Why the Recent Php85 Wage Hike Is Not a Victory to Celebrate

The labor side has it. It’s pressing, renewing battle cry has once again made it to the government’s nod—pay increase for minimum-wage workers. This came following the Department of Labor and Employment’s (DOLE) recent proclamation raising daily minimum wage in the metropolis by Php85. This seems a welcome update, even a triumph both in the economic and social perspective. Little do people appreciate is that wage hikes entail something unpleasant, even detrimental, one that comes to awareness not immediately but gradually.

Minimum-wage employees in the National Capital Region (N.C.R.) are set to receive a major pump in their daily income, reaching Php1,870 a month after the DOLE announced an Php85 boost in their daily earning.

“Bilang pagsunod din sa tagubilin ng ating mahal na Pangulong Marcos, itinataas po natin ang sweldo ng lahat ng manggagawa dito sa Metro Manila. Makikinabang po ay 1.1M daily wage earners. Itinataas po natin sa isang makasaysayang P85 increase. Pinakamataas po ang P85 bawat araw sa pribadong sektor. Ang pagtaas po ay ibibigay sa dalawang hulog, P60 effective July 19, 2026 at P25 sa Enero 2027,” said labor secretary Francis M. Tolentino at a labor conference in Malabon City on 30 June 2026.

[In compliance with President Marcos’s instruction, we shall raise the wage of laborers in Metro Manila. 1.1M daily wage earners will benefit from this. We are increasing it by a historic Php85 increase. This Php85 hike given each day is the biggest (in history) in the private sector. This increase will be given in two tranches, Php60 effective July 19, 2026 and Php25 in January 2027.]

That’s good news for the labor sector, a historic raise even, in the words of the labor department itself. The minimum-wage workers gain financial capability to meet price adjustments in commodities and other essential goods and services, which were triggered by various political and economic factors both locally and abroad, such as the ensuing war in the Middle East and the nasty inflation, among others. By and large, the pay increase helps these employees to get by amid elevating cost of living.

In a broader lens, however, is it really advantageous? Can we confidently categorize this compensation boost good news overall?

As the labor sector, composed of minimum-wage workers and other service providers, grapples to survive the daily costs of living, the business sector similarly does. Entrepreneurs engage in different strategies and endeavors to sustain their businesses. It can be through network building, tie-ups, X-deals, barter, venturing in a new product or service, even pouring in additional capital, all to keep their businesses afloat, relevant, and competitive in the market. Many owners sometimes add themselves in the labor force of their businesses at least to cut head count in their salary expense. This is common in the business of gasoline station, convenient store, and party needs. All these said, it is clear that both the labor side and capital side undertake to do what they need to in exchange for earnings—wage for the employees and profit for the entrepreneurs—all towards survival.

While the Php85 daily-wage increase moves towards providing an elbow room to laborers to face the upward trend of the prices of goods and services, it pushes businesses somehow backwards, particularly in their fiscal space and overall competitive footing in the market.

Raising minimum wage entails an increase in the salaries expense of the business. To illustrate in the simplest, imagine a medium-size convenient store that employs fifteen minimum-wage workers. With the Php85 pay increase reeling, the store incurs additional Php1,275 in its daily operational expenses. Assuming that it operates six days a week, that is, 26 days a month, that additional cost translates to additional Php33,150 in business expenses under the salary-expense entry in the accounting books. This amount constitutes a significant adjustment in the store’s monthly financial movement.

True, the additional expense for the wage increase will be distributed among the price of every merchandise item in the store. That’s how the owner will handle the mandated pay hike. In other words, the Php85 additional wage for the employees will ultimately be passed on to customers. Even though this is how it’s going to be, this “expense-passing” does not put an end to the store’s burden. This method will, consequently, shake the competitiveness of the prices of the merchandise items vis-à-vis the prices of similar goods in other convenient stores. As a result, customers may turn to other sellers that offer products at a lower cost. Logically, convenient stores that employ workers fewer than 15 have, in general, the potential to sell their items at a cheaper price, thereby winning buyers’ patronage.

Possible Outcomes

As the capital sector complies with the Php85 wage hike, some adjustments and shifts may take place in the commerce of those affected businesses. Here are three of these changes.

