Archives: Business World Article

Philippine wage regulators opened talks on a possible increase in the minimum pay for domestic workers in Metro Manila, a move that could raise household costs for millions of families even as authorities grapple with weak compliance and uneven ability to pay.

The Regional Tripartite Wages and Productivity Board-National Capital Region on Monday held a public hearing on adjusting the minimum wage for a kasambahay (domestic worker), marking the start of deliberations that could result in a decision after Jan. 15, according to the board chairperson Sarah Buena S. Mirasol.

“We are hopeful that there will also be an increase for domestic workers, following last year’s adjustment for formal sector workers,” she told BusinessWorld.

Ms. Mirasol said the hearing in Pasay City gathered views from local governments, labor groups, employer representatives, and domestic workers themselves.

Ms. Mirasol said the board is weighing several factors, including cost of living, inflation, prevailing wages, and employers’ capacity to pay. Unlike the formal sector, household employers are largely workers themselves rather than businesses, she added.

Data presented during the hearing indicated that the average wage of domestic workers in Metro Manila is around PHP 9,000 a month, above the current minimum of PHP 7,000. This was set by the last minimum wage order effective Jan. 4, 2025.

“That already reflects the prevailing wage in NCR,” she said.

The board is also seeing a shift toward part-time and live-out arrangements for domestic workers, Ms. Mirasol added.

The board is currently relying on the Philippine Statistics Authority’s Labor Force Survey, while awaiting the release of a more detailed results from the rider questions on kasambahays. The results are expected later this year.

Employer representative Federico R. Marquez, Jr. said any wage hike for domestic helpers would be felt most by middle- and low-income households.

“Those earning below P50,000 a month are the ones who will really feel the increase,” he said, noting that “elite-income” households already pay above the minimum.

“For those in the top group, such as families living in gated subdivisions, the increases are negligible. In fact, the current PHP 7,000 minimum wage is almost nothing for them. Most already pay PHP 10,000 to PHP 11,000 for their kasambahays. They can easily afford this,” Mr. Marquez said.

“But for employees… earning less than PHP 50,000 — the increase is substantial. These are the households that will truly feel the impact of a wage hike for a kasambahay,” he added.

Mr. Marquez stressed the need to balance affordability with worker welfare, warning that steep increases could lead some households to forgo hiring domestic help or to circumvent the law.

He also expressed concern about weak compliance, particularly the lack of written employment contracts, which are mandatory under the Kasambahay Law (Republic Act No. 10361), also known as the Domestic Workers Act.

The law establishes comprehensive labor rights and protections for domestic workers, including a written contract, minimum wage, humane working conditions, and social security benefits.

Labor groups, meanwhile, pushed for a meaningful adjustment and stronger enforcement.

Helena Simplina, project officer of the Federation of Free Workers, said the hearing highlighted persistent noncompliance, citing cases of domestic workers earning as low as PHP 2,000 a month.

“There are still employers who do not comply with the minimum wage and registration requirements,” she said, adding that many households remain unregistered with barangays, contributing to data gaps.

Labor sector representative Angelita D. Señorin said workers are expecting a “good increase,” noting that most domestic workers in Metro Manila already refuse jobs paying only the minimum wage.

“No one is really accepting PHP 7,000 anymore,” she said.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort told BusinessWorld that cost of living and inflation, which vary by region, “are key inputs in wage decisions.”

According to the PSA, full-year NCR inflation averaged 2.4% in 2025, down from 2.6% in 2024, driven by slower food price growth, though higher housing and utility costs exerted upward pressure.

“(The wage) may look low but many of them are stay in. Free or subsidized rent, food, utilities, among others, but mostly free,” Mr. Ricafort added.

Benjamin B. Velasco, an assistant professor at the University of the Philippines Diliman School of Labor and Industrial Relations, said domestic workers deserve higher wages.

“Definitely kasambahays deserve a raise. It’s been a year since they had a wage hike,” he told BusinessWorld in a Facebook Messenger chat.

