Balancing Aspirations with Economic Reality
From the Sidelines
By: Ray G. Talimio Jr.
“Will a nationwide wage hike uplift the working class or strain the very economy it seeks to empower?”
On June 4, 2025, the House of Representatives approved on third and final reading House Bill No. 11376 mandating a ₱200 daily wage increase for minimum wage earners in the private sector. This follows the Senate’s earlier passage of Senate Bill No. 2534 on February 19, 2024, which proposes a ₱100 daily wage hike. The House version was principally authored by Deputy Speaker Raymond Democrito Mendoza, while the Senate version was authored by Senator Juan Miguel Zubiri. These differing versions are now scheduled for reconciliation by a Bicameral Conference Committee to arrive at a unified law.
The move has reignited a familiar debate. How do we promote social justice for workers without compromising the viability of micro, small, and medium enterprises?
Filipino workers have long endured stagnant wages amid rising costs of living. Legislated wage increases seem to provide immediate relief. However, the deeper concern lies in whether this shift signals a departure from the long-standing regionalized wage setting framework that has guided labor policy for more than three decades.
Since 1989, wage determination in the Philippines has been governed by Republic Act No. 6727 or the Wage Rationalization Act. This law created the Regional Tripartite Wages and Productivity Boards or RTWPBs in every region to set minimum wages based on localized economic conditions. These boards consider the cost of living, employer capacity to pay, regional employment rates, and macroeconomic indicators.
RA 6727 was passed following the last legislated across the board wage increase in 1989 which led to unintended disruptions in business operations and labor relations. The law aimed to replace arbitrary nationwide wage mandates with a professionalized, data driven system responsive to local conditions.
A return to legislated wage increases raises important questions. Why has Congress now chosen to override the existing regional system? Is this a reaction to slow or insufficient wage orders in certain regions, or a political response to worker pressure?
Regardless of the intent, a ₱100 or ₱200 legislated wage hike imposes the same obligation on all employers, regardless of industry size or location. A microenterprise in Lanao del Norte will bear the same compliance burden as a multinational factory in Laguna. This equalizes regulation but not business capacity.
Micro, small, and medium enterprises or MSMEs comprise 99.58 percent of all registered businesses in the Philippines. As of the latest data from the Department of Trade and Industry, there are over 1.1 million MSMEs nationwide employing more than 64 percent of the total labor force. MSMEs also account for about 25 percent of the country’s exports. During the COVID 19 pandemic, MSMEs were the most severely affected, with thousands forced to shut down or reduce operations. Recognizing their importance, Congress enacted Republic Act No. 9178 or the Barangay Micro Business Enterprises Act of 2002, authored by Senator Mar Roxas in the Senate and Congressman Roseller L. Barinaga in the House. This law exempts registered BMBEs from income tax, provides credit facilitation, and mandates training support. Wage orders issued by the RTWPBs have also traditionally exempted businesses with fewer than ten workers or those classified as distressed enterprises. Whether the same exemptions will apply under a nationally legislated wage hike like HB 11376 or SB 2534 remains unclear and is a pressing concern for small business owners.
While workers may gain higher take home pay in the short term, many businesses may respond with downsizing, reduced shifts, or total closure. Informal employment may increase as employers attempt to avoid wage compliance.
Further compounding the burden is the increase in mandatory contributions to the Social Security System, PhilHealth, and Pag IBIG Fund. Since employer contributions are based on monthly compensation, any daily wage hike translates to higher monthly remittances. What appears to be a ₱100 or ₱200 increase can mean thousands more in monthly payroll expenses per employee.
Another predictable impact is wage distortion. When entry level workers receive significant increases, the gap between them and mid level or supervisory personnel narrows or disappears. Without structured upward adjustments, internal equity within organizations collapses. The National Labor Relations Commission consistently receives wage distortion cases following regional wage increases. A nationwide legislated hike will likely result in an even greater volume of labor complaints.
To be equitable and sustainable, any wage hike law must include balancing measures. These may include temporary wage subsidies, tax incentives for MSMEs, structured implementation phases, and institutional safeguards that clarify the ongoing role of the RTWPBs. Policymakers must also define clearly which businesses may qualify for exemption or deferment, as was done under RA 9178 and previous RTWPB wage orders.
As the Bicameral Conference Committee begins its work, lawmakers must focus not just on the amount but on the economic infrastructure that supports its implementation. Listening to both workers and employers is essential. It is not enough to legislate a figure. It must be viable and responsive.
A fair wage must be one that can be sustained without sacrificing jobs, discouraging investment, or dismantling the entrepreneurial foundation of our economy. In the end, a meaningful wage is one that empowers workers while allowing enterprises to remain competitive and inclusive.
About the Author
Ray G. Talimio Jr. is a seasoned accountant, business leader, and public policy advocate based in Northern Mindanao. He is the Past President and Past Chairman of the Board of the Cagayan de Oro Chamber of Commerce and Industry Foundation Inc. (Oro Chamber), Co Chairman of the Economic Development Committee of the Regional Development Council Region X, and Chairman of the MSME Development Council of Misamis Oriental and Cagayan de Oro City. He serves as Chairman for Northern Mindanao of the BIMP EAGA Business Council and is a long time officer of the Philippine Institute of Certified Public Accountants, having served as Past Chapter President and Past Senior Regional Director of PICPA. As a regular columnist, he writes “From the Sidelines” on matters of governance, economic reform, taxation, and regional development.
Sources:
House Bill No. 11376 authored by Deputy Speaker Raymond Democrito Mendoza
Senate Bill No. 2534 authored by Senator Juan Miguel Zubiri
Republic Act No. 6727 (Wage Rationalization Act)
Republic Act No. 9178 (BMBE Law)
Department of Trade and Industry
Department of Labor and Employment
National Wages and Productivity Commission
National Labor Relations Commission
Congress of the Philippines
Relevant Documents:
Senate Bill No. 2534 – Full Text (PDF)
Republic Act No. 9178 – Full Text
RA 9178 IRR – DTI and DOF Joint Order
Photo Credit: ABS CBN News
Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the organizations he is affiliated with.