First, the possibility that the business trims down its manpower moves closer to reality. Cutting down the number of employees is a direct solution to the magnified salary expense of the business as the compensation given to the laid-off workers can be allocated to the retained ones, thereby meeting the Php85 additional daily wage or at least cushioning its financial impact.

In the case of the convenient store mentioned earlier, letting go of one employee gives the owner the financial space to meet the Php85 daily-wage increase for his nine staffers. The previous daily minimum-wage rate is Php695. Combine here the Php85 additional, and we’ll get Php780 as the new daily minimum-wage rate in the N.C.R. Php780 can cover the additional daily wage for at least nine employees, where dividing Php780 into Php85 equals nine.

Cutting off one worker in the roster is a painful plus in the unemployed population in the metro. Multiply this to how many businesses that reduce their workforce by one employee, and we’ll get the total number of laid-off laborers. What about those businesses that let go of two, three, or more employees? That’s an even more heartbreaking blow in the local employment.

It is worth noting that shrinking personnel may also give the employer a competitive leverage: the business can keep its current prices for its products despite the additional salary expense it has to bear. This is somehow a plus-minus practice occurs in operating expenses vis-à-vis product pricing: the additional Php85 wage rate met by decreasing salary expense through layoff results in capability to retain the original prices of products.

Another likely consequence of the Php85 wage plus is that entrepreneurs may embrace lower profits from doing business, which possibly pose distaste among capitalists in engaging in business in the N.C.R. This is highly common in micro, small, and medium enterprises (M.S.M.E.s), the businesses that mostly bear the brunt of the Php85 daily-wage hike. As a result, for those who are really born for business, these entrepreneurs could just content themselves with micro ventures that employ 10 workers at most to exempt themselves from the legal imposition of minimum-wage-rate adoption for a manpower comprising 11 or more people. This might bring about a chain reaction of triggering a steeper upward trend in the prices of goods and services in the metro following the dwindling suppliers and retailers in the region.

The last possible consequence of the recent Php85 pay increase in the N.C.R. is the aggravated pressure on the part of businesses to make sales. The wage hike, indeed, puts further pressure to entrepreneurs to sell their products or services to make up for, or get through, various risks and labor grants in the Philippines. These business owners reconcile numerous holidays in the Philippines (where they are put to numerous situations of paying unworked-for days to their employees or paying double wage on these days) and the commercially-detrimental weather in the country, characterized by a barrage of furious storms, which slows down economic activity, thus, making the wet season financially dry for businesses.

Some Long-term Solutions

Various solutions present themselves for the government and the nation to take in pursuit of controlled, stable cost of living, all of which certainly do not promise overnight results but guarantee desirable future for both the laborers and entrepreneurs—even to the country as a whole—in due course and through proper handling.

The first road to achieving tame prices in the market involves renewable energy (R.E.). A stable, widely-established renewable energy system in the country paves the way for the Philippines’s independent, sustainable, and flourishing economy. A reliable R.E. setup shields the country from global shocks, supply threats, regional conflicts, and other political and economic headwinds that impact the availability of oil, gas, coal, and other energy sources in the country. This directly insulates goods and services from price surge as they are closely linked to electricity and freight costs. An entrenched R.E. system in the country will, consequently, keep living cost in the modest level possible.

Another solution to insulate the prices of goods and services in the Philippines points to infrastructure, particularly, farm-to-market roads (F.M.R.s) and other passages connecting the farm and the metropolis. It’s all gospel truth: our farmers and livestock raisers in provinces are key players in the country’s food security. These agricultural workers are vital contributors to the food supply in the N.C.R. Relatively, offering them safe, accessible, and convenient avenues to transport their produce from their farmlands to wet markets and other retailers in the metro certainly helps in curbing sharp uptick of prices of agricultural products offered in the region. This, eventually, will thwart increase in the cost of living, particularly, that coming from food.