While the law mandates 10-point criteria for wage adjustments, in practice it boils down to the cost of living and the capacity of employers to pay, Mr. Velasco said.

“In the case of kasambahays, their employers are the rich, the middle class and the small number of higher paid workers in which both parents are most probably working so they need a househelp for domestic and care work,” Mr. Velasco said. “Given the sustained economic growth, I believe they have the capacity to pay kasambahays a higher salary.”

Mr. Velasco said given the option to work abroad and the high cost of living, the reservation wage — the rate at which a kasambahays is willing to work — has gone up. — Erika Mae P. Sinaking

Overseas Filipino workers’ (OFW) remittances are expected to remain stable this year despite the United States’ move to charge a 1% tax on cash transfers to foreign countries, analysts said.

Analysts see the new duty having a muted impact on remittance growth in the Philippines.

“The proposed 1% tax on OFW remittances in the US could be a drag, though minimal or negligible, on OFW remittances growth and on the overall local economy,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort told BusinessWorld in a Viber message.

On Jan. 1, the US government began to impose a 1% tax on remittances from US-based senders, regardless of citizenship status, made via cash payments, money orders and cashier’s checks.

However, the regulation exempts money wired via US banks or US-issued debit and credit cards, as well as hand-carried cash.

Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion noted that steady global demand for Filipino workers and better labor conditions in major host countries should support continued growth in remittances this year.

“Regarding the newly implemented 1% US remittance tax, its macroeconomic impact is likely minimal, as it applies only to cash-based transfers while digital and bank channels remain exempt,” he added via Viber.

Mr. Ricafort estimated the Philippines may lose around PHP 8 billion to PHP 9 billion annually due to the tax, although noted that remittances could still grow by around 3% this year.

“About 3% OFW remittances growth (is) still possible for 2026 since the 1% tax would be relatively affordable for many OFWs in the US,” he said.

A 1% tax means the US government gets a dollar for every USD 100 remitted from the US to other countries.

In October, Filipinos abroad sent home USD 3.171 billion, up 3% year on year from USD 3.079 billion, latest data from the Bangko Sentral ng Pilipinas (BSP) showed.

This was the slowest growth since May when remittances rose by 2.9% but matched the 3% growth in July.

The US remained the top source of remittances to the country in the first 10 months of the year, accounting for 40.3% of total remittances during the period.

“The new US remittance tax will put mild pressure on the peso in the short term as inflows dip slightly,” Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas likewise said in a Viber message.

Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said in a Viber message that the new remittance tax could slightly dampen support for the peso as the US is a major source of inflows.

“In the near term, any impact on the Philippine peso is likely to be modest, as remittances are relatively resilient and driven more by labor demand and migrant incomes than taxes alone. For the medium to long term, the effect will depend on whether tax meaningfully changes remittance behavior,” Mr. Rivera said.

In addition to reduced inflows, Mr. Rivera said the added tax could weaken key buffers for the local unit as it could encourage the use of informal channels.

Meanwhile, a trader said OFWs would likely adapt by sending more money home to offset the tax costs.

“Since there will be 1% excise tax, there will be changes in behavior. But if the remittances are intended for their families, I think the remittances will adjust rather than result (in) a reduction,” the trader said in a Viber message.

“Those in the US who will send money here will just work harder to compensate for the excise tax rather than send something smaller,” the trader added.

Mr. Asuncion also noted that the levy might drive OFWs to switch from traditional or physical remittance service providers to digital platforms to cut costs.

“(I)t could influence remittance practices by encouraging OFWs to shift toward formal, digital platforms to avoid additional costs, potentially reducing reliance on informal channels and improving financial inclusion,” he said. “While some households may adjust transfer frequency or consolidate remittances to manage costs, overall inflows should remain broadly stable.”

In the long term, Mr. Ravelas said the peso could be kept broadly stable by OFWs’ shift to cheaper digital channels to send money home.

He said this could prompt policymakers to strengthen monitoring and promote low-cost formal channels.

