(Part 2)
How do we help employers who want to comply with the ethical standard set by the Social Doctrine of the Church, that a living wage must enable the worker and his family to attain a minimum level of comfort and decency with the wage that he or she is paid.
First, let us calculate what the actual monthly income of a worker who is paid the legal or statutory minimum wage is. We can use the formula: monthly income = daily wage x workdays per month or P645 x 22 standard days = P14,190 per month.
Let us compare this to what a “just” minimum wage should be considering minimum consumption requirements for minimum comfort and human dignity for the worker and his family.
Without using his case as the standard for all workers, just to illustrate, the following were the estimated monthly costs for the various items in the consumer basket reported by an average worker: Food (P5,000); Rent and Utilities (P7,000); Transportation (P1,500); Healthcare (P1,000); Education (P1,000); Clothing/hygiene (P1,000), Emergency savings (P1,000) totaling monthly expenses of P17,500. In this case the legal wage is too low.
It would be useful to cite some studies that have been made in calculating what a family with four members (the present statistical average according to the Philippine Statistics Authority or PSA) would need to live with minimum comfort and human dignity. According to a PSA study (2023), a family of five (the average among the poorest of the poor) would need at least P13,873 per month to be at the poverty threshold (not sufficient for minimum comfort and dignity). About 16% of total households in the Philippines fall below this poverty line. It is clear that this amount does not comply with the doctrine of Rerum Novarum and other papal encyclicals. According to the Social Weather Station (2025), families surveyed say that they need P12,000 per month (for the whole country) while those who reside in Metro Manila estimate it at P20,000, just to feel that they are not poor. These official figures may be useful as possible guides for employers and the Government to consider but they clearly understate what families feel is realistic.
Some publications have attempted to estimate what would be needed by a family of four, which is the national average. According to one study published by Numbeo/Tribune, a family of four in Metro Manila would need P109,770 monthly for a modest lifestyle covering food, utilities, transport, and leisure, excluding rent and education. FilePino (2025) calculated an urban family budget would have monthly costs ranging from P45,000 to as high as P83,000, including food, rent (two bedrooms), utilities, education, healthcare, and personal expenses. A Reddit user shared a breakdown for a family of four in Metro Manila, citing P100,000 as an ideal, broken down into P25,000 for housing; P15,000 to P20,000 for groceries; P4,000 to P8,000 for utilities; and P5,000 for transportation. All totaling P77,000. If extras are added for eating out, savings, or a house helper, the total budget can reach as high as P100,000 monthly.
As summary, the following amounts can be considered as monthly threshold family income depending on how one wants to interpret the phrase “a minimum of comfort and human decency.”
• Bare minimum (PSA threshold): P13,873 monthly for a family of five;
• Self-perceived survival threshold: P12,000 to P20,000 (varying by region);
• Living decently with savings (NEDA): P42,000 to P45,000;
• Modest comfort (basic lifestyle): P45,000 to P83,000;
• More realistic comfort (urban lifestyle): P80,000 to P110,000;
• More affluent lifestyle (savings, leisure, tuition): P150,000 to P250,000.
As can already be realized at this stage of translating doctrine to specific policy recommendations, the issue of minimum wage can be subject to various interpretations depending on family size and costs of living in various geographical settings, whether urban or rural, whether in Metro Manila or other urban centers.
To summarize the various computations above, we can conclude that the barest subsistence level (poverty line) is around P11,000 to P14,000. This does not comply with the criterion of “minimum comfort and human dignity.” A more adequate monthly income for a family of four — ensuring dignity, essentials, and savings — is around P40,000 to P45,000 a month. At the lower level, this would translate to a required daily income of P1,818 (assuming 22 standard working days monthly). This is almost three times the actual minimum wage of P645.
There is, however, a further question about a just family wage. Must it be earned by a single breadwinner, either the husband or wife? Practically every household today in the Philippines has at least two breadwinners, with one of the spouses or a close relative joining one other breadwinner. In a good number of households, there are breadwinners who are overseas workers.
Whatever the actual conditions may be in the average Philippine household, there are those who maintain that one of the spouses, ordinarily the wife, must be given the choice to take on some remunerative work, whether full or part time, or to be a full time wife and mother, doing all the necessary household chores and especially taking care of the children. There are actual methods of imputing financial values to these tasks, thus increasing the real income of the household. In some countries that are suffering severely from extremely low fertility rates, there are serious recommendations that stay-home mothers be actually compensated by the State for addressing a national crisis. In the future the Philippines may have to consider this policy recommendation because our fertility rate has already dropped to 1.9 babies per fertile woman, which is already below replacement. The State may have to compensate stay-home parents if we are to avoid the serious population crisis of rapid ageing that practically all developed countries in the world are experiencing.
It is understandable that President Ferdinand Marcos, Jr. was not ready to take a stand about the debate on the daily P200 wage hike being requested by labor groups. There should be more discussion on the pros and cons of this very complex issue.
The majority of Filipinos who are poor are not wage earners. These are the ones who may be prejudiced by high minimum wages.
To end, let me summarize the pros and cons of setting a high minimum wage. On the pros side, workers can better afford their basic needs and they do not have to rely on government assistance or debt; a high wage helps lift low-income workers above the poverty line and narrows the wage gap between high and low earners. More spending power in workers’ hands can stimulate consumer spending, which is the primary engine of growth of the Philippine economy. Higher wages can improve motivation, loyalty, and work quality and can reduce absenteeism and turnover. Employers may be motivated to invest in advanced technology or streamline processes rather than rely on cheap labor. Greater social stability may be attained through reduced crime, labor unrest, and social tensions.
On the other hand, high wages may lead to job losses or reduced hiring for those who are unemployed or underemployed. Employers may cut staff, reduce hours, or freeze hiring to offset higher labor costs. The MSME sector may be the hardest hit because they are more labor-intensive. Businesses may pass on the higher labor costs on to consumers, thus fueling inflation and reducing the real value of the wage increase. Employers may avoid regulation by hiring informally or underreporting hours, thus increasing job insecurity. There may be greater incentives to automate and outsource as businesses are encouraged to replace workers with machines or shift jobs overseas. The jobs that are most affected are the low-skill ones. There may result wage compression in which wage differentials between entry-level and experienced workers are reduced, causing dissatisfaction.
People in Congress and labor leaders must consider all the stakeholders in the entire economy before suggesting further increases in the minimum wage.
(To be continued.)
Bernardo M. Villegas has a Ph.D. in Economics from Harvard, is professor emeritus at the University of Asia and the Pacific, and a visiting professor at the IESE Business School in Barcelona, Spain. He was a member of the 1986 Constitutional Commission.
bernardo.villegas@uap.asia
