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Money sent home by overseas Filipino workers (OFWs) jumped by an annual 4% in April, the fastest pace in 28 months, data from the Bangko Sentral ng Pilipinas (BSP) showed.

Cash remittances from migrant Filipinos coursed through banks rose by 4% to USD 2.66 billion in April from USD 2.56 billion in the same month a year ago.

The 4% annual growth in April was the fastest since the 5.8% seen in December 2022.

MONEY SENT HOME by overseas Filipino workers (OFWs) jumped by an annual 4% in April, the fastest pace in 28 months, data from the Bangko Sentral ng Pilipinas (BSP) showed.

Cash remittances from migrant Filipinos coursed through banks rose by 4% to $2.66 billion in April from $2.56 billion in the same month a year ago.

The 4% annual growth in April was the fastest since the 5.8% seen in December 2022.

However, the amount of cash remittances in April was the lowest in nearly a year or since May 2024 when remittances stood at USD 2.58 billion.

Month on month, remittances declined by 5.1% from USD 2.81 billion in March.

In April, cash remittances from land-based workers rose by 4% to USD 2.08 billion from USD 2 billion in the same month last year.

Sea-based migrant workers sent home USD 580 million, 3.8% up from the USD 560 million a year ago.

Reinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc. said the cash remittances posted a “strong” growth mostly due to “seasonal factors, as this month usually posts one of the fastest during the summer months.”

“The year-on-year increase shows underlying strength in remittance flows, driven by stable overseas employment, particularly in the US, Middle East, and parts of Asia,” John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies said in a Viber message.

Personal remittances, which include inflows in kind, rose by 4.1% to USD 2.97 billion in April from USD 2.86 billion a year ago.

Personal remittances from workers with contracts of a year or more increased by 3.9% to USD 2.25 billion, while those with contracts of less than a year jumped by 4.1% to USD 650 million.

Four months

In the first four months of 2025, cash remittances went up by 3% to USD 11.11 billion annually from USD 10.78 billion a year ago.

Cash remittances sent by land-based workers jumped by 3.4% to USD 8.82 billion as of end-April, while sea-based workers’ remittances went up 1.7% to USD 2.29 billion.

“Higher growth of remittances from the United States, Saudi Arabia, Singapore, and the United Arab Emirates (UAE) drove the overall increase in remittances during January-April 2025,” the BSP said.

The US remained the top source of remittances in April, accounting for 40.4% of the total.

This was followed by Singapore (7.3%), Saudi Arabia (6.3%), Japan (5%), the United Kingdom (4.5%), the UAE (4.5%), Canada (3.2%), Qatar (2.9%), Taiwan (2.7%) and Hong Kong (2.7%).

Personal remittances increased by 3% to USD 12.37 billion during the January-to-April period, from USD 12.01 billion in the same period last year.

“We may continue to see stronger remittance inflows from OFWs due to the relative strength of the peso. They may be prompted to send more to maintain the same peso value they used to send,” Mr. Erece said.

The peso closed at PHP 55.84 a dollar at the end of April, appreciating by PHP 1.37 from the PHP 57.21 finish at end-March.

Mr. Rivera said remittance growth is likely to remain steady on the back of demand for Filipino workers overseas, particularly in the healthcare, logistics, and domestic services.

“Global uncertainties such as inflation in host countries, geopolitical tensions, and policy shifts like taxes on remittances in major markets (e.g., the US) are downside risks to monitor,” Mr. Rivera said.

In the US, the One Big Beautiful Bill Act proposes a 3.5% tax on remittances sent abroad by foreign workers, including green card holders and temporary visa workers.

This is expected to have serious implications for countries that heavily rely on remittances, such as the Philippines, India, Mexico and China.

The BSP forecasts 2.8% growth in cash remittances to an estimated USD 35.5 billion this year.

Next year, cash remittances are projected to grow by 3% to USD 36.5 billion. — Aubrey Rose A. Inosante

The Department of Finance (DoF) will renew its push for the passage of a general tax amnesty (GTA) bill in the incoming 20^th Congress.