BDO Capital & Investment Corp., President Eduardo V. Francisco said he is hopeful the additional tax would not dampen remittances, given that the bulk of remittances sent to the Philippines are for families.

“I guess we have to see if the remittance businesses will just absorb the new excise tax or pass it to their customers. I hope it is not the latter,” he said in a Viber message.

The BSP projects cash remittances to grow by 3% to USD 36.6 billion this year. — Katherine K. Chan and Aaron Michael C. Sy, Reporters

 

The sustainability of Philippine debt is not currently a matter of serious concern, the World Bank (WB) said, noting however that the government still needs to rebuild fiscal buffers to prepare for future shocks.

“There is no cause for serious concern (over debt sustainability… Most countries would dream of having the kind of debt-to-GDP (gross domestic product) ratios we have here,” World Bank Senior Economist Jaffar Al-Rikabi told reporters last week on the sidelines of an event.

Philippine debt-to-GDP was 63.1% at the end of the third quarter, rising from 60.1% a year earlier.

The rule of thumb for healthy levels of debt for developing countries is 60%, which the government has informally abandoned in favor of a new 70% benchmark.

Asked if the record PHP 17.65-trillion debt stock at the end of November poses concerns for debt servicing, Mr. Al-Rikabi said it is “normal” for such levels to increase with inflation and fiscal deficits.

The Bureau of the Treasury will release the fourth-quarter debt-to-GDP ratio when the Philippine Statistics Authority (PSA) reports full-year and fourth-quarter GDP.

“We still don’t have Q4 data, but in our projection, if you looked at the outlook slides, we are generally reassured that the fiscal situation is very sustainable,” he said.

In its Philippine Economic Update, the World Bank said it expects sovereign debt to start declining after 2026.

National Government debt is projected to peak at 62.5% of GDP in 2026 before declining to 61.4% by 2028.

Mr. Al-Rikabi also noted that public debt remains “sustainable,” noting that the majority of the debt is long-term and peso-denominated.

“Because if debt held (is) non-peso-denominated or short-term, that usually is much more volatile and is exposed to external shocks instead of just domestic shocks,” he said.

He also noted that the debt ratio was low at 40% leading up to the COVID-19 pandemic, when the government had to take on much more debt to fund the pandemic containment effort and stimulate the economy.

“What we want to see on public debt, on servicing costs, is fiscal consolidation program being implemented,” he said.

“We want to rebuild fiscal space so that the country can act for future crisis. You had a lot of fiscal space back then. You’ll have fiscal space in the future,” he added.

Mr. Al-Rikabi said the government should take control of rising interest payments to avoid squeezing out productive spending.

“You want to spend more of your budget on education, on health, on effectively implementing infrastructure projects. You don’t want it to go increasingly on interest expenditure, which has grown over the last few years,” he said.

For 2026, the government has budgeted PHP 2.01 trillion for debt service, with PHP 1.06 trillion going to amortize principal and PHP 950 billion to interest payments.

Mr. Al-Rikabi said the bank expects the economy to expand 5.3% in 2026 and 5.4% in 2027.

“We do see deceleration for this year. We’re projecting around 5.1% (in 2025). Maybe with fourth-quarter data, it ends up being weaker. I don’t know. Or maybe around the same,” he said.

The revised government target is 5-6% for 2026 and 5.5-6.5% for 2027.

Jonathan L. Ravelas, senior adviser at Reyes Tacandong & Co., projected a faster economic growth for the Philippines at 5.3% in 2025.

“Mainly because we’re a consumption-driven economy. We have one of the longest Christmases. People tend to forget when the calendar starts the ber-months it’s Christmas,” Mr. Ravelas said in a John Clements Consultants, Inc. event on Jan. 8.

“People talk about spending. This has been a major driver over the last two weeks of December. I think that could probably prop up the fourth quarter,” he said.

Mr. Ravelas sees the economy growing by 5.6% in 2026 and 5.8% in 2027.

Economy Secretary Arsenio M. Balisacan has said that GDP growth likely slowed to 4.8-5% in 2025 due to the flood control corruption scandal, prompting economic managers to temper their goals through 2027.

