MANILA, Philippines — President Ferdinand R. Marcos Jr.’s economic managers have warned against the proposed across-the-board minimum wage hike in the private sector, citing potential negative impacts on inflation, employment, and overall economic growth.

In a joint position paper submitted to the President, the country’s top economic officials said that proposed increases of P100 or P200 in the daily minimum wage could slow gross domestic product (GDP) growth and increase inflation.

The economic team estimated that a P200 wage hike could pull GDP down by 1.6 percentage points and raise inflation by 2 percentage points, while a PHP100 increase could cut GDP by 0.5 percentage point and add 0.7 percentage point to inflation.

“Both scenarios are predicted to result in the economy missing the lower end of the GDP growth target range,” the paper stated.

The economic managers expressed concern that wage hikes not backed by productivity gains could drive up production costs, which would be passed on to consumers through higher prices—particularly affecting low-income households.

They warned that the progress in reducing inflation could be reversed. Headline inflation dropped to 1.3 percent in May 2025, bringing the year-to-date average to 1.9 percent.

“A wage hike will inevitably result in higher prices in the goods sold by enterprises who will have to accommodate the wage increase,” the officials said. “This will result in the poorest of the poor, who are mostly in the informal sector and do not even make minimum wage, bearing the brunt.”

The economic team also flagged potential job losses, estimating an increase in the unemployment rate of 0.2 percentage point for a P100 wage hike and up to 0.6 percentage point for a P200 hike. This could translate to 105,000 to 300,000 job losses nationwide.

Businesses, especially micro, small, and medium enterprises (MSMEs) — which make up over 90 percent of all enterprises — may struggle with compliance, they said. The proposed increase would mean an additional P4,000 to P4,800 in monthly payroll expenses per worker, depending on the work week.

They warned that some employers may reduce workdays, lay off workers, or even shut down operations. Others may opt to bypass the wage increase altogether by shifting employees to the informal sector.

The economic managers also raised concerns about the impact of a uniform wage hike across all regions, saying it could worsen regional disparities and hinder investment and job creation in less developed areas.

Instead, they urged the President to retain the current system of wage setting through the Regional Tripartite Wages and Productivity Boards (RTWPBs), which they said better reflects regional economic conditions and aligns with international labor standards.

The position paper was signed by Special Assistant to the President for Investment and Economic Affairs Frederick Go, Finance Secretary Ralph Recto, Socioeconomic Planning Secretary Arsenio Balisacan, and Budget Secretary Amenah Pangandaman. Trade Secretary Ma. Cristina Roque and Bangko Sentral ng Pilipinas Governor Eli Remolona also signed the document. (Courtesy of PNA)