Employers push tax cuts, not wage hikes, on Labor Day
The country’s largest employers’ group is pushing back against calls for wage increases on Labor Day, warning that most companies are already strained by rising costs and cannot absorb higher labor expenses.
“We understand the needs of the people, but the government should be the one to shoulder that. Companies can no longer absorb it, Employers Confederation of the Philippines (Ecop) president Sergio Ortiz-Luis Jr. told the Inquirer.
“If this is forced, it could lead to more job losses; instead of helping employment, it could end up hurting it,” he added.
This year’s Labor Day commemoration is seeing renewed calls for a legislated P200 wage hike, as Filipinos reel from the impact of the Middle East crisis that pushed inflation to a near two-year high of 4.1 percent in March.
Ortiz-Luis, who also heads the Philippine Exporters Confederation Inc. (Philexport), said most enterprises were already squeezed by the successive fuel price hikes and could not afford wage increases.
“Ninety percent of our enterprises are micro. There is no way they can handle it. Many are already operating on very thin margins,’’ he said.
Instead of wage hikes, Ortiz-Luis said, the government should focus on easing cost pressures, particularly by reducing excise and value-added tax (VAT) on fuel.
“Why not grant exemptions from excise tax and VAT on fuel? As prices rise, government collections from VAT and excise taxes also increase,” he said.
Cutting fuel taxes would have a more immediate and broader impact by lowering the cost of goods and services, he added.
Earlier this month, Ortiz-Luis pushed for targeted, time-bound relief measures—such as the suspension of VAT on fuel—which he considered critical to safeguarding economic momentum, supporting exporters and protecting consumers from further price shocks.
“Reducing the tax burden on fuel will have a cascading positive effect, lowering operational expenses and ultimately stabilizing prices of goods and services,” he said in a statement issued by Philexport on April 16.
He also called for greater transparency in oil pricing and urged the government to exercise its powers under existing laws to intervene during extraordinary circumstances.
