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The House of Representatives on Tuesday approved on third and final reading a measure seeking a PHP 200 across-the-board minimum wage hike for workers in the private sector, despite concerns over its potential inflationary effects and adverse impact on small businesses.

Lawmakers voted 171-1-0 to approve House Bill No. 11376, paving the way for the possibility of a first legislated wage hike since the late 1980s, when a law created regional wage boards to dictate pay rates.

Congressmen in February passed the bill on second reading, while the Senate greenlit a counterpart bill seeking a P100 wage increase last year.

However, the House’s approval of the wage hike comes just a few days before Congress adjourns for a final time on June 13.

In a statement after the approval, the Trade Union Congress of the Philippines (TUCP) urged the House and Senate leadership to immediately convene a bicameral conference committee to reconcile disagreeing provisions of their bills.

“I appeal to all my fellow bicameral committee conferees — my counterparts in the Senate and my colleagues in the House — let us get this done, and get it done now,” Deputy Speaker and TUCP Party-list Rep. Raymond Democrito C. Mendoza said in the statement. “We are way past the stage of whether we will pass a legislated wage hike, but how much that wage hike will be.”

“Regardless of whether it ends up closer to PHP 100 or PHP 200, this will be the most significant wage increase in nearly four decades,” he added.

The Philippines sets minimum wages regionally through wage boards, but lawmakers argue the system delivers slow and meager increases that fail to keep up with rising costs.

Around 55% of Filipino families see themselves as poor, according to an April Social Weather Stations survey. Data from the Philippine Statistics Authority in 2023 showed that a family of five needs at least PHP 13,797 a month or PHP 460 daily to make ends meet.

Giving a nod to a legislated wage hike would provide a “real boost” to achieving a livable wage, Federation of Free Workers President Jose Sonny G. Matula said before the bill’s approval, adding that it’s “pro-worker, pro-poor and pro-local economy.”

“A legislated wage hike breaks the cycle of barya-barya (loose change) adjustments from regional wage boards,” he said in a Viber message. “For minimum wage workers nationwide, this means a real boost to daily survival — a step toward a living wage.”

However, only five million workers would benefit from the wage hike, Sergio R. Ortiz-Luis, Jr., president of the Employers Confederation of the Philippines, said before the bill’s approval.

“Only 10% of employees would be affected by the legislated wage increase,” he said in a phone call, noting that most workers are in the informal sector. “Most are, for example, farmers, fisherfolk, tricycle and jeepney drivers and market vendors.”

Close to 50 million Filipinos were employed in March 2025, according to government data.

Companies would likely struggle to keep up with a legislated wage hike, prompting them to raise the prices of goods and services they provide, which could be inflationary, John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said before the bill’s approval.

“Businesses could pass on the higher labor costs to consumers through increased prices,” he said in a Viber message. “However, the inflationary impact would depend on the scale of the wage hike and whether it is staggered or accompanied by productivity gains.”

An immediate wage hike could force companies to downsize their workforce, leading to job shedding and reduced hiring, he said. “Micro, small and medium enterprises (MSME) may struggle to absorb higher wage bills.”

MSMEs account for more than 99% of all businesses in the Philippines and generate 67% of the country’s total employment, according to the United Nations Development Program.

The Labor department may provide incentives to small businesses to help them comply with the legislated wage increase, according to the proposed law. Companies with fewer than 10 employees may be exempted from the measure too.

It could cost the government PHP 1.5 billion monthly if it chooses to subsidize small businesses just so they could comply with the proposed wage hike, said Mr. Ortiz.

“It could cost up to PHP 50 million a day,” he said. “Where will that come from?”

Lawmakers should instead let regional wage boards handle salary increases, Mr. Ortiz said. “There are regional wage boards that are raising wages every year.”

Congress should also look at implementing a legislative wage hike by phase or through a region-based approach to help balance the interests of businesses and workers, said Mr. Rivera. – Kenneth Christiane L. Basilio, Reporter

The Philippines’ growth momentum remains “broadly stable,” even as global trade tensions would make it hard to hit the 6-8% growth target in the next two years, an Organisation for Economic Co-operation and Development (OECD) economist said.

“The Philippines continues to show very solid growth momentum, supported by domestic demand and somewhat by public investment,” OECD economist Cyrille Schwellnus said at a briefing on Wednesday.

