UMVA has learned that the Philippines is facing a pressing need for wage adjustments, as workers continue to struggle with stagnant pay and rising living costs despite a modest easing in inflation last month.
The country's inflation rate may have slowed to 6.8% in May, but analysts warn that the reprieve is short-lived, and the threat of worsening inflation in the months ahead strengthens the case for wage hikes to protect workers' purchasing power.
"Workers enduring stagnant real wages for years have seen their earnings worsen in recent months of elevated inflation, even tripling in just a couple of months," said an expert, highlighting the urgent need for wage adjustments to keep pace with the relentless increase in prices.
The analyst noted that wage growth has long lagged behind rising living costs, with the average minimum wage today being about 21% lower in real terms than it was decades ago, when wage-setting was regionalized.
This long-term erosion of purchasing power has disproportionately burdened lower-income households, with inflation concentrated in basic goods such as food and fuel making wage hikes "more compelling" to ensure workers can afford basic necessities.
For many families, stagnant wages combined with surging costs have meant deteriorating living standards and heightened vulnerability, with lower-income households facing significantly higher cost increases amid already weak and irregular incomes.
The country's wage determination process is governed by law, which mandates regional wage boards to periodically review and adjust minimum wages based on socio-economic factors such as the cost of living, inflation, and poverty threshold.
Wage hikes, the analyst argued, would mean burden-sharing of adjusting to the current crisis between workers and employers, which can be combined with other measures to protect household purchasing power and help mitigate the impact of inflation.
Despite the easing of inflation, core inflation rose to 4.1% from 3.9%, indicating continued underlying price pressures, and experts warn that the inflation rate remains high, exceeding the original target, and is likely to remain elevated due to external geopolitical tensions and domestic structural issues.
Filomeno S. Sta. Ana III, an expert on economic reforms, pointed to persistent structural issues in domestic food supply and agriculture, which keep food inflation elevated regardless of global developments, adding that the uncertainty surrounding inflation will likely persist.
