Businesses express concerns as minimum wage hike set to take effect

By: Morexette Marie B. Erram - Multimedia Reporter - CDN Digital | September 18,2023 - 04:10 PM

Businesses worry as wage hike set to be implemented. In photo are factory workers working in factory in Mactan.

Minimum wage earners will soon get a P33 increase in their salaries, but businesses worry that this development may cause inflation and job losses. | FILE PHOTO [CONTRIBUTED]

CEBU CITY, Philippines — Establishments of all sizes in Central Visayas are told to start preparing for the new daily minimum wage rate that will take effect this October.

But business communities here in Cebu had reservations over it, saying that it might further dampen the economy instead of promoting stimulus.

The Department of Labor and Employment in Central Visayas (DOLE-7) is set to conduct inspections in small, medium, and large establishments in the region following their decision to increase the daily minimum wage pay by P33.

READ: Workers in Central Visayas to get P33 daily pay raise starting next month

DOLE-7 explains P33 wage hike

During a press conference on Monday, September 18, DOLE-7 explained the ruling of the Regional Tripartite Wages and Productivity Board for a P33 hike in the minimum wage.

Lilia Estillore, DOLE-7 director, said it was a ‘unanimous decision’ to implement another round of wage hikes. The last time minimum wage earners in Central Visayas saw an increase in their salaries was last year.

“We hope masabtan sa tanan — labor and management — ang decision. And I hope mahappy ang tanan and at least, ang Region 7 nakahatag og increase,” Estillore said.

(We hope all will understand — labor and management — the decision. And I hope that all will be happy and at least, in Region 7 we are able to give an increase.)

READ: On Labor Day, groups in Cebu call to increase minimum wage to P750

Businesses: Wage hike to lead to inflation

However, leaders from the Cebu Chamber of Commerce and Industry (CCCI) and Mandaue Chamber of Commerce and Industry (MCCI) expressed concerns that the new increase might lead to inflation.

“The official stand (of CCCI) was no increase…Inflation should not be the reason to increase wage but rather productivity,” said Charles Kenneth Co, president of CCCI.

Kelie Ko, president of MCCI, also shared the same sentiment with Co.

READ: Gov’t economic managers reject legislated wage hike

Wage hike provides short-term benefits – businesses

While they understood the need to increase minimum wages, Ko warned that it might only provide short-term benefits and carry long-term costs.

“Increasing minimum wage can stimulate consumer spending and stimulate the local economy. However, this can lead to job cuts and inflation,” he said in a separate text message.

Both the CCCI and MCCI also said imposing another wage hike might hamper businesses’ journey to recovering following the recent crises such as the pandemic and the Russia-Ukraine war.

The new rates are expected to directly benefit 346,946 minimum wage earners in Central Visayas, while at least 399,572 other workers may indirectly benefit from adjustments in wage distortion.

The wage hike resulted from several petitions filed since April by labor groups, citing escalating prices of basic goods and commodities.

READ: PH economic team: P150 pay hike means inflation spike, more job losses

Wage hike petitions

According to DOLE-7 officials, they received a total of three petitions from labor groups — two of which asked for a P100 increase. The other requested for the government for P292-hike.

The P33 increase would be the highest recorded in Central Visayas’ recent history, said Estillore.

In coming up with the number, regulators factored in the poverty threshold, consumer price index, inflation rate, and purchasing power of the peso.

On the other hand, Estillore said DOLE-7 would soon visit micro establishments to lend technical assistance in implementing the new daily minimum wage rate.

Once the new wage order takes effect, establishments are given up to 20 days to transition from the current daily minimum wage to the new one.

Those who failed to comply may be compelled to pay their workers double the latest increase imposed.

So far in Central Visayas, no establishment has been sanctioned for not complying with the mandated daily minimum wage rate. | with reports from Philippine Daily Inquirer

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TAGS: Cebu‬, Cebu Daily News, cebu news, Central Visayas, Department of Labor and Employment in Central Visayas, minimum wage

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