The Philippine Chamber of Commerce and Industry (PCCI) is warning lawmakers about the severe ramifications of the lower chamber-approved ₱200 daily minimum wage hike, calling out its impact on the economy and job security.

PCCI issued the statement following the House of Representatives’ approval of the bill proposing an across-the-board wage increase in the private sector in its third and final reading on Wednesday, June 4.

PCCI, the country’s largest business organization, stated that the measure was implemented without considering the consequences it would have on the economy.

The group said the wage hike will have wide-ranging effects, including the price of goods and services, those working in the informal sector, and on the micro and small enterprises (MSEs).

“The wage hike leads to higher labor costs, consequently resulting in higher costs of goods and services, and inflation,” it said.

PCCI asserted that the benefit of the additional ₱200 wage will only benefit workers in the formal sector, leaving behind the informal sector, which accounts for 50 to 60 percent of the working populace.

“This will bear down more on workers in the informal sector who are not bound by the minimum wage law,” it added.

Another consequence of the measure, if approved, is the inflationary effect, which may further erode purchasing power. This essentially negates the intended benefit of the wage increase.

This is feared to reduce jobs in the market as increased operational expense poses the risk of closure of many businesses, particularly MSEs.

According to government data, MSEs account for 96 percent of the total number of enterprises in the country.

Furthermore, PCCI warned that the proposed wage increase would set a precedent that is poised to undermine the mandate of the Regional Wage Boards (RWBs) perpetually.

RWBs—comprised of business, labor, and government representatives—were explicitly created to determine region-specific rates based on the local cost of living.

“Legislating a single wage for all areas can harm businesses in lower-cost regions and remove the flexibility of the RWBs to set wages that are aligned with the situation in the local areas,” said PCCI.

After gaining approval from the lower chamber, the business group hopes that lawmakers will consider the portion of the business section during the bicameral conference committee.

Under the committee, lawmakers from both chambers of Congress—the House of Representatives and the Senate—will reconcile the differences of their respective wage hike bills.

Last year, the upper chamber approved a bill on its third and final reading, proposing a ₱100 across-the-board minimum wage increase for workers in the private sector.

Instead of the two measures, PCCI said lawmakers should instead adopt a bill that seeks a comprehensive approach in balancing the needs of workers with the capacity of businesses.

The group stated that it is crucial for a wage hike to ensure that MSEs continue to thrive while also providing fair wages.

The bicameral conference committee is the final step before the measure is transmitted to the president for his approval.

Malacañang said it will study the economic implications and consult the opinion of the wage boards over the matter.