The P85 Metro Manila minimum wage hike takes effect in two parts. An initial P60 increase starts on July 25, 2026, followed by the remaining P25 on January 20, 2027.
For non-agriculture employees, the daily minimum wage increases from P695 to P755, and finally to P780 in January.
For agriculture and retail/service employees, it increases from P658 to P718, and finally to P743 in January.
Who Spearheads and Approves this Wage Increase?
The Wage Order NCR-27 wage increase was issued by the Regional Tripartite Wages and Productivity Board – National Capital Region (RTWPB-NCR) and approved on July 9, 2026.
The RTWPB-NCR consists of representatives from three government agencies, employers, and employees. The government agencies involved are the Department of Labor and Employment (DOLE), the Department of Trade and Industry (DTI), and the National Economic and Development Authority (NEDA).
While the RTWPB-NCR issues the wage order, the final approval is made by the National Wages and Productivity Commission (NWPC), which is chaired by the Secretary of Labor and Employment.
Why Some Organization or Experts are Against It
One of the most basic concepts in economics is the law of supply and demand. This principle states that when demand for something is low while supply is high, prices tend to decrease because there is an abundance of that product.
It also works the other way around. When demand increases while supply remains limited, prices tend to rise because the product or service becomes more scarce.
Reason 1: Increased Salaries Leads to Bigger Demand
Increasing workers’ salaries gives them greater purchasing power. This means people can afford to buy more goods and services, increasing demand for certain products. If demand rises faster than supply, prices may also increase.
Inflation refers to the gradual increase in the prices of common goods and services over time. Everyday necessities such as rice, bread, meat, and gasoline generally become more expensive as the years go by. The rate at which prices increase is called the inflation rate.
The Foundation for Economic Freedom (FEF) argues that this wage increase is larger than the cumulative inflation rate since the previous wage increase.
Reason 2: MSMEs Might Close Because of Wages to Pay
The FEF also argues that the increase could force some micro, small, and medium enterprises (MSMEs) to close because the higher labor costs may be difficult for smaller businesses to sustain. This could lead to layoffs or even business closures.
Why I Think They Might Be Wrong
Reason 1: Inflation Rate is Not Caused by Wage Increase Alone
We did the math, and they are actually correct that the wage increase is higher than the cumulative inflation rate, excluding productivity growth.
| Wage Increase¹ | Inflation Rate² |
| 8.6% | ~5.85% |
¹from July 2025 wage increase to July 2026
²cumulative inflation estimate from PSA from July 2025 to July 2026 nationwide
Although inflation can be influenced by increased demand for products and services, many other factors also contribute to rising prices.
Inflation can also be driven by government corruption, wars that disrupt supply chains, environmental damage that reduces supply, taxes, and pricing decisions made by large corporations, oligopolies, or monopolistic businesses.
How much each of these factors contributes to inflation is difficult to measure and even harder to express as a single number.
Reason 2: Employees Become Customers Too
A wage increase does not simply increase an MSME’s payroll expenses. It also increases the purchasing power of millions of workers, many of whom spend their income at local businesses, including these very MSMEs.
Some of the businesses that benefit from this additional spending include sari-sari stores, barber shops, public transportation, local bakeries, and wet markets.
In many ways, this is a redistribution of cash throughout the economy. An additional P85 in someone’s daily salary does not automatically mean that all of it will be spent at large corporations or on products that suddenly become more expensive.
There are simply too many factors involved, including culture, personal preferences, brand loyalty, and the quality of a business’s products, services, and marketing.
