Barcelon said exporters and labor-intensive manufacturers could be hit hardest as they compete with regional rivals on production costs.
“We have to consider how competitive we are. The export market is very important because our trade deficit continues to widen,” he said.
He also warned of wage distortions, saying employers may be forced to increase the salaries of workers already earning above the minimum wage to preserve pay differentials, further raising payroll expenses.
“You’re adjusting the minimum wage, but there will be a ripple effect because companies will also have to review the wages of other employees,” Barcelon said.
While he expressed hope the increase would not lead to layoffs, Barcelon acknowledged the risk remains, particularly as economic growth softens and government infrastructure spending slows.
Still, he said employers recognize the need to improve workers’ welfare, adding that future wage adjustments should strike a balance between protecting purchasing power and preserving productivity, employment and the country’s competitiveness.