The last core solution to shoot down the surging prices of goods and services in the market is research and development (R&D). Empowering the Philippine R&D sector infuses fresh opportunities for Filipinos with respect to business, investment, and employment. A vibrant R&D domain also gives the country the opportunity to make a name in different areas of commerce, which results from deliberate investment in various fields of knowledge. Most importantly, and what concerns us here, is that a kicking R&D sector gives the chance to break free from the passive, never-ending, even involuntary dependence on, and patronage of, other countries’ products via producing local counterparts of items that are mostly fruits of foreign genius. You name it—cellphones, computers, automobiles, software, military equipment, medicines, hospital equipment. Most of the products in the marketplace corresponding to these technological and innovative items are imported from other countries such as China, Taiwan, Vietnam, and India, making the Philippines a sitting recipient—and a passive consumer—of foreign products. Having Filipino counterparts of these items provides Filipinos cheaper, accessible, even prideful choices for their purchase, use, and consumption. This, in the long run, will cultivate a market offering accessible, less expensive items, which will contribute to lowering the costs of goods and services around. A direct response to the escalating cost of living in the country, indeed.

Worth remembering relative to this is the recent coronavirus disease 2019 (COVID-19) pandemic. When COVID-19 proliferated swiftly across the Philippines from 2020 to 2022, the people and the government scrambled to secure antiCOVID-19 merchandise that either prevent or determine contraction of the disease. These included flu medicines, vitamins, external alcohol, thermometer, facial shields, and facial masks. As I purchased ones for my household, I noticed that most of the items I bought were merely distributed by local firms to drugstores nationwide; the items were indeed manufactured in Indonesia, India, and China. I wondered if these items, especially flu medicines, vitamins, and thermometers, are rocket science for Filipinos not to create and sell in the local market. More so facial masks and facial shields!

There are, certainly, many other long-term actions on the table to address the rising cost of living in the Philippines, such as pulling in numerous investors in the country, as all Philippine presidents have done in their state visits to other countries; a deeper exploration of latent natural resources in the Philippine territory; a more quality and advanced education, especially that offered in public schools; and a crackdown on smuggling and underground sales, among others. The three solutions discussed above, however, were found to be the most solid and highly promising methods to keep the prices of goods and services in utmost control.

A Point of Clarification

I must emphasize that I am not against the recent Php85 daily-wage hike granted by the national government to minimum-wage earners in the N.C.R. Said pay increase is, indeed, necessary to help these workers and their families meet the escalating cost of living in the region. What I try to tell in this piece is a twofold message.

First, the wage increase for laborers is not an isolated event: there are ripples of this grant, representing a domino effect to the economy. Employers shoulder the additional Php85 wage as a form of further operating expense of their businesses. The customers or clients purchasing the products of the businesses are the ultimate bearers of this additional financial load as all operating costs of the business are distributed among the products being sold. This expense-passing, an integral business procedure, results in pressure on the part of businesses to upscale their sales and adopt measures to maintain competitiveness in the marketplace. This pressure may eventually redound disadvantageously to the laborers themselves as said measures the entrepreneurs can adopt include employee layoff to cut operating expenses in a bid to keep their products as cheap and competitive as possible. This circular effect is not at all healthy for the economy as the cost of living goes high. So do unemployment rate.

The other idea I strive to point out here is that there are ways which the Philippines as a whole can take to keep the prices of goods and services in their modest rate, which will, eventually, foster decent cost of living in the country. These solutions are not executed in a year or two—they do not constitute immediate wins. A well-established renewable energy system, infrastructure linking farms and the market, a breathing research-and-development sector, and many more high-time, long-term solutions—all of these do not materialize after days and nights, but, in due time and proper management, these bring about results that keep the prices of goods and services under strict control all towards taming down the cost of living in the Philippines.

Final Thoughts

No, it is not. The Php85 wage increase—a band-aid solution on its own—is not a win to celebrate. No one has emerged triumphant here. Definitely, the pay hike is highly necessary to alleviate the financial struggles of minimum-wage earners in the N.C.R. as these laborers make both ends meet for themselves and their dependents. It must be noted, however, that there arises commercial and economic pressure which jeopardizes consumers, employers, and employees. The minimum-wage workers included. This pressure may eventually result in the worst labor nightmare, employee layoff. There must be a move to cut down the stem of the economic quagmire—the rising cost of goods and services—towards carving a path to stable, controlled, and decent cost of living in the country. The Philippines—including the labor sector—stands vulnerable to different economic factors out there as specific, nationwide reforms and priority shift, which are begging for attention and adoption, remain as plans and promises that are yet to be fully fulfilled.