In its latest Economic Outlook, the OECD projected below-target growth for the Philippines for 2025 and 2026. It sees the Philippine economy growing by 5.6% this year, and picking up to 6% in 2026.

Mr. Schwellnus cited robust labor market and election-tied expenditure as main drivers of growth.

“But investment is going through a soft patch, growing well below its average over the past three years. Exports, again, are growing at a healthy pace. But we expect that to weaken on the back of escalating global trade tensions,” he said.

In April, the US slapped higher reciprocal tariffs on most of its trading partners’ goods exports, though this has been suspended until July, except for the baseline 10% which still remains in effect. The US slapped the Philippines with a 17% reciprocal tariff, the second lowest among its neighbors.

Mr. Schwellnus said the government’s 6-8% growth target is “perfectly attainable” in the medium term.

“But in the very short term, in 2025, 2026, we see [the target] as difficult to reach,” Mr. Schwellnus said.

In the first quarter, gross domestic product (GDP) grew by a weaker-than-expected 5.4% amid heightened uncertainty arising from the Trump administration’s tariff policies.

“Now in 2025, we have additional headwinds, especially from the external side, so a slowdown of global trade, but also on the domestic side, where we see some fiscal consolidation going on over the next couple of years,” Mr. Schwellnus said.

The OECD cut its global growth outlook to 2.9% in both 2025 and 2026, noting that “substantial barriers to trade, tighter financial conditions, diminishing confidence and heightened policy uncertainty are projected to have adverse impacts on growth.”

The OECD noted the possible impact of the global economic slowdown on remittances from overseas Filipino workers.

“If there were to be a larger-than-expected slowdown in major economies, such as the US or China, that would, of course, have an effect on exports of the Philippines, and it might also impact remittance flows, which would then impact domestic consumption and investment,” Mr. Schwellnus said.

However, the OECD said the impact on remittance flows was not accounted for in its growth projection for the Philippines.

Mr. Schwellnus said the Philippines can immediately implement reforms, especially to reduce barriers to foreign direct investment.

In the same report, the OECD projected that inflation would settle at 2% this year and 3.1% in 2026 “amid balanced domestic demand and currency stability.”

“Looking ahead, we expect inflation to gradually return to 3% as food prices stabilize and monetary policy continues to ease,” he said.

BSP Governor Eli M. Remolona, Jr. earlier said cooling inflation has given them “plenty of room” to cut rates this year. Mr. Remolona said they could deliver two more rate cuts this year, in “baby steps” of 25 basis points.

Services unaffected

Meanwhile, the Philippines’ services sector is unlikely to be impacted by the US tariff policies, S&P Global Ratings said, though the industry could eventually face strains in the coming years.

“In the Philippines, the story is more nuanced. The Philippines is active in the export of certain things. One is services, especially business process outsourcing. It is a big factor for the Philippine economy,” S&P Global Ratings Senior Economist Vishrut Rana said in a webinar.

The service sector will likely be sheltered from the initial impact of the trade tensions, he said.

“One element of shelter is that for services. Trade seems to be unaffected by the tariff measures for the time being. It could come under pressure over the next few years,” he added.

United States President Donald J. Trump’s reciprocal tariffs have only covered goods, not services.

Meanwhile, the credit rater also noted that the Philippines’ electronics exports are also spared for the time being.

“The Philippines is also a significant player in the electronic supply chain in Asia and the Pacific (APAC). However, for the time being, it doesn’t seem to be a focus area,” Mr. Rana said.

The US’ reciprocal tariffs will not apply to certain goods, such as semiconductors, copper, pharmaceuticals, gold, and minerals that are not available in the US, according to the White House’s April 2 tariff announcement.

Electronic products were the top commodity export of the Philippines last year, accounting for more than half or 53.4% of its total exports.

“On broader trade, there could be some pressure on the electronic space. We are watching that at the moment,” Mr. Rana said. “For now, the APAC electronic sector is performing relatively well, which is supporting the sector in the Philippines also.” — ARAI and LMJCJ

The national government’s (NG) outstanding debt rose to a record PHP 16.75 trillion in the first four months amid a modest uptick from March that was tempered by a strong peso, according to the Bureau of the Treasury (BTr).