Finance Undersecretary Maria Luwalhati C. Dorotan-Tiuseco said the department is interested in pushing for a new general tax amnesty bill after it failed to secure Congress’ approval.

“[The bill] will address the issues on the veto,” Ms. Tiuseco said in a Viber message on June 13. 

In 2019, then-President Rodrigo R. Duterte vetoed the provisions on the general tax amnesty under the Republic Act (RA) No. 11213 but retained the provisions for estate tax amnesty.

The tax amnesty program looked to impose an amnesty charge equivalent to a portion of the taxpayers’ outstanding unpaid taxes in exchange for immunity from civil, criminal, and administrative penalties.

For his part, Bureau of Internal Revenue (BIR) Commissioner Romeo D. Lumagui, Jr. said the discussions on a general tax amnesty are in the early stages.

“It’s not like it’s being seriously discussed to the point of saying it will happen this year. But it’s being talked about — whether it will happen or not — it’s still kind of in a very, very early stage of discussion,” he said.

In his veto message at that time, Mr. Duterte urged Congress to pass another bill on the general tax amnesty that includes the “lifting of bank secrecy for fraud cases, the inclusion of automatic exchange of information, and safeguard to ensure that asset or net worth declarations are truthful.”

“[Mr. Duterte] noted that without the lifting of the Bank Secrecy Law, the GTA may be abused by taxpayers declaring untruthful asset or net worth without the BIR being able to double check the taxpayers’ representations,” Eleanor L. Roque, a tax principal at P&A Grant Thornton, said in an e-mail to BusinessWorld.

The Bank Secrecy Law or the Republic Act No. 1405 protects the confidentiality of bank deposits in the Philippines. This prevents disclosure or inquiry of deposits in banking institutions.

Ms. Roque said a general tax amnesty could generate much-needed revenue for the government.

“Generally, a GTA is crucial when major tax laws are introduced to give the taxpayers a clean slate. That was the reason why RA 11213 was intended to be a companion law to the Tax Reform for Acceleration and Inclusion (TRAIN) law,” she said.

Republic Act No. 10963 or TRAIN, which took effect in 2018, cut personal income tax while increasing the rates on some goods and services.

“Considering the BIR’s intensified efforts in tax audits, some taxpayers may wish to avail the GTA to close ongoing assessments. However, the take-up of the GTA may depend on whether the amnesty amount is reasonable compared to the taxpayers’ deficiency tax exposure and cost of litigation,” Ms. Roque said.

The tax expert also said that the DoF should ensure the ease of availing the general tax amnesty in terms of documentary requirements and reasonable amount.

“It should also provide for a definite time period for the BIR to issue the confirmation of entitlement for the benefits of availing the tax amnesty,” she said. – Aubrey Rose A. Inosante, Reporter

THE BANGKO SENTRAL ng Pilipinas (BSP) is expected to cut rates by 25 basis points (bps) this week amid easing price pressures and slowing economic growth.

A BusinessWorld poll conducted last week showed that 15 out of 16 analysts expect the Monetary Board to reduce the target reverse repurchase rate by 25 bps at its policy meeting on June 19.

If realized, this would bring the benchmark rate to 5.25% from the current 5.5%.

Only one analyst, Ateneo Center for Economic Research and Development Director Ser Percival K. Peña-Reyes, expects the BSP to keep rates unchanged.

Analysts said the inflation downtrend and weaker-than-expected growth in the first quarter gives the central bank room to continue its easing cycle.

“A lower-than-expected Philippine inflation trajectory, a stronger local currency, high real rates, and uncertainty over global growth reinforce our view that monetary policy easing is far from over,” ING Bank said.

HSBC economist for ASEAN Aris D. Dacanay said he previously forecasted a pause in June “to be mindful of the Fed’s preference of taking its time,” but now expects a 25-bp rate cut on Thursday.

“Due to low inflation over the past two months and slow growth in 1Q 2025, we now expect the BSP to cut its policy rate by 25 bps to 5.25% (on June 19),” he said.

