Suspension of NCR P85 wage hike urged

MANILA, Philippines — Warning it could trigger further price increases and layoffs, the Foundation for Economic Freedom (FEF) has called on the government to suspend the implementation of the P85 daily minimum wage hike in Metro Manila pending a review.

In a statement issued yesterday, the FEF expressed serious concern over the National Capital Region minimum wage increase mandated by the Department of Labor and Employment through Wage Order 27, which was signed on July 9.

“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.

The group warned that the P85 increase far outpaces both productivity growth and inflation, raising the risk of higher prices for basic commodities as businesses pass on increased labor costs to consumers.

According to the FEF, the resulting rise in the cost of living would erode the purchasing power of poor households and offset the wage gains of employed Filipinos.

It also warned that businesses may reduce hiring or cut operating hours, making it more difficult for unemployed workers to find jobs.

The group said micro, small and medium enterprises (MSMEs), which comprise the vast majority of businesses in the country, would bear the brunt of the wage hike. It noted that many MSMEs are already struggling with weak consumer demand and rising global oil prices that have increased operating and logistics costs.

“Unlike large conglomerates, MSMEs operate on paper-thin margins and lack the capital cushions to absorb a sudden spike in overhead costs. Forcing these businesses to shoulder higher labor costs under these volatile conditions will push many to the brink of insolvency, resulting in widespread layoffs, reduced working hours or even complete business closures,” the FEF said.

The public advocacy organization also warned that the wage increase could discourage investments in manufacturing, agribusiness and other labor-intensive industries.

“Such unpredictability in the regulatory environment undermines the country’s long-term industrial development and regional competitiveness,” the non-profit group said.

Beyond its impact on businesses, the FEF said the wage hike could threaten macroeconomic stability, as rising inflation may prompt tighter monetary policy even as economic growth remains weak.

“Faced with higher wages, rising costs driven by uncertainty surrounding the Middle East oil crisis and higher interest rates, businesses will likely incur losses or raise prices, fueling another round of the wage-price spiral,” the group said.