Treasury data showed that outstanding debt inched up 0.41% or PHP 68.69 billion from end-March. Year on year, the debt rose 11.56%.

“The uptick was minimized by the significant appreciation of the peso, which reduced the effect of additional borrowings in line with the fiscal program,” the BTr said in a statement on Tuesday.

It used a foreign exchange rate of PHP 55.93 a dollar in April, appreciating from PHP 57.28 in March and PHP 57.58 in April 2024.

The bulk or 69.2% of the debt stock came from domestic sources, while external obligations took the rest.

The improved share of external debt at 30.8% is in line with the government’s thrust to cut exposure to external shocks.

As of end-April, outstanding domestic debt inched up 1.85% to PHP 11.59 trillion, mostly made up of government securities.

The BTr attributed the increase to the strong demand for government securities, including PHP 300 billion in benchmark bonds.

In April, the government raised P300 billion worth of new 10-year fixed-rate Treasury notes amid strong demand for longer-dated tenors on expectations of rate cuts by the Bangko Sentral ng Pilipinas.

“With economic fundamentals remaining sound, the country continues to enjoy strong market access at reasonable rates,” it said.

The peso appreciation shrank the peso value of dollar-denominated domestic securities by PHP 3.85 billion. Year on year, domestic debt increased 12.44%.

On the other hand, external debt slipped 2.68% to PHP 5.16 trillion at end-April from March.

“The reduction was primarily due to the PHP 124.74-billion decrease in the peso value of external debt owing to the peso appreciation, combined with net repayments of PHP 58.28 billion,” the Treasury said.

Foreign debt went up 9.63% year on year.

NG-guaranteed obligations dipped 0.68% to PHP 377.54 billion at end-April from March due to PHP 1.75 billion in net repayment of domestic guarantees and PHP 2.14-billion lower valuation arising from the peso appreciation, the BTr said.

Year on year, guaranteed obligations declined 5.2%.

‘Firmly on track’

“Finally, the debt portfolio remains resilient, with 91.7% of obligations carrying fixed interest rates and 82% classified as long term,” the Treasury said. “This structure helps insulate public finances from abrupt changes in interest rates and the market environment.”

It said the Philippine economy is “firmly on track” to cut the debt-to-gross domestic product ratio to below 60% by the end of President Ferdinand R. Marcos, Jr.’s term in 2028.

The debt-to-GDP had risen to 62% by the end-March — the highest in 20 years.

“The fiscal deficit has also been steadily narrowing and is on track to drop to about 3.8% by 2028,” it added.

Reinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc., attributed the rise in government debt to increased demand for government securities.

“In the following months, I expect the country’s debt to rise as spending programs may continue to put a burden on the country’s fiscal space,” he told BusinessWorld in a Viber Message.

The debt would remain “manageable” as long as debt service is consistent and revenue growth is strong, he pointed out.

But the relative strength of the peso, which tempered the rise in domestic debt, is expected to be short-lived, Mr. Erece said.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said the additional debt in April reflected the P300 billion in Treasury notes issued during the month and the previous month’s budget deficit.

The NG posted a PHP 67.3-billion surplus in April, a turnaround from the PHP 375.73-billion deficit in March.

“For the coming months, the outstanding National Government debt could hit record highs amid new borrowings in the early part of the year, as well as the need to hedge both local and foreign borrowings of the National Government in view of the Trump factor,” Mr. Ricafort said in a Viber Message.

US President Donald J. Trump’s protectionist policies, including higher tariffs, have caused volatility in global financial markets since October, he pointed out.

The NG’s outstanding debt is projected to hit PHP 17.35 trillion by yearend.

In a related development, Finance Secretary Ralph G. Recto said the Bureau of Internal Revenue (BIR) is on track to hit its P3.232-trillion collection goal this year.

“So far, they are on track to meet their target,” he told BusinessWorld in a text message on Monday.

The BIR, which seeks to increase revenue by 13.36% or PHP 380.87 billion this year from 2024, on Friday said it exceeded its goal for the first four months by 14.5%, collecting PHP 1.11 trillion.

“Cumulative collection as of April 2025 represents more than 35% collection of the Bureau’s calendar year 2025 collection target of PHP 3.232 trillion,” it said in a statement.

John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies said the this is a “promising sign.”