Inflation cooled to an over five-year low of 1.3% in May, as utility costs rose at a slower pace. This brought the five-month average to 1.9%, slightly below the BSP’s 2-4% target band.

“Easing inflation offers relief to consumers and businesses that grappled with elevated prices from 2022 until the first half of last year,” Moody’s Analytics economist Sarah Tan said.

ANZ Research said the outlook for inflation “remains benign amid softer global commodity prices.”

“Given how retail rice prices haven’t plunged as low as global rice prices did, there is still room for food and overall inflation to remain subdued throughout the rest of 2025,” Mr. Dacanay said.

In May, rice inflation continued its downtrend, falling to 12.8% from the 10.9% decline in April.

Metropolitan Bank & Trust Co. Chief Economist Nicholas Antonio T. Mapa said he expects inflation to be “target consistent” for this year, 2025 and 2026.

The central bank slashed its risk-adjusted inflation forecasts to 2.3% in 2025 from 3.5% previously; and 3.3% in 2026 from 3.7% previously. It also now expects inflation to average 3.2% in 2027.

Below-target growth

Angelo B. Taningco, chief economist of Security Bank, said below-target gross domestic product (GDP) growth in the first quarter, as well as the strong peso, are some of the factors the BSP will take into consideration for this week’s decision.

Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco said he expects a rate cut this week “with GDP growth still struggling to engineer a material pickup.”

The Philippine economy expanded by an annual 5.4% in the first quarter, slightly faster than the 5.3% growth in the fourth quarter of 2024 but slower than the 5.9% pace in the same quarter last year.

This was also below the government’s 6-8% growth target band for the year.

“We think this slowdown adds pressure on the BSP to hasten its easing cycle. This is because a policy rate cut can help shore up the country’s services exports (or exports in general) by improving the peso’s competitiveness vis-à-vis other currencies,” Mr. Dacanay said.

Reinielle Matt M. Erece, Oikonomia Advisory & Research, Inc. economist, said the peso’s recent strength gives the BSP some headroom to cut rates ahead of the US Federal Reserve.

The local unit closed at PHP 56.21 per dollar on Friday, falling by 32.5 centavos from its PHP 55.885 finish on Wednesday, Bankers Association of the Philippines data showed.

This was the peso’s weakest finish in more than a month or since its PHP 56.42 close on April 28. It was also the first time the local currency breached the PHP 56-per-dollar level since ending at PHP 56.145 on April 29.

Year to date, the peso has gained by PHP 1.635 from its PHP 57.845 close on Dec. 27, 2024.

Ms. Tan said the recent stabilization of the peso will “provide an additional nudge to the decision-making process.”

“Continued monetary easing would play a vital role in supporting the domestic economy amid a complex external environment. While negotiations with the US to lower reciprocal tariffs are ongoing, the outcome remains uncertain,” she said.

Maybank Investment Banking Group Economics Research said further rate cuts will also help shield the country’s economy against global growth uncertainties and tariff-related risks.

Outlook

Analysts expect the BSP to lower borrowing costs further this year as inflation remains under control. 

“Given the manageable inflation outlook, we think the BSP will lower the policy rate by another 50 bps by (third quarter) 2025 bringing the terminal rate to 5%,” ANZ Research said.

Oikonomia’s Mr. Erece said the BSP could cut rates by 50-75 bps more this year in 25-bp increments to avoid extreme foreign exchange fluctuations.

“A rate cut, more than its impact on borrowing costs, is also a signal to the markets that the central bank is confident that inflation is well under control,” he said.

Bank of the Philippine Islands Lead Economist Emilio S. Neri, Jr. said the BSP could hold borrowing costs steady at its Aug. 28 meeting.

“To avoid the need for an abrupt policy reversal, BSP will likely keep the policy rate above 5% before the end of this year and well above 4% through 2026. Risks include a spike in global oil prices, global tariff policy uncertainty, US stagflation, local wage hikes and other potential risks to a rise in local inflation expectations,” he said.

BSP Governor Eli M. Remolona, Jr. previously said the Monetary Board could cut rates twice in increments of 25 bps for the remainder of the year. — A.M.C. Sy

The Philippines’ current account deficit (CAD) ballooned to USD 4.25 billion in the first quarter amid a larger trade gap, the central bank said.

