Less than two months after the Philippine Senate passed the PHP 100 Daily Minimum Wage Increase Act, a bill that sets an across-the-board increase of PHP 100 in the minimum wage across the regions, the Regional Tripartite Wages and Productivity (RTWP) Board in the National Capital Region (NCR) approved a PHP 35 minimum wage hike in NCR.

This will bring the minimum wage in the non-agriculture sector to PHP 645 from PHP 610, effective on July 17. And as for agriculture, service/retail establishments employing 15 workers or less, and manufacturing establishments regularly employing less than 10 workers, the minimum wage will increase from PHP 573 to PHP 608.

The last wage hike in NCR was implemented a year ago, with a PHP 40 increase.

Not enough

Previously, we talked about the implications of a minimum wage hike. Now this latest development may seem like a boon for workers. However, it is substantially less than what was proposed in Congress.

Leaders in the Senate, including President Francis “Chiz” Escudero, former Senate President Miguel “Migz” Zubiri, and Committee on Labor Chairperson Joel Villanueva, said the PHP 35 increase is insufficient to meet the daily needs of poor Filipino families given the increasing prices of basic necessities, in particular the Filipino family’s staple, rice.

Labor representatives likewise expressed dismay on the low wage increase, interpreting it as an insult to Filipino workers. Gabriela Women’s Party Representative Arlene Brosas pointed out that it’s barely higher than the raise workers received over three decades ago in 1989, that it’s even smaller than the PHP 40 increase granted last year.

She questioned how the government expects workers in the National Capital Region to survive on the new daily wage of PHP 645, given that the estimated cost for a family to meet basic needs is nearly double that amount at PHP 1,200 pesos per day.

So what’s the basis for this wage increase? The RTWP said it used the average price levels and the poverty threshold. Then again, have the recent PHP 35 wage hike and the previous hikes actually compensated for the continuous acceleration of prices?

The chart below shows the nominal wages and the real wages which consider the headline Consumer Price Index (2018-100) in the non-agricultural sector in NCR.

With the PHP 35 increase in minimum wage for NCR, the real minimum wage is estimated to be around PHP 508.7 (constant 2018 prices). Although the nominal increase of PHP 35 is lower than the PHP 40 increase last year, the increase in real terms is higher because the inflation level was higher then.

The projection for the real minimum wage in Q3 2024 is based on a 2024 full-year inflation forecast of 3.3% to 3.6%.

On the other hand, the chart below shows the nominal wages and the real wages which consider the headline Consumer Price Index (2018-100) in the agricultural sector in NCR. With the PHP 35 increase in minimum wage for NCR, the real minimum wage is estimated to be around PHP 479.5 (constant 2018 prices).

This is based on a 2024 full-year inflation forecast of 3.3% to 3.6%.

The computed real wages, although higher than pandemic levels (Q2 2020 – Q1 2024), are still lower than the 5-year historical average (Q2 2015 – Q1 2020).

The PHP 35 minimum wage is not enough to bring back the purchasing power of poor Filipino families to the pre-pandemic level, especially since food items, including rice, are the major contributors to inflation.

There is more work to be done to address the financial struggles of Filipinos. For countless Filipinos, this isn’t merely about survival. It’s about forging a path to genuine prosperity in an increasingly challenging economic landscape.

MARIAN MONETTE FLORENDO is a Research and Business Analytics Officer of the Financial Markets Sector at Metrobank. She provides macroeconomic research for the bank. Her academic background is in Mathematics and Economics. She loves solving puzzles and watching mystery movies.