P42 Wage Increase Draws Criticism From Cebu Labor Group

A Cebu labor group has criticized the newly approved P42 daily minimum wage increase in Central Visayas, saying the adjustment remains insufficient to meet workers’ basic needs as prices of food, utilities and other necessities continue to rise.

The Alyansa sa mga Mamumuo sa Sugbo-Kilusang Mayo Uno (Ama Sugbo-KMU) said Monday, Sept. 28, that the new wage rates fall short of what workers need to cope with the region’s cost of living.

The Regional Tripartite Wages and Productivity Board 7 approved the P42 increase after consultations and public hearings involving labor, management and other stakeholders.

The adjustment will raise the daily minimum wage from P540 to P582 in Class A areas, including Expanded Metro Cebu, and from P500 to P542 in Class B areas beginning Oct. 14.

The National Wages and Productivity Commission unanimously affirmed the wage order during its meeting in Cebu City on Saturday, Sept. 26, with Department of Labor and Employment Acting Secretary Francis Tolentino present.

The increase is expected to benefit more than 300,000 minimum wage earners across Cebu, Bohol, Negros Oriental and Siquijor. Central Visayas is the second region in the country to implement a wage increase.

Ama Sugbo-KMU chairman Jaime Paglinawan described the adjustment as “meager and unlivable,” arguing that it does not sufficiently address the erosion of workers’ purchasing power.

“The latest wage order from Regional Tripartite Wages and Productivity Board – Region 7 office fails to deliver social justice to workers, even though the Philippine Constitution clearly mandates that the State must ensure workers — organized and unorganized — receive a living wage. Specifically, a national minimum wage of P1,200,” Paglinawan said.

He called for a P1,200 national minimum wage, saying workers need substantially higher pay to cope with the cost of basic goods and services.

Paglinawan cited data showing that P133.90 is now needed to purchase what P100 could buy in 2018. He also pointed to utility costs in Central Visayas, including an electricity rate of P14.96 per kilowatt-hour and a monthly water charge of P259.16 for the first 10 cubic meters.

The labor group said the region’s economic gains should also be reflected in workers’ wages. It cited Central Visayas’ wealth generation at P1.19 trillion in 2023, P1.28 trillion in 2024 and P1.32 trillion in 2025.

Paglinawan urged Congress and the Senate to pass legislation establishing a living wage, saying workers should receive compensation that more adequately reflects their contribution to the economy.

The wage increase has also generated mixed reactions from the public.

Some welcomed the adjustment, while others questioned whether an additional P42 per day would make a meaningful difference amid higher transportation fares, food prices and mandatory employee deductions.

“The question is, can an ordinary Filipino afford the increase given the current inflation?” a concerned citizen said.

Another commenter argued that the increase could be offset by rising prices and deductions.

“The P42 increase is not worth it because the prices of goods and mandatory deductions will also increase. Therefore, the government will still be the one to benefit because its collections from mandatory employee deductions will increase,” a commenter said in Cebuano.

Other reactions focused on the possible impact on small businesses and employment. Some expressed concern that higher labor costs could result in increased prices or fewer jobs, while others said any wage increase was preferable to no adjustment.

Business organizations have likewise raised concerns about the financial impact of the new rates, particularly on MSMEs.

The Cebu Chamber of Commerce and Industry (CCCI) said it recognizes the need to protect workers’ purchasing power but warned that the wage adjustment would affect more than basic payroll expenses.

Businesses will also face higher costs for 13th-month pay, overtime and holiday pay, night differential, service incentive leave and mandatory social protection contributions. The chamber also noted the possibility of wage compression among employees already earning above the minimum.

“Wage adjustments must be implemented with due regard to the capacity of enterprises, particularly MSMEs, to absorb additional labor costs without compromising employment, competitiveness, or long-term viability,” CCCI said.

The chamber called for government assistance to help enterprises absorb the additional costs. Among the measures it proposed were affordable financing, productivity and digitalization programs, technology assistance, skills development, expanded market access, appropriate tax relief and regulatory support.

CCCI also called for closer coordination between wage growth and productivity growth through investments in skills, technology, innovation and more efficient business operations.

It said reducing the cost of essential goods and services should also form part of efforts to improve workers’ purchasing power, rather than relying solely on wage adjustments.

The Filipino-Cebuano Business Club Inc. also expressed concern over the additional burden on businesses.

Chairman Rey Calooy said the group supports better wages but noted that businesses, particularly MSMEs, are already facing higher fuel, electricity, raw material, logistics and financing costs.

“A wage hike adds another burden to businesses with thin margins,” Calooy said.

He said government assistance would be needed to prevent higher labor costs from translating into higher consumer prices, reduced hiring or business closures.

“We need higher wages, but we also need stronger and more sustainable MSMEs to provide jobs,” Calooy said.

Calooy said businesses have continued operating despite rising costs but have yet to see a clear solution to the pressures affecting employers and workers.

The Mandaue Chamber of Commerce and Industry (MCCI), meanwhile, maintained its opposition to another minimum wage increase, saying businesses are already dealing with rising electricity, fuel, transportation, imported input and financing costs.

The chamber had asked the wage board to reject pending petitions for another general minimum wage increase or a unified regional wage baseline and retain the P540 and P500 wage rates.

MCCI said 99.4 percent of enterprises in Central Visayas are MSMEs, providing about 443,000 formal jobs. It estimated that labor accounts for around 30 percent to 50 percent of operating expenses for many businesses.

The chamber warned that companies unable to absorb higher payroll costs could reduce operating hours, freeze hiring, delay expansion, shift toward seasonal or task-based employment or reduce their workforce.

It also cited additional employer expenses arising from higher wages, including increased contributions to the Social Security System, PhilHealth and the Home Development Mutual Fund, or Pag-IBIG Fund.

MCCI further warned that higher entry-level wages could create wage compression, narrowing the gap between the salaries of new workers and those of more experienced employees and supervisors.

Instead of relying primarily on statutory wage increases, the chamber proposed targeted government programs to help households cope with higher food and other essential costs.

Its recommendations include expanded food-stamp or food-voucher programs, public transport subsidies, measures to moderate utility costs, skills and employment initiatives, agricultural support and assistance for low-income households supporting five or more members.

“Protecting workers should also involve protecting the jobs that provide their income,” MCCI said.