The National Economic and Development Authority (NEDA) has cautioned that the proposed P100 wage hike could present financial difficulties for micro, small, and medium enterprises (MSMEs).

NEDA Undersecretary Rosemarie G. Edillon said the recently implemented tax relief, intended to assist businesses in offering better benefits to their employees, will not suffice to accommodate the proposed P100 wage increase.

Senate President Juan Miguel Zubiri earlier cited that the tax reductions for both MSMEs and large corporations would serve as an adequate buffer to absorb the costs of their proposed wage increase.

Zubiri was referring to the Corporate Recovery and Tax Incentives for Enterprises (Create) law, enacted in 2021, which reduced the corporate income tax (CIT) rate from 33 percent to 20 percent for MSMEs and to 25 percent for big companies, down from 33 percent.

However, Edillon pointed out that the savings from the lower CIT will not be enough to sustain the wage increase.

“Ang isa na tinitingan din namin is the affordability levels, especially for the MSMEs. We looked at, let’s say for instance, savings nila from CREATE, kasi isa yan sa pwedeng windfall,” Edillon told reporters.

[The one that we are also looking at is the affordability levels, especially for the MSMEs. We looked at, let's say for instance, their savings from CREATE, because that is one of the possible windfalls.]

“But we saw there for the micro small and medium, hindi nila kakayanin [they will not afford that]. The savings from CREATE will not be enough to cover yung additional na wage increase,” she added.

MSMEs represent over 99 percent of business establishments and employ 63 percent of the country's workforce.

The current minimum wage for workers in Metro Manila stands at P610 per working day for non-agriculture jobs, while for the rest of the regions, their minimum wages are between P500 to P300 across all types of jobs.

The upper house recently passed the P100 wage hike bill on its third and final reading, prompting apprehension from business organizations and economists.

For one, the Foundation for Economic Freedom said that the bill would push companies to increase their prices, driving a wage-price spiral that would decrease the purchasing power of the people.

This, in turn, could prompt the Bangko Sentral ng Pilipinas to further increase interest rates and drive companies to cut down on investments and employment.

Meanwhile, Finance Secretary Ralph Recto said that the proposal is well-meaning considering that the prices of goods and commodities have gone up, but is wary that it may increase inflation which has been in the downward trend since December last year.

Based on the proposed legislation, establishments with less than 10 employees, establishments utilizing a capital of P3 million and below, and establishments registered under the the Barangay Micro-Business Enterprise Act will be excluded from the wage increase.