“We may have seen peak negative sentiment, unless somebody gets jailed (over the corruption scandal),” he said.

Mr. Ravelas said the peso may settle between PHP 61 and PHP 65 over the next three years, after the currency fell to a record low of PHP 59.35 on Jan. 7.

“A weaker peso should be good for the Philippines even though we’re a net importing country, because we need to sell the Philippines as an investment destination,” he added. — Aubrey Rose A. Inosante, Reporter

The Philippines’ dollar reserves as of end-December exceeded the Bangko Sentral ng Pilipinas’ (BSP) estimate for the year as it reached over USD 110 billion.

Based on preliminary central bank data, the country’s gross international reserves (GIR) amounted to USD 110.873 billion at end-December, slipping by 0.34% from the USD 111.254 billion seen in the previous month.

However, this was 4.34% higher than the USD 106.257-billion foreign reserves recorded in 2024 and breached the BSP’s revised full-year projection of USD 109 billion.

GIR refers to the central bank’s foreign assets held mostly as investments in foreign-issued securities, foreign exchange, and monetary gold, among others.

These are supplemented by claims to the International Monetary Fund (IMF) in the form of reserve position in the fund and special drawing rights (SDR).

In a statement released late Wednesday, the BSP said the level of dollar reserves as of end-2025 is enough to cover about four times the country’s short-term external debt based on residual maturity.

It also equates to 7.4 months’ worth of imports of goods and payments of services and primary income, well above the three-month standard.

“The latest GIR level ensures availability of foreign exchange to meet balance of payment financing needs, such as for payment of imports and debt service, in extreme conditions when there are no export earnings or foreign loans,” the central bank said.

Record-high gold

BSP data showed that the country’s gold holdings rose by 3.06% to its highest yet at USD 18.578 billion as of end December. This exceeded the previous record of USD 18.026 billion at end-November. Year on year, it surged by 68.8% from USD 11.006 billion.

However, the central bank’s foreign investments stood at USD 87.009 billion by end-2025, slipping by 1.1% from USD 87.975 billion as of end-November and by 2.76% from USD 89.476 billion at end-2024.

This decline dragged the foreign reserves lower during the period, though tempered by record-high gold holdings, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said.

“The monthly decrease in the GIR (was) again largely due to the latest month-on-month decline in foreign investments… but positively offset by the continued month-on-month increase in gold holdings… to a new record high of USD 18.577 billion,” he said in a commentary.

Mr. Ricafort noted that gold prices in the global market climbed by 1.9% month on month in December, even hitting a fresh high of USD 4,549.92 per ounce on Dec. 26.

Meanwhile, the BSP’s foreign exchange holdings climbed by 6.51% to USD 647.2 million from USD 612.8 million at end-November. However, it plunged by 52.64% from USD 1.367 billion last year.

The Philippines’ reserve position in the IMF dipped by 0.14% month on month to USD 727.3 million at end-December from USD 728.3 million. Year on year, it grew by 7.65% from USD 675.6 million.

SDRs — the amount the Philippines can tap from the IMF’s reserve currency basket — were unchanged month on month at USD 3.912 billion but increased by 4.02% from USD 3.761 billion at end-2024.

“The dip in GIR this month is mainly due to debt payments and BSP’s moves to stabilize the peso, plus lower gold valuations,” Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said in a Viber message.

BSP Governor Eli M. Remolona, Jr. has said that they have been carrying out minimal interventions in the foreign exchange market amid the peso’s recent volatility.

For this year, Mr. Ravelas said debt servicing may continue to add pressure on the country’s GIR level, although inflows from remittances, tourism and the business process outsourcing (BPO) sectors may provide some buffer.

“Moving forward, expect a slight softening as debt servicing continues, but steady inflows from OFWs (overseas Filipino workers), BPOs, and tourism will keep our external position resilient.”

For this year, the central bank expects GIR to end at USD 110 billion, up from its previous forecast of USD 106 billion. — Katherine K. Chan, Reporter