Research group IBON said the 19th Congress passing a legislated minimum wage hike between Php100 and 200 – from the bill just passed by the House of Representatives (HOR) and its counterpart passed by the Senate last year, respectively – are important first steps towards a family living wage (FLW) nationwide. Minimum wage earners will feel immediate benefits and should be able to look forward to an FLW that actually raises their families’ standard of living to a decent level.
With only days left in the 19th Congress, the HOR passed House Bill No. 11376 or “An Act providing Php200 increase for minimum wage workers in the private sector”. This is over 15months after Senate Bill No. 2534, also known as the Php100 Daily Minimum Wage Increase Act of 2023, was passed in February 2024. The Php100 and Php200 wage hikes give welcome initial relief and help restore some purchasing power lost over decades, but are both still too small.
A Php100 hike in the daily minimum wage still keeps the real value of the minimum wage in 9 out of 17 regions below their levels in 1989, when regionalization of wage-setting started. The minimum wages in Regions IV-B, V, VII, VIII, IX, X, XII, XIII, and BARMM will still be around 6-30% lower than they were in 1989. Minimum wages in 15 regions will also still be below the official poverty threshold for a family of five, and only NCR and Region XI will have minimum wages over the poverty line.
A Php200 hike is a little better where 15 regions will at least have recovered their real value in 1989 and overcome 36 years of minuscule wage hikes chronically falling behind inflation. Only two regions will still lag – Region V whose minimum wage today is still 3% less than in 1989 and BARMM at still a large 25% less. Most regions will also have been nudged above the official poverty threshold except for Regions V, IX, and BARMM.
IBON has computed the feasibility of the Php200-wage hike. Even if granted across the board, the wage increase is just a small portion of company profits: 11.1% of profits of large firms, 9.1% of medium firms, 12.9% of small firms, and 15% of micro firms. The government can support smaller firms that may have difficulty in affording the wage hike.
The group stressed that any large increase in the daily minimum wage brings substantial relief to wage earners and their families by increasing their households’ purchasing power. Wage hikes also help boost the informal economy, where workers spend their earnings, and overall they are a strong driver of economic activity and more inclusive growth.
IBON also highlighted that a legislated wage hike now can be considered part of a phased rollout towards a nationwide family living wage, as well as a key element in a broader strategy for more equitable and domestic-oriented national development.
