CARTOON BY: AARON PAUL C. CARIL
EDITORIAL
Wages, small businesses and the future of work
The wage debate in the Philippines should not be reduced to the usual shouting match between labor and business. At its heart, this is a question of balance: how do we protect workers from the rising cost of living without pushing small businesses to the wall? That question is now very real in Central Visayas, where the Regional Tripartite Wages and Productivity Board VII has been holding consultations on a possible wage increase, including the July 15 public consultation at the Tagbilaran City Hall Atrium in Bohol. The timing matters. The current wage order took effect only on Oct. 4, 2025, yet workers are again asking for relief because prices have continued to bite. Any decision must therefore be grounded not in slogans, but in hard facts: inflation, household expenses, business capacity, productivity, and the changing nature of work itself.
Workers have every reason to press their case. A daily wage of around P540 in Class A areas and P500 in Class B areas in Central Visayas does not stretch very far once food, fare, rent, electricity, school needs, medicine, and other basic expenses are paid. Labor groups are right to say that wages lose meaning when prices rise faster than pay. In Cebu, unions raised the erosion of purchasing power; in Bohol, labor representatives also pushed for higher rates for both Class B and Class A workers. This is not just a sentimental appeal. When wages are too low, families skip meals, postpone medical care, borrow money, and cut back on education. And because low-income workers spend most of what they earn in their own communities, better pay can also keep money moving through sari-sari stores, eateries, tricycle routes, markets, and other small local businesses.
But employers are not simply crying wolf either. Many micro, small, and medium enterprises survive on very thin margins, especially in provinces where foot traffic is smaller, sales are seasonal, credit is expensive, and the cost of supplies keeps moving. A wage increase that is too steep and too sudden can force an owner to cut hours, delay hiring, raise prices, or, in the worst cases, shut down. This matters because MSMEs make up the vast majority of business establishments in the country and employ a large share of Filipino workers. The World Bank’s 2025 Philippines Growth and Jobs Report also points to a deeper problem: since 2010, more than 90 percent of growth has come from capital accumulation, while total factor productivity contributed less than 10 percent, and three out of four new jobs were created in non-tradable sectors where productivity gains are harder to achieve. In plain terms, we cannot keep raising wages sustainably if output per worker is not also rising.
This is why the answer cannot be wage suppression on one side or wage populism on the other. The wage board should grant increases that are fair, evidence-based, and, where needed, phased in a way that gives smaller firms time to adjust. Bohol’s consultation is important precisely because Tagbilaran’s economy, tourism-linked enterprises, rural suppliers, and neighborhood businesses are not the same as Metro Cebu’s larger commercial base. A single number may be convenient, but it may not capture local realities. Still, business difficulty should not become a permanent excuse for poverty wages. If a firm can only survive by paying workers too little to live decently, then the challenge is not to freeze wages forever, but to help that firm upgrade. Government can do this through targeted tax relief, easier access to working capital, energy-cost support, shared service facilities, and technical help that allows MSMEs to become more productive.
Productivity is also the best protection against the next wave of job displacement. The threat is already here. The International Labour Organization reported in 2026 that more than one-fourth of Philippine employment, or about 12.7 million jobs, is exposed to generative artificial intelligence—the highest exposure rate among ASEAN countries with comparable data—though only 3.6 percent of Philippine jobs fall under the highest GenAI exposure category with greater displacement risk. A 2025 IMF working paper also found that about one-third of Philippine workers are highly exposed to AI, with business-process outsourcing facing the highest share of jobs at risk. Globally, the World Economic Forum estimates that labor-market transformation by 2030 could create 170 million jobs but displace 92 million. These numbers should not paralyze us, but they should wake us up. Wage increases must go hand in hand with training, digital adoption, gainsharing, and sector-based productivity programs so technology helps workers do better jobs instead of simply replacing them.
The way forward is a practical social compact. Workers should receive timely wage protection when inflation eats into their pay. MSMEs should receive transition support, but only if they comply with labor standards and commit to productivity improvements. Government should enforce wage laws, publish the evidence behind wage decisions, and monitor what happens after a wage order takes effect: jobs created or lost, prices, business closures, and movement into informal work. In Bohol and the rest of Central Visayas, this kind of honest accounting matters. Employees are right to demand dignity now. Employers are right to fear mandates that outrun capacity. But both sides lose if the result is stagnant pay, closed shops, or workers displaced before they are ready for new jobs. The Philippines should raise wages responsibly, help firms become stronger, and prepare workers for the future. That is not the easiest compromise, but it is the fairest one.