Data from the Bangko Sentral ng Pilipinas (BSP) showed that the current account deficit surged by 105% to USD 4.25 billion in the first quarter from USD 2.07 billion in the same period a year ago.

This brought the CAD as a share of gross domestic product (GDP) to 3.7% in the January-to-March period, larger than the 1.9% in the same quarter in 2024.

“This development reflected the widening merchandise trade gap, as import spending grew faster than export earnings,” the BSP said in a statement dated June 13.

“The increase in the current account deficit also resulted from the contraction of net revenues from trade in services due to lower transport services receipts and increased outbound travel spending,” the central bank said.

However, this was partly tempered by higher remittances from overseas Filipino workers.

Cash remittances rose by 2.7% to USD 8.44 billion in the January-to-March period, while personal remittances went up by 2.7% to USD 9.4 billion in the first quarter.

The central bank expects the current account deficit — which covers transactions involving goods, services, and income — to reach USD 19.8 billion or -3.9% of economic output in 2025.

Trade in services

Data from the BSP showed net receipts from trade in services stood at USD 3.3 billion in the first quarter, down 9.3% from USD 3.7 billion in the same period last year.

This came as service exports slipped by 1.5% annually to USD 12.56 billion in the first quarter, while imports rose by 1.7% to USD 8.92 billion.

“The decline in receipts was mainly due to lower earnings from transport services (from USD 1.1 billion to USD 755 million), and technical, trade-related, and other business services (from USD 5.5 billion to USD 5.4 billion),” the BSP said.

Earnings from insurance and pension services dropped by 9.8% to USD 16 million, while those from construction fell by 25.7% to USD 14 million.

On the other hand, receipts from exports of telecommunications, computer and information services rose by 8.8% to USD 1.92 billion, manufacturing services on physical inputs owned by others went up by 0.6% to USD 980 million, and travel up by 0.2% to USD 2.89 million.

Earnings from exports of financial services went up by 72.6% to USD 128 million, personal, cultural, recreational services by 5.3% to USD 63 million, and charges for the use of intellectual property surged by 1,469.5% to USD 8 million.

Exports of technical, trade-related, and other business services as well as computer services include earnings from business process outsourcing (BPO)-related transactions.

The BSP estimated that BPO export revenues, including computer and other business services reached USD 7.2 billion in the first quarter, up 1.3% from USD 7.1 billion in the same period last year.

The services industry is a key growth driver of the Philippine economy.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the wider current account deficit “largely reflects the wider trade deficit/net imports” amid the uncertainty surrounding the US tariff policy.

Mr. Ricafort noted the Trump administration’s higher tariffs and trade wars could “slow down global trade, investments, employment, and overall world GDP growth.”

The US slapped the Philippines with a 17% reciprocal tariff, but this has been on hold until July. A 10% baseline tariff remains in effect.

“The widening of current account deficit was mainly driven by the persistent trade deficit, as merchandise imports continued to outpace exports despite modest growth in outbound shipments,” Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said in a Viber message.

The country’s trade-in-goods deficit grew by 14.7% year on year to USD 16.8 billion in the first quarter from USD 14.7 billion, as the growth of imports outpaced exports.

However, analysts warned on the escalating attacks between Israel and Iran that could bring more uncertainty, particularly in global crude oil prices.

“Israel-Iran is a source of uncertainty in terms of volatility in global crude oil prices near 4-month highs, as the Philippines imports almost all of its oil,” Mr. Ricafort said.

In the coming months, Mr. Rivera said current account deficit will likely balloon in the short term, if oil prices remain high or if the peso weakens further and makes imports more expensive.

He noted steady growth in services receipts, remittances, and BPO revenues may help cushion the pressure.

“The trajectory will depend on external demand, import growth, and how global trade conditions including the evolving US-China dynamics play out. A wider deficit, if not offset by stable financing inflows like FDIs (foreign direct investments) or portfolio investments, could add strain on the PHP and forex (foreign exchange) reserves,” Mr. Rivera said.

