Wage increases “have negative effects” on jobs and prices

The business community warns that an increase in the minimum wage of 33 to 43 pesos (about 121 euros) will lead to job losses and an increase in the price of goods.

It also pointed out that the government should instead look for ways to control the inflation rate and thus reduce the cost of basic needs.

“The government should find ways to control inflation rates to reduce the cost of basic necessities so that we do not have to resort to regular wage increases,” Mandaue Chamber of Commerce and Industry (MCCI) President Mark Anthony Ynoc told SunStar Cebu in a text message on Monday, September 16, 2024.

Ynoc stressed that raising the minimum wage by 33 or 43 pesos could prompt companies to raise prices, which could further fuel inflation.

SME

He stressed that the economic sectors most affected are small and medium-sized enterprises (SMEs), as some of them are still in their early stages.

“Companies, especially SMEs, are forced to cut jobs to maintain their profitability and competitiveness,” he said.

He pointed out that the wage increases would contribute significantly to an “increase in companies’ operating costs”, which would consequently be passed on to customers.

Operating costs are the costs a company incurs to ensure the smooth running of its day-to-day operations. These costs are essential for a company to function and generate revenue. They also include wages and salary costs and employee benefits.

Ynoc said this could lead to potential job losses as labour costs are a major cost factor in most industries.

“This will affect the competitiveness of the corporate sector as prices will rise,” he explained.

Meanwhile, the Cebu Chamber of Commerce and Industry (CCCI) hopes that the recent decision of the Regional Tripartite Wages and Productivity Board (RTWPB)7 regarding wage adjustments will not burden businesses, especially those classified as SMEs, which form the backbone of the regional economy.

The CCCI stressed that SMEs operate with limited profit margins and are unable to bear additional costs, such as labor.

The RTWPB 7 has approved the increase in the daily minimum wage for workers in private companies in the region.

The Department of Labor and Employment (Dole) said in a statement that the RTWPB has approved the increase of the daily minimum wage from 33 to 43 pesos starting October 2.

The increase will increase the daily minimum wage from P458-P468 to P501 for workers in private establishments classified as Class A or the cities of Carcar, Cebu, Danao, Lapu-Lapu, Mandaue, Naga and Talisay, and the municipalities of Compostela, Consolacion, Cordova, Liloan, Minglanilla and San Fernando, and from P425-P430 to P463 in other cities not classified as Class A, including Bais, Bayawan, Bogo, Canlaon, Dumaguete, Guihulngan, Tagbilaran, Tanjay and Toledo.

For Class C or municipalities not covered by Classes A and B, the daily minimum wage was increased from 415–420 pesos to 453 pesos.

“The new rates for employees in private companies represent an increase of about seven to eight percent in the prevailing minimum daily wages in the two regions and will result in a comparable increase of 11 percent in wage-related benefits, including 13th month salary, official leave and social security benefits such as SSS, PhilHealth and Pag-Ibig,” Dole said.

“The wage adjustments are expected to directly benefit a total of 1.2 million minimum wage earners in these regions, and about 2.7 million full-time workers earning above the minimum wage could also benefit indirectly from the wage adjustments at the company level due to the correction of wage distortions,” it said. (CDF / TPM / SunStar Philippines)