Daily Minimum Wage Hike of P100 Approved by Senate

(SPOT.ph) The Senate unanimously approved on Monday, February 19, a bill to increase the daily minimum wage by P100 for workers in the private sector. This decision comes after years of stagnant wage levels and rising living costs, marking a significant step towards improving the financial well-being of approximately 4.2 million minimum wage earners across the country.

Timeline of the Senate Bill on Daily Minimum Wage Increase

The original version of the bill on the daily minimum wage increase, which was Across-the-Board Wage Increase Act of 2023 (Senate Bill 2002), proposed to raise wages in the private sector across all regions by P150 (and not P100). This was filed in March 2023 by Senate President Juan Miguel Zubiri.

This was later consolidated into Senate Bill 2534, or “An Act Providing for a 100 Pesos Daily Minimum Wage Increase for Employees and Workers in the Private Sector.” Co-sponsors include Senate Labor Committee chairman Sen. Jinggoy Estrada, Joel Villanueva, Loren Legarda, Bong Go, Ramon Bong Revilla Jr., Nancy Binay, Bato Dela Rosa, Robin Padilla, Risa Hontiveros, and Pia Cayetano.

The Daily Minimum Wage Bill received a 20-0 vote in favor on the third and final reading last February 19. Zubiri highlighted the historic nature of the legislation, noting that it has been 35 years since a wage hike of this magnitude was legislated. The bill’s approval signals a responsive government action to the pressing needs of its citizens, especially in light of the escalating prices of basic commodities.

The measure was also unanimously approved by the Senate of the Philippines on its second reading on Valentine’s Day, February 14.

“This is our Valentine’s Day gift to all our workers […] “This is for them (workers). I think it will be a perfect timing because today is the day of hearts. It’s the day of love and sharing,” Zubiri said.

The bill’s approval in the Senate is not the final step in the legislative process. It now moves to the House of Representatives for consideration in three readings. The bill then goes back to the Senate. If signed by the Malacañang into law, the increase will take effect nationwide.

Implications of the Minimum Wage Hike

The Employers Confederation of the Philippines (ECOP) has expressed concerns about the potential implications of the wage hike, particularly its impact on inflation and the financial strain it could place on small and medium enterprises (SMEs).

“Iyong P100 [minimum wage hike], ay naku catastrophe iyan!” ECOP president Sergio Ortiz-Luis Jr. said in an interview on PTV’s Bagong Pilipinas Ngayon on February 15.

Earlier, during the committee hearing in May 2023, ECOP governor Ferdinand Ferrer said: “We are in favor of reviewing increasing minimum wages, but hopefully it could go through the regional wage boards. We, the employers, after three and a half years of pandemic impact, the employers are also recovering.”

Economists also have something to say about the measure, as unintended consequences may actually hurt those in the informal sector.

The Foundation for Economic Freedom said in a statement released on February 18, “firmly oppose Senate Bill No. 2534 (SB 2534) mandating a national wage increase of PHP 100 daily in the private sector, because of its damaging effects on the national economy.”

They enumerated four implications of the minimum wage hike, as proposed by the Senate:

• “It will significantly turbocharge inflation, with the additional across-the-board wage increase pushing companies to charge higher prices.
• “Increased inflation will force the Bangko Sentral ng Pilipinas (BSP) to hike interest rates, which will raise the cost of housing, cars, and appliances, which are mostly bought on credit.
• “A national wage increase doesn’t take into account the different cost factors and employment situations across different regions.
• “It will only cause more suffering for informal workers, such as seasonal workers, fishermen, gig economy workers, and market vendors.

FEF clarified that they “are not against wage increases but we urge the Senate not to tamper with the existing mechanism of regional wage boards to adjust wages if needed. Regional wage boards take into account the interests of both employers and workers and the different cost and employment situations of various regions.”

Despite these concerns, legislators argue that the economy’s vitality depends on a robust workforce capable of sustaining consumption and stimulating local economies.

Current Minimum Daily Wage in Metro Manila

Currently, the minimum wage in the National Capital Region (NCR) stands at P610. This was last raised through a wage hike ordered by the National Wages and Productivity Commission.

Wage Order No. NCR-24, which was published on June 30, 2023, took effect 15 days thereafter. It provided an increase of P40, bringing the daily minimum wage in NCR from P570 to P610 for the non-agriculture sector and from P533 to P573 for the agriculture sector, service, and retail establishments employing 15 or less workers, and manufacturing establishments regularly employing less than 10 workers.