Meanwhile, primary income rose to USD 1.5 billion in the first quarter, up 14.6% from USD 1.3 billion in the same period last year.

Capital account

Meanwhile, the capital account posted a USD 23-million surplus in the first quarter, wider than the USD 17 million in the same period last year.

“The surplus was driven by gross disposals of non-produced nonfinancial assets amounting to USD 4 million, compared with USD 1-million gross acquisitions in Q1 2024,” the BSP said.

The financial account net inflows amounted to USD 6.7 billion in the first quarter, up 43.2% from the USD 4.6-billion net inflows in the same period a year earlier.

“This stemmed mainly from the notable increase in net inflows in the direct and other investment accounts, alongside sustained inflows in the portfolio investment account,” the central bank said.

In the January-to-March period, net inflows of direct investments surged by 179.5% to USD 1.8 billion.

For portfolio investments, net inflows inched up by 0.4% to USD 978 million in the first quarter.

Meanwhile, net inflows of other investments expanded by 31.1% to USD 3.9 billion in the first quarter.

On the other hand, the Philippines’ gross international reserves (GIR) reached USD 106.7 billion as of end-March 2025, higher than the USD 104.1-billion level in the same period a year ago.

“At this level, the reserves adequately covered 7.2 months’ worth of imports of goods and payments of services and primary income. It was also equivalent to 3.3 times the country’s short-term external debt based on residual maturity,” the central bank said.

The central bank noted that the GIR are foreign assets that are mostly in foreign-issued securities, gold, and foreign exchange. — ARAI

 

The World Bank has kept its economic growth forecasts for the Philippines despite heightened uncertainty arising from the Trump administration’s tariff policies.

In its bi-annual Global Economic Prospects report, the multilateral lender said the Philippine gross domestic product (GDP) is expected to expand by 5.3% this year, 5.4% in 2026 and 5.5% in 2027.

The World Bank’s forecasts were below the government’s 6-8% GDP target range for this year up to 2028.

These were unchanged from the bank’s East Asia and Pacific report released in April.

However, it was lower than the forecasts in the January edition of the Global Economic Prospects report released before Donald J. Trump assumed the US presidency on Jan. 20.

The latest 2025 forecast was 0.8 percentage point (ppt) lower than the 6.1% projection in January, while the 2026 forecast was 0.6% lower than the 5.9% projection in January.

The Philippines’ GDP growth for this year is still one of the fastest among the East Asia and Pacific country forecasts, after Palau’s 8.6%, Mongolia’s 6.3% and Vietnam’s 5.8%, but the same as Samoa’s 5.3%.

For 2026, the Philippines will be the second-fastest in the region after Vietnam’s 6.1%. In 2027, the Philippines is again expected to be the second-fastest growing economy after Vietnam’s 6.4%.

“Growth in East Asia and Pacific (EAP) is projected to slow from 5% in 2024 to 4.5% in 2025, slightly lower than previously expected owing to increases in trade barriers and related policy uncertainty,” the World Bank said.

In April, Mr. Trump announced a 10% tariff on all trading partners as well as higher reciprocal tariffs on others including the Philippines which is facing a 17% rate.

The reciprocal tariffs have been paused for 90 days until July as countries negotiate lower rates with the US.

The World Bank projects EAP growth at 4% for both 2026 and 2027, a tad below the previous forecasts.

“The downgrade reflects the impact of higher tariffs on growth, which is expected to be partly offset by policy support measures in EAP economies, notably China. In many regional economies, the deterioration in the outlook will weigh on the pace of job creation and per capita income catch-up with advanced economies,” it said.

The World Bank said downside risks to the baseline projections have intensified since January.

“Additional shifts in trade policy would likely have large impacts on economies across the region, owing to their high trade openness and links to global production networks. Other downside risks include tighter global financial conditions, substantially weaker growth in major economies, increased geopolitical stress, and natural disasters,” it said.

A partial resolution of trade tensions and a reduction in trade policy uncertainty would likely boost growth in the region above the baseline, the World Bank added.

