The Missing Variables in the Philippine Wage Debate

ECOP Director-General Jose Roland A. Moya argues that higher wages must be pursued alongside productivity, business viability and job creation

When Jose Roland A. Moya appeared before The Monday Circle on September 7, he began from a point on which labor and management should readily agree. Filipino workers need higher incomes.

When wage hikes ignore jobs, productivity and business survival, good intentions can carry a costly price. [Illustration: RIZ]

The harder question, he said, is how wages can rise without weakening the businesses and jobs that sustain them.

“The issue before us is not whether Filipino workers deserve higher wages. Yes, they do,” Moya told the gathering.

“The more difficult question is how we raise wages in a manner that is sustainable, preserves employment, protects wage structures, and strengthens rather than weakens the competitiveness of our enterprises.”

It was a fitting message from the Director-General of the Employers Confederation of the Philippines, or ECOP, the country’s recognized voice of employers on labor, employment and social policy.

ECOP Director-General Jose Roland A. Moya makes the business case for wage growth anchored in productivity, competitiveness and job creation before The Monday Circle. [Photo: LinkedIn]

ECOP represents management in tripartite discussions with government and labor, while helping shape policies on wages, industrial relations, workplace safety and enterprise development.

Moya stands near the center of that process.

Apart from leading the ECOP Secretariat, he represents employers in institutions that include the National Tripartite Industrial Peace Council and the Regional Tripartite Wages and Productivity Board for the National Capital Region.

A wage order caught in uncertainty

Much of Moya’s address focused on NCR Wage Order No. 27, which granted an ₱85 increase in the Metro Manila daily minimum wage through two tranches.

The first ₱60 would raise the non-agricultural rate from ₱695 to ₱755, followed by another ₱25 in January 2027. Agricultural workers would move from ₱658 to ₱718, then to ₱743.

Moya and the board’s other employer representative dissented. They believed that an increase of between ₱60 and ₱65, preferably delivered in two tranches, would have been more consistent with the economic indicators presented during deliberations.

The disagreement was not merely about the headline figure. An ₱85 increase also affects 13th-month pay, overtime compensation and, depending on applicable contribution bases and ceilings, statutory payments.

From ₱85 to ₱60 and talk of ₱145, competing wage pronouncements have left workers and employers asking what truly applies. [Photo: TUCP]

It can likewise compress the gap between minimum-wage employees and longer-serving or more highly skilled workers, compelling companies to adjust entire salary structures.

“The real cost of a wage increase is not the increase in wages alone,” Moya said. “It is the increase in total employment cost.”

For companies accustomed to budgeting around 5 to 7 percent for annual wage movements, the adjustment represented roughly 12 percent of the previous ₱695 daily minimum.

That difference can be significant for enterprises operating on narrow margins.

Legal uncertainty has since complicated the picture. A Pasig court restrained the implementation of Wage Order No. 27, prompting challenges from the government and labor groups.

The NCR wage board subsequently approved Wage Order No. 28, providing a one-time ₱60 increase subject to affirmation by the National Wages and Productivity Commission.

Labor Secretary Francis Tolentino clarified that the two increases would not be cumulative. Workers would not receive a combined ₱145 adjustment.

Still, the existence of overlapping orders has generated confusion among workers, employers and legislators while leaving businesses unsure about payroll planning and possible retroactive obligations.

The variables left outside the simulation

The most revealing moment came during the opening question-and-answer session.

According to Moya, wage-board simulations consider indicators such as inflation, economic growth, poverty thresholds, employment conditions and lost purchasing power.

Yet the models presented during deliberations did not quantify three potentially decisive outcomes: jobs that could disappear, businesses that could close and formal employment arrangements that could regress into the informal economy.

That omission deserves attention.

Wage boards measure inflation, growth and purchasing power, but the costliest variables may be those left uncounted: lost jobs, closed businesses and work pushed underground.

A wage increase can improve the lives of workers who retain covered jobs and whose employers can absorb the cost.

But a statutory adjustment cannot deliver the same benefit to someone whose working hours are reduced, whose employer stops hiring or whose position is eliminated.

Neither does it directly help informal workers, although they may still face higher prices if increased business costs flow through the economy.

For micro, small and medium enterprises (MSMEs), which comprise more than 98 percent of Philippine establishments, the consequences may be particularly acute.

Most employers will try to preserve trained workers because recruitment and retraining are expensive. Those facing severe financial pressure, however, may eventually reduce hours, postpone expansion, automate more functions or restructure their workforces.

These outcomes are not certainties. They are risks. But credible wage policy should measure them rather than assume them away.

When economics gives way to politics

The uncomfortable implication is that minimum-wage increases are increasingly presented as entitlements disconnected from productivity. Political theater can make the largest announced increase appear to be the most compassionate choice, even when the economic effects have not been fully modeled.

Moya acknowledged that wage determination is never purely technical. “Political considerations also come into play,” he said, highlighting pressure from proposals for a legislated national wage increase.

Yet regional wage boards exist precisely because economic conditions differ across the country. Metro Manila’s costs, industries and enterprise capacity cannot automatically serve as the benchmark for every province.

This does not make higher wages undesirable. It makes productivity indispensable.

Moya urged policymakers to ask not only how much can be added to the minimum wage, but how enterprises and workers can become productive enough to sustain continually rising incomes.

Productivity gain-sharing, skills development, workplace improvements, technology adoption and lower business costs offer a more durable path than periodic increases alone.

“It should not be workers against employers,” he said.

“Workers need higher incomes. Enterprises need to remain viable, and the economy needs productivity, investment and jobs.”

That may be the fairest conclusion to an emotionally charged debate. A wage increase delivers its greatest value when it raises living standards without destroying opportunities. Compassion sets the objective, but economics determines whether the gains will last.

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