THE business community has warned that a P33 to P43 increase in minimum wage will result in job losses and an escalation in the prices of goods.
It also indicated that the government should instead find ways to manage inflation rates to bring down the costs of basic necessities.
“The government should find ways to manage inflation rates to reduce the costs of basic necessities so we do not have to resort to regular wage hikes,” Mandaue Chamber of Commerce and Industry (MCCI) president Mark Anthony Ynoc told SunStar Cebu in a text message on Monday, Sept. 16, 2024.
Ynoc stressed that the increase in the minimum wage by P33 or P43 could lead businesses to raise their prices, which could further fuel inflation.
SMEs
He emphasized that the business sectors most affected are small and medium-sized enterprises (SMEs), as some of them are just starting out.
“Companies, especially SMEs, are forced to cut jobs to maintain profitability and competitiveness,” he said.
He noted that the wage increase will significantly contribute to the “increase in companies’ operating expenses,” which will consequently be passed on to customers.
Operating expenses are the costs a company incurs to keep its day-to-day operations running smoothly. These expenses are essential for a business to function and generate revenue, including payroll from salaries, wages and benefits for employees.
Thus, Ynoc said this might lead to potential job losses since labor costs are a major expense in most industries.
“This will affect the business sector’s competitiveness as prices will go up,” he explained.
Meanwhile, the Cebu Chamber of Commerce and Industry (CCCI) hopes the recent decision by the Regional Tripartite Wages and Productivity Board (RTWPB) 7 regarding wage adjustments will not burden businesses, particularly those classified as SMEs, which serve as the backbone of the regional economy.
SMEs operate with limited profit margins and lack the capacity to absorb additional costs, including labor, CCCI stressed.
THE RTWPB 7 approved the increase of the daily minimum wage rates of workers in private establishments in the region.
In a statement, the Department of Labor and Employment (Dole) said the RTWPB set the increases in the daily minimum wage rates from P33 to P43 per day, starting on Oct. 2.
The increase brings the daily minimum wages from P458-P468 to P501 for the workers in private establishments under 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 under Class A, which include Bais, Bayawan, Bogo, Canlaon, Dumaguete, Guihulngan, Tagbilaran, Tanjay and Toledo.
For Class C or the municipalities not covered under Class A and B, the daily minimum wage was increased to P453 from P415-P420.
“The new rates for workers in private establishments translate to about a seven-eight percent increase from the prevailing daily minimum wage rates in the two regions and result in a comparable 11 percent increase in wage-related benefits covering 13th month pay, service incentive leave, and social security benefits such as SSS, PhilHealth and Pag-Ibig,” the Dole said.
“The wage orders are expected to directly benefit a total of 1.2 million minimum wage earners in these regions and about 2.7 full-time wage and salary workers earning above the minimum wage may also indirectly benefit as a result of upward adjustments at the enterprise level arising from the correction of wage distortion,” it added. (CDF / TPM / SunStar Philippines)