Minimum wage rate varies across the regions and across sectors. PHOTO BY Adobe Stock

Current Minimum Daily Wage Across Regions in the Philippines

There is a stark contrast in the minimum wages across different regions, with some areas in Visayas and Mindanao receiving significantly lower rates.

The Regional Tripartite Wages and Productivity Boards issued 15 wage orders, “nine of which were initiated motu proprio,” according to the National Wages and Productivity Commission on January 1, 2024.

Cordillera Administrative Region

• P430 across all sectors except domestic workers

Ilocos Region

• Non-agriculture: P435 for establishments with 10 or more employees, P402 for establishments with less than 10 employees
• Agriculture: P402

Cagayan Valley

• Non-agriculture: P435
• Agriculture: P415

Central Luzon

Bataan, Bulacan, Nueva Ecija, Pampanga, Tarlac, Zambales

• Non-agriculture: P500 for establishments with 10 or more employees, P493 for establishments with less than 10 employees
• Agriculture
• Plantation: P470
• Non-plantation: P454
• Service and retail: P480 for 10 or more employees, P475 for less than 10 employees

Aurora

• Non-agriculture: P449
• Agriculture: P434 for plantation, P422 for non-plantation
• Service and retail: P384

CALABARZON

Extended Metropolitan Area

• Non-agriculture: P520
• Agriculture: P479

Component cities

• Non-agriculture and agriculture: P479

1st class municipalities

• Non-agriculture: P479
• Agriculture: P425

2nd and 3rd class municipalities

• Non-agriculture: P425
• Agriculture: P385

4th, 5th, and 6th class municipalities

• Non-agriculture and agriculture: P385
• Service and retail establishments with not more than 10 workers (across all areas): P385

MIMAROPA

• All sectors (except domestic workers): P395 for 10 or more workers, P369 for less than 10 workers

Bicol

• All sectors (except domestic workers): P395

Western Visayas

• Non-agriculture: P480 for more than 10 workers, P450 for less than 10 workers
• Agriculture: P440

Central Visayas

Class A (Carcar, Cebu City, Danao, Lapulapu, Mandaue, Naga, Talisay, Compostela, Consolacion, Cordova, Liloan, Minglanilla, San Fernando)

• Non-agriculture: P468
• Agriculture and non-agriculture establishments with less than 10 workers: P458

Class B (Bais, Bayawan, Bogo, Canlaon, Dumaguete, Guihulngan, Tagbilaran, Tanjay, Toledo)

• Non-agriculture: P430
• Agriculture and non-agriculture establishments with less than 10 workers: P425

Class C (municipalities not under Class A and B)

• Non-agriculture: P420
• Agriculture and non-agriculture establishments with less than 10 workers: P415

Eastern Visayas

• Non-agriculture: P405
• Service and retail: P405 for more than 10 workers, P375 for 10 workers or less
• Cottage and handicraft: P375
• Agriculture: P375

Zamboanga Peninsula

• Non-agriculture: P381
• Agriculture, and service and retail: P381 for establishments with more than 10 workers, P369 for agricultural enterprises, and establishments with one to nine workers

Northern Mindanao (effective on or before July 1, 2024)

Non-agriculture

• Cagayan de Oro, Iligan, Tagoloan, Villanueva, Jasaan, Malaybalay, Valencia, Gingoog, El Salvador, Ozamiz, Opol, Maramag, Quezon, Manolo Fortich, and Lugait: P438
• All other areas, and service and retail establishments with 10 or less workers: P423

Agriculture

• Cagayan de Oro, Iligan, Tagoloan, Villanueva, Jasaan, Malaybalay, Valencia, Gingoog, El Salvador, Ozamiz, Opol, Maramag, Quezon, Manolo Fortich, and Lugait: P426
• All other areas, and service and retail establishments with 10 or less workers: P411

Davao Region (effective on or before September 1, 2024)

• Non-agriculture: P481
• Agriculture: P476

Soccsksargen

• Non-agriculture: P390
• Agriculture, and service and retail: P369

Caraga (effective on or before May 1, 2024)

• All sectors (except domestic workers) and provinces: P385

Bangsamoro Autonomous Region in Muslim Mindanao (effective February 28, 2024)

Cotabato City

• Non-agriculture: P361
• Agriculture: P336

Provinces of Maguindanao del Norte, Maguindanao del Sur, Lanao Del Sur, Sulu, Tawi-tawi and the cities of Marawi, Basilan, and Lamitan

• Non-agriculture: P336
• Agriculture: P326

Special Geographic Area

• Non-agriculture: P341
• Agriculture: P316