“The rollout of new tax measures such as digital taxation and improvements in tax administration can further support collections, especially if enforcement is sustained,” he said in a Viber message.

But an economic slowdown brought by global uncertainties or domestic spending constraints pose risks to the BIR target, he said.

“Volatile inflation and weaker business profits could also dampen collection growth,” he said. “Sustained efficiency reforms, broadening the tax base and minimizing leakages will be key to meeting the target.”

Mr. Ricafort said he expects digital taxes to help the BIR meet its goal this year. He also cited the Philippines’ “good track record of growth in recent years.”

Hitting the BIR target rests not just on new taxes but also on enforcement, said Eleanor L. Roque, tax principal at P&A Grant Thornton.

“The bulk of the tax take will still come from voluntary compliance with regular taxes like income tax and value-added tax,” she said in a Viber message. “To be able to achieve this year’s high target, the BIR needs to exert extra effort widening their tax net.”

“The BIR needs to make the cost of evading taxes higher than the cost of compliance,” she added. – Aubrey Rose A. Inosante, Reporter

The Philippine Economic Zone Authority (PEZA) approved PHP 66.34 billion worth of investment pledges in the first five months — 80% higher than a year earlier —  that could generate more than 29,000 more jobs and USD 1.092 billion in exports.

In a statement on Tuesday, the agency said the commitments are covered by 102 approved projects in January to May, compared with 95 projects a year ago.

The P66 billion in new and expansion projects spans advanced manufacturing, semiconductors, information technology and business process management, logistics and renewable energy — key industries driving the transformation of global trade networks, PEZA said.

“This consistent growth in job creation affirms investor confidence in the Philippine ecozone program, especially in strategic and emerging locations,” PEZA Director-General Tereso O. Panga said in a statement.

“Our focus remains on inclusive growth by developing economic zones (ecozones) beyond urban centers,” he added.

This year, PEZA is targeting the approval and proclamation of at least 30 ecozones, particularly in Central Luzon, Cebu and Mindanao.

Meanwhile, Mr. Panga said US reciprocal tariffs, the subject of negotiations between Philippine authorities and the US Trade Representative, are creating uncertainty among investors.

“However, at PEZA, we are promoting the China+1+1 methodology to facilitate the growing interest of China-based companies in having a presence in the Philippines,” Mr. Panga said, referring to the supply-chain strategy of some companies to diversify by setting up manufacturing and sourcing locations in two other countries aside from China.

“PEZA has received numerous inquiries lately, and we are confident that we can do a quick turnover and welcome these companies as new locators,” he added.

South Korea was the top investment source in the first five months, accounting for 16% of PEZA’s approved investments.

“This surge is largely attributed to the recently implemented South Korea-Philippine free trade agreement, which has boosted investor confidence and strengthened bilateral economic ties,” the ecozone regulator said.

The other top sources of investments were the US (4.08%), China (3.3%), Japan (2.92%) and The Netherlands (2.16%).

Mr. Panga said his team is in talks with Malaysian and Indonesian companies that have signified their intent to set up shop in the country.

“We welcome these interests as we continue to grow and strengthen inter-trade ties among our neighbors, making the ASEAN (Association of Southeast Asian Nations) region a more cohesive economic and trade area,” he said.

“With the rising interest in the Philippines and together with this massive ecozone development in Palawan, we are well on the way to meeting the set targets for 2025,” he added.

PEZA is targeting approved investments to reach at least PHP 235 billion this year, and for exports and jobs to rise by 5%.

The ecozone development in Palawan province in western Philippines was among the big-ticket projects approved by PEZA in its board meeting last month.

Considered the first and largest of its kind, the Palawan Mega Ecozone (PMEZ) is a joint initiative between PEZA and the Bureau of Corrections. Under the plan, 28,000 hectares of the Iwahig Prison Colony will be transformed into an eco-friendly industrial estate.

“An initial 4,000 hectares has been transferred to PEZA as phase 1 for conversion into the approved PMEZ,” PEZA said.

The grant of pre-qualification for the declaration of a 4,000-hectare property in the villages of Montible and Sta. Lucia in Puerto Princesa City, Palawan had been approved for development, it said.

Apart from strengthening Brunei Darussalam-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA) trade, the PMEZ is also in line with President Ferdinand R. Marcos, Jr.’s call to promote stronger trade ties among ASEAN member states.

