Wage hike to trigger higher inflation -- Visayas employers warn

An expansive range of stakeholders from the Central Visayas business community expressed “strong opposition” on the proposed P150 daily minimum wage hike, warning of an “inflationary effect” once such measure by the legislative branch is passed into law.

A joint statement from Central Visayas employers comprising of 15 business and industry organizations said they teamed up to “express our STRONG OPPOSITION to any and all proposed bills calling for a legislated and across-the board wage hike” against Senate Bill 2002 or Across the board Wage Increase Act of 2023 “An Act Providing for a P150 daily Across-the-board increase in the Salary Rates of Employees and Workers in the Private Sector and for Other Purposes”.

“We recognize and respect the rights and welfare of workers. However, we also deeply believe that a wage increase will not address the plight of the labor sector which is the essence of the proposed bill,” the joint statement added.

According to the employers, implementing a wage increase will not address inflation but instead trigger higher prices of basic good and commodities making such proposed legislated wage hike an “economic suicide”. Without addressing poor productivity, the group said a wage increase would ultimately lead to higher inflation, which would result in higher interest rates and increased costs of living for all.

“Such a move can be considered an ‘economic suicide’ as increasing wages to combat high commodity prices perpetuates a vicious cycle that harms the economy and the vulnerable population,” the statement pointed out.
In addition, the employers admitted that will only be forced to pass on the additional salary cost to their prices of goods and services to continue operation. “Absorbing these additional costs could potentially lead to headcount reduction or layoffs and business resizing,” the group added.

In particular, they said the proposed P150 daily wage hike would hurt the companies’ financial security and can lead to business establishment closures further exacerbating unemployment rates and loss of income. even as companies, especially the micro, small and medium enterprises, are still recovering from the pandemic.
The group even sided with the National Wages and Productivity Commission in questioning the constitutionality of the proposed across-the-board wage increase and urged that wage issues should only be determined by the Regional Tripartite Wages and Productivity Board (RTWPB).

Instead of legislating wage hikes, the Visayas employers suggested some measures to improve income of Filipinos.
First is for government to prioritize expanding economic activity and attracting investments to complement labor and local productivity. “This can be achieved through innovative investment promotion strategies and efforts to enhance the ease of doing business in the region. By attracting foreign and domestic direct investments, we can create more job openings and stimulate economic growth,” the group said.

Second, government must proactively address inflationary pressures, particularly regarding the prices of basic goods and services, high utility costs (especially power and water), fuel prices, and the importation of goods. “It is crucial to boost the agricultural value chain and develop new farming and fishing technologies to improve productivity and reduce dependency on imports. Additionally, the government can enact safety nets to protect labor from exploitation and ensure fair wages,” the statement added.

Third, instead of an across-the-board wage hike, the employers proposed for an “industry-driven wage hike” as this is more realistic.

“The government should consider creating a regional industry wage board that will consider the economic situation of each company, large, medium or small, and the wherewithal and resources in line with respective performance. Or support a Collective Bargaining Agreement type of solution per sector,” the statement added.

The joint statement was signed by Cebu Chamber of Commerce and Industry (CCCI), Mandaue Chamber of Commerce and Industry (MCCI), Mactan Export Processing Zone Chamber of Exporters and Manufacturers Inc. (MEPZCEM), Japanese Chamber of Commerce and Industry of Cebu Inc. (JCCICI), People Management Association of the Philippines (PMAP), Philippine Retailers Association (PRA) Cebu Chapter, Philippine Exporters Confederation (PhilExport) Cebu, Cebu Furniture Industries Foundation, Inc (CFIF) and the Hotel Resort & Restaurant Association of Cebu Inc. (HRACCI) together with the other Business Membership Organization (BMO) in the Visayas namely, Bohol Chamber of Commerce and Industry (BCCI), Negros Oriental Chamber of Commerce and Industry (NOCCI), Siquijor Chamber of Commerce and Industry (SCCI), PCCI Panglao Chamber of Commerce and Industry, and the Bohol Association of Hotels Resorts and Restaurants.