TRADE COLLAPSE
At the same time, the World Bank on Tuesday slashed its global growth forecast for 2025 by four-tenths of a percentage point to 2.3%, saying that higher tariffs and heightened uncertainty posed a “significant headwind” for nearly all economies.

The global lender lowered its forecasts for nearly 70% of all economies — including the US, China and Europe, as well as six emerging market regions — from the levels it projected six months ago before Mr. Trump took office.

Mr. Trump has upended global trade with a series of on-again, off-again tariff hikes that have increased the effective US tariff rate from below 3% to the mid-teens — its highest level in almost a century — and triggered retaliation by China and other countries.

The World Bank is the latest body to cut its growth forecast as a result of Mr. Trump’s erratic trade policies, although US officials insist the negative consequences will be offset by a surge in investment and still-to-be approved tax cuts.

It stopped short of forecasting a recession but said global economic growth this year would be the weakest outside of a recession since 2008. By 2027, global gross domestic product growth was expected to average just 2.5%, the slowest pace of any decade since the 1960s.

The report forecast that global trade would grow by 1.8% in 2025, down from 3.4% in 2024 and roughly a third of its 5.9% level in the 2000s. 

The forecast is based on tariffs in effect as of late May, including a 10% US tariff on imports from most countries. It excludes increases that were announced by Mr. Trump in April and then postponed until July 9 to allow for negotiations. 

The World Bank said global inflation was expected to reach 2.9% in 2025, remaining above pre-COVID-19 levels, given tariff increases and tight labor markets.

“Risks to the global outlook remain tilted decidedly to the downside,” it wrote. The lender said its models showed that a further increase of 10 percentage points in average US tariffs, on top of the 10% rate already implemented, and proportional retaliation by other countries, could shave another half of a percentage point off the outlook for 2025.

Such an escalation in trade barriers would result “in global trade seizing up in the second half of this year… accompanied by a widespread collapse in confidence, surging uncertainty and turmoil in financial markets,” the report said.

Nonetheless, it said the risk of a global recession was less than 10%.

‘FOG ON A RUNWAY’
“Uncertainty remains a powerful drag, like fog on a runway. It slows investment and clouds the outlook,” World Bank Deputy Chief Economist Ayhan Kose told Reuters in an interview.

But Mr. Kose said there were signs of increased dialogue on trade that could help dispel uncertainty, and supply chains were adapting to a new global trade map, not collapsing. Global trade growth could modestly rebound in 2026 to 2.4%, and developments in artificial intelligence could also boost growth, he said.

“We think that eventually the uncertainty will decline,” Mr. Kose said. “Once the type of fog we have lifts, the trade engine may start running again, but at a slower pace.”

Mr. Kose said while things could get worse, trade was continuing and China, India and others were still delivering robust growth. Many countries were also discussing new trade partnerships that could pay dividends later, he said.

The World Bank said the global outlook had “deteriorated substantially” since January, mainly due to advanced economies, which are now seen growing by just 1.2%, down half a percentage point, after expanding by 1.7% in 2024. — Reuters with ARAI

Congress adjourned session on Wednesday without giving the final approval for the proposal to hike the minimum daily wage by PHP 100-PHP 200, after economic managers warned of its “dangerous repercussions” on the Philippine economy.

“We express our strong reservations on the proposed legislated wage hikes as these may undermine our recent gains and result in adverse economic and social impact,” economic managers said in a letter addressed to Senate President Francis G. Escudero and House Speaker Ferdinand Martin G. Romualdez.

The joint position paper was signed by Special Assistant to the President for Investment and Economic Affairs Frederick D. Go, Finance Secretary Ralph G. Recto, Economic Planning Secretary Arsenio M. Balisacan, Budget Secretary Amenah F. Pangandaman, Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr. and Trade Secretary Ma. Cristina A. Roque.

Estimates by the Department of Economy, Planning, and Development showed that a P100 or P200 increase in the daily regional minimum wage “could exert downward pressure on gross domestic product (GDP), increase inflation and result in job losses.”

