Manila: A manufacturing sector executive on Wednesday expressed optimism for the continued expansion of the country's manufacturing sector amid challenges due to external developments and their impact on the domestic economy and the wage hike.
According to Philippines News Agency, Federation of Philippine Industries (FPI) chairperson Elizabeth Lee underscored the expansion of the S and P Global Philippines Manufacturing Purchasing Managers' Index (PMI) for the second month in a row in June to the 50.9 level from the previous month's 50.8 level. "We have two months of expansion and we are looking forward to a stronger positive trend given that the production volume also was relatively resilient with a positive 12 percent growth in April," Lee stated.
Lee highlighted that "new orders and output grew, export order declines eased, and input cost inflation moderated," yet acknowledged that "still, business confidence is at a relatively low level given global uncertainties affecting supply chain disruptions and rise in input costs." She added, "Businesses are weighing the cumulative toll of recent cost pressures."
On Tuesday, the Department of Labor and Employment (DOLE) announced the approval by the National Capital Region (NCR) Regional Tripartite Wages and Productivity Board (RTWPB) of the PHP85 increase in daily minimum wage to PHP780. The wage hike will be implemented in two tranches - PHP60 effective July 19 and the additional PHP25 effective January 20, 2027.
Lee noted, "We recognize the legitimate basis for the wage adjustment: the cost of living for workers has genuinely risen, and the wage board acted within its mandate. At the same time, this increase compounds with other pressures already weighing on manufacturers this year - elevated energy and logistics costs, tighter financing amid continued BSP (Bangko Sentral ng Pilipinas) monetary policy, and global trade uncertainty. We must keep that in mind."
While the wage hike will benefit the workers, Lee expressed concerns about its impact on the productivity and sustainability of micro, small, and medium enterprises (MSMEs). She emphasized that policy must consider the cumulative costs businesses face as each adjustment cannot be viewed in isolation.
"We welcome the staggered implementation as a reasonable way to ease the transition, and we urge continued dialogue grounded in data, mindful of regional differences, and attentive to employment impact," Lee said. She concluded, "June's PMI uptick shows Philippine manufacturing can still grow under pressure. However, sustaining that growth means supporting workers while preserving businesses' ability to invest, employ, and compete. We cannot treat one factor in isolation."