Case Studies and Real Life Price Comparisons
It is easy to discuss inflation using percentages and indices, but let’s look at products and services that most Filipinos are familiar with.
| July 2025 | July 2026 | % Change | |
| Electricity (Meralco Residential) | P12.64 | P14.83 | +17.3% |
| Galunggong (Scad) | P216.01 | P237.69 | +10% |
| Tomato 1kg | P78.34 | P97.05 | +23.9% |
| Rice 1kg (Regular) | P41.57 | P49.30 | +18.6% |
| Diesel | P69.90 | P88.58 | +27% |
| Gasoline | P70 | P85.35 | +22% |
It is difficult to obtain historical prices for specific products because prices vary depending on the brand, seller, and product quality. In general, the Philippine Statistics Authority (PSA) and other government agencies do not maintain monthly records for every specific product.
Simulated Monthly Payroll Changes
Let’s compare a worker earning P695 per day with another earning P755 per day. Both work five days a week, or about 22 working days per month, live alone, and ride four jeepneys every workday.
| P695/day | P755/day | |
| Gross Income | P15,290 | P16,610 |
| Philhealth (2.5%) | – P382.25 | – P412.25 |
| SSS (bracket based) | – P775 | – P825 |
| Pag-ibig (2% cap P200) | – P200 | – P200 |
| Net Income | P13,932.75 | P15,169.75 |
Minimum wage earners are already required to pay mandatory government contributions such as PhilHealth, SSS, and Pag-IBIG, although they remain exempt from income tax.
Simulated Expenses
Below is a reasonable estimate for an employee living alone in Metro Manila. These estimates are based on actual market prices, personal observations, and firsthand experience living in Manila.
| Expenses | Cost in PHP |
| Jeepney Fare (P52 x 22) | P1,144 |
| Electricity (P14.83 x 50kwh) | P742 |
| Water | P400 |
| Rent | P4,000 |
| WiFi or Data | P500 |
| LPG (2 months) | P500 |
| Food (P200 x 30) | P6,000 |
| Total Expenses | P12,286 |
With these estimated expenses, the worker earning the old minimum wage would have about P1,647 remaining each month, while the worker earning the new minimum wage would have approximately P2,884 remaining. That is about 75% more disposable income.
At first glance, that seems like a significant improvement. However, this budget is already extremely conservative. It assumes a single person living alone. Expenses increase substantially for households with children, elderly parents, or other dependents. Some workers also need to buy milk for their children, send money to their parents, or purchase maintenance medication.
Even with these estimated savings, it would still be difficult for many workers to build an emergency fund or achieve long-term financial stability.
I highly doubt that these additional one thousand pesos for the new wage will not automatically flow to large corporations or cause MSMEs to shut down.
Final Thoughts and Disclaimers
This article is based on official government information, economic and marketing concepts, and my firsthand exposure to poverty.
Looking only at percentages and economic indicators is different from actually experiencing the effects of rising prices every day. It is difficult to rely solely on averages and indices when you personally feel the impact of inflation on your daily expenses.
I support this wage increase and believe it is appropriate under the current circumstances. Not because wage inequality between provinces or differences across Southeast Asian countries have been solved, but because this increase better reflects the rising cost of living and inflation in the Philippines.
These agencies did not simply choose the amount at random. The figures were based on analyses of inflation, productivity, business sustainability, and the realities faced by both workers and employers.
All sources used in this article are listed below. If you have any clarifications or corrections, feel free to leave a comment.
References
NWPC, Wage Order No. NCR-27 (July 9, 2026) — nwpc.dole.gov.ph
PSA, Consumer Price Index Report, July 2026 — psa.gov.ph
PSA, Price Situationer (Selected Agri Commodities), Jul 2025 & Jul 2026
Meralco Rate Advisories, Jul 2025 & Jul 2026 — meralco.com.ph
DOE Fuel Price Monitoring, Jul 2026
FEF statement, as reported by Philstar (Jul 21, 2026) and Tribune (Jul 21, 2026)
SSS/PhilHealth/Pag-IBIG 2026 contribution tables
PIA, “NCR minimum wage to rise by P85 starting July 25” (Jul 2026)
Some figures (rent, food, water estimates) are personal/market estimates, not from a single official source — flagged inline.
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