“Estimates show that the across-the-board wage hike will exert substantial downward pressure on GDP by 1.6 ppts (percentage points) for a PHP 200 hike and 0.5 ppt for a hike of PHP 100. Both scenarios are predicted to result in the economy missing the lower end of the GDP growth target range,” the economic managers said.

Economic managers are targeting 6-8% GDP growth this year.

The wage hike could also stoke inflation, which has recently been on a downtrend.

“A PHP 200 increase in wages could raise inflation by approximately 2 ppts, while a PHP 100 hike may add 0.7 ppt. The substantial minimum wage increase may lead to higher production costs, which could result in higher prices that may disproportionately affect low-income households,” economic managers said.

“Additionally, when wage adjustments are not commensurate with improvements in productivity, they can exacerbate price pressures.”

Inflation cooled to an over five-year low of 1.3% in May, bringing the five-month average to 1.9%. This is below BSP’s 2-4% target band.

Economic managers also warned a P100 or P200 increase in the minimum wage could spur job cuts as companies seek to reduce operational costs.

“These could increase the unemployment rate by 0.2 ppt, equivalent to 105,000 unemployed persons if minimum wage increases by PHP 100, and as much as 0.6 ppt or 300,000 persons if minimum wage increases by PHP 200,” they said.

In April, the number of jobless Filipinos rose by 4.1% to 2.06 million from 1.93 million in March.

Micro, small, and medium enterprises, which account for 90% of businesses and heavily rely on minimum wage labor, may be unable to absorb the proposed daily wage hike, economic managers said. They estimated this would translate to an additional PHP 4,000 increase every month for those working five days a week.

Economic managers said that while higher wages can initially benefit workers, the long-term impact will be detrimental to the economy.

“Higher prices of goods and services reduce the purchasing power of households, dampening consumption spending and overall economic activity,” they said.

Economic managers recommended maintaining the current system of adjusting wages through the Regional Tripartite Wages and Productivity Boards.

“Rather than a one-size-fits all legislated wage hike, we support existing measures such as (i) strengthening the implementation of the minimum wage law to increase compliance; (ii) encouraging collective bargaining system and other voluntary mechanisms at the firm level to promote workers’ welfare, and (iii) strengthening the linkage between wages and productivity,” they said.

NO BICAM
Meanwhile, the House of Representatives and the Senate did not convene a bicameral conference committee to reconcile the conflicting provisions of the wage hike bills. The House approved a P200 daily increase for minimum wage earners in the private sector, while the Senate approved a PHP 100 hike.

Senator Joel B. Villanueva, chairman of the Labor Committee, said some congressmen had previously expressed willingness to adopt the Senate’s version of the legislated wage hike bill. “I don’t know what the intentions of our colleagues in the House are but the ones I spoke to yesterday were more than willing to adopt the Senate version,” Mr. Villanueva told reporters, noting that Congress no longer had time for further discussions.

Mr. Villanueva previously asked Rizal Rep. Juan Fidel Felipe F. Nograles, chairman of the House Labor Committee, to adopt the Senate’s version to expedite the bill’s ratification.

In response, Mr. Nograles called for a transparent and deliberative bicameral process, “rather than being bamboozled into accepting the Senate version wholesale, without discussion or compromise.”

Ser Percival K. Peña-Reyes, director of the Ateneo Center for Economic Research and Development, said the wage hike bills are “populist.”

“Wages per se aren’t really a problem. The current tripartite system already accurately reflects the different market conditions across regions. That legislation is job-killing,” he told BusinessWorld in a Viber Message.

Instead, Mr. Peña-Reyes suggested improving competitiveness to attract investments that create high-value jobs.

Jose Enrique “Sonny” A. Africa, executive director at think tank IBON Foundation, urged the economic managers to focus on creating “a fairer economy” where the rising wages reflect rising productivity.

“The government’s scaremongering about urgent wage hikes is an alarmingly anti-worker position built on biased analysis crafted to prioritize profit margins over workers’ livelihood and long-term development,” Mr. Africa said. — A.R.A.Inosante with inputs from A.H.Halili