“The PMEZ is envisioned to attract environmentally responsible industries such as agro-industrial processing, renewable energy, ecotourism and marine biotechnology,” Mr. Panga said.

“This will not only preserve Palawan’s rich biodiversity but will also uplift the livelihood of local communities through jobs and infrastructure development,” he added.

PEZA seeks to complete the regulatory requirements for the PMEZ within the month before submitting it to the President for proclamation.

The ecozone is expected to create more than 480,000 jobs that could benefit the local communities and Filipino prisoners. – Justine Irish D. Tabile, Reporter

Growth in Philippine manufacturing activity slowed in May due to declining output and weaker demand from foreign markets amid global trade tensions.

The S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI), which measures the country’s monthly factory performance, settled at 50.1, slipping from 53 in April.

This was the lowest index since the 49.4 contraction in March.

A PMI reading above 50 denotes better operating conditions month on month, while a reading below 50 shows the opposite.

“The promising growth observed at the beginning of the second quarter signaled a notable cooling in May,” Maryam Baluch, an economist at S&P Global Market Intelligence, said in a report on Monday. “While new orders continued to increase, they did so at a slower pace, overshadowed by contractions in other areas.”

S&P Global data on the Association of Southeast Asian Nations (ASEAN) showed that only the Philippines expanded in May, while Vietnam (49.8), Myanmar (47.6) and Indonesia (47.4) all declined.

In its report, S&P Global said output declined in May, the second contraction in the past three months.

“Overall, the downturn was marginal, but companies noted softer demand conditions weighed on production,” it said.

Despite continuing to signal a rise in new sales, the rate of expansion in new orders was slight and weaker than in April, it added. This was reflected in the softer rate of increase in input buying activity.

“The situation was further exacerbated by a deteriorating demand from foreign markets, with May witnessing a sharper drop in new export orders,” Ms. Baluch said. “As global trade tensions escalate, the outlook for overseas demand appears increasingly precarious,” US President Donald J. Trump paused his reciprocal tariffs in April for 90 days but continues to apply a 10% baseline tariff rate for most trading partners.

Ms. Baluch said the drop in production requirements was accompanied by a fresh decline in employment and the inventories of both purchases and finished goods.

S&P said employment numbers declined for the first time in four months.

The pace of job shedding was marginal, but the strongest in 11 months, which factories attributed to voluntary resignations and the nonreplacement of those roles.

S&P also cited the limited manpower for a renewed buildup of backlogs across Filipino producers.

“On a brighter note, inflationary pressures remain modest and historically subdued, which could play an important role in supporting demand moving forward,” she said.

However, cost burdens and output charges rose to the highest since January.

“The stability of price pressures may also provide a necessary buffer against the challenges posed by a cooldown in new orders and external market uncertainties,” she added.

S&P Global said manufacturers expect new orders to continue to rise, supported by confidence in the year-ahead outlook for production, but the degree of optimism was the third weakest in the series’ history.

Analysts also said trade tensions and softer demand weighing down the country’s manufacturing activity in May.

The anticipation for higher tariffs likely caused subdued exports, said Reinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc.

“The persistent trade tensions continue to weigh on global trade, causing exports to drop as higher tariffs may be imposed,” he said in a Viber message.

Philippine exports in the first four months rose 9.5% to USD 26.87 billion, according to the local statistics agency.

Mr. Erece said domestic demand slowed as the election-spending season ended. Stronger manufacturing activity is expected later this year, as local authorities continue trade talks with the US Trade Representative, he added.

John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said companies might have been more cautious due to “election-related transition risks and global supply-chain realignments, which could lead to hesitation in new orders and production planning.”

In the coming months, easing inflation, lower interest rates and public and private sector spending post-election season might help improve factory activity in the Philippines.

Further rate cuts by the Bangko Sentral ng Pilipinas and US Federal Reserve could help cut the financing costs of some manufacturers, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a Viber message.

The Monetary Board cut the key policy rate by 25 basis points (bps) to 5.5% in April. It has cut the rate by 100 bps since it started its easing cycle in August last year.

BSP Governor Eli M. Remolona, Jr. has signaled two more rate cuts this year. The Monetary Board’s next policy meeting is on June 19. – Aubrey Rose A. Inosante, Reporter