AFFi releases public statement on the timing of P85 wage increase

PUBLIC STATEMENT | 3 July 2026 —

On the Timing of the P85 Metro Manila Wage Order Amid the Global Oil Price Crisis

The Association of Filipino Franchisers Inc. (AFFi) recognizes and respects the legitimate aspiration of Filipino workers for wages that keep pace with the rising cost of living. As employers, we, the franchisers, as well as our franchisees, all share that aspiration. After all, many of us built our businesses on the belief that the people who help grow a franchise deserve to grow alongside it. We do not dispute the intent behind the P85 daily minimum wage increase for Metro Manila. We are, however, compelled to raise serious concerns about its timing.

The country is currently under a state of national energy emergency arising from the war in the Middle East. The resulting disruption to global crude supply have already driven domestic fuel prices to near-record levels, and with it, the costs of logistics, raw materials, cooking gas, and practically every input that a franchise business depends on. Consistent inflation, the rising cost of electricity (still one of the highest in Asia!), the non-stop escalation of rental charges from retail establishments, have all made doing business nearly untenable in the Philippines. Add to this the rising local and national taxes imposed including real property taxes, other charges and fees, among others, and the harassment by BIR to our fellow small business owners with the dreaded Letters of Authority. With very little government support and assistance given to our MSMEs, we have been pummeled to the ground with all these inflationary attacks, rising costs of doing business, and unnecessary financial burdens. Suffice it to say, that many of us who are still reeling from the ill-effects of the COVID-19 pandemic are once again battered incessantly by all these. 

Implementing a mandatory wage increase in the middle of this shock means that franchisees — the overwhelming majority of whom are micro, small, and medium enterprises — are being asked to absorb two primary simultaneous cost pressures at once: a fuel-driven spike in the cost of goods and delivery, and a mandated increase in labor cost. For a franchisee operating on the thin margins typical of food carts, quick-service outlets, retail kiosks, and service franchises, there is no room left to absorb both. Something will have to give, and history tells us what that usually means: reduced headcount, shortened operating hours, deferred expansion, or, for the most vulnerable, closure.

The Full Weight Falls on the Entrepreneur

Franchising in the Philippines is built on a genuine partnership between the franchiser, the franchisee, and the people they employ. Our members treat their workers as partners in the business, not merely as line items on a payroll. But partnership in spirit does not change the legal and financial reality: when costs rise, it is the franchisee — the entrepreneur who mortgaged savings, took out loans, and staked personal capital to open that outlet — who absorbs the full weight of the increase. Employees rightly expect their pay to arrive in full and on time. Suppliers expect to be paid. Landlords expect rent. It is the franchisee, alone, standing between all of these obligations and a business environment that is, for the moment, extraordinarily volatile. Even with some relief provided by Barangay Micro Business Enterprises (BMBE) Act only for new businesses, all these rising costs still point to a gloomy atmosphere and disabling environment for small, micro, and medium businesses to thrive. At the end of the day, the full weight of the costs falls lamentably on the struggling entrepreneur. 

What We Are Asking For

AFFi is not asking government to abandon the wage increase altogether. What we are asking is narrower and, we believe, reasonable: that the National Capital Region wage board and the Department of Labor and Employment revisit this decision and reconsider its timing. Government can instead render stronger support for the MSME sector through the following:

• Defer or stagger the effectivity of the wage order until the Department of Energy confirms that fuel prices have stabilized, rather than layering a labor cost increase on top of an active, government-declared energy crisis.
• Explore other tax-diminishing mechanism on the part of the laborers by increasing the total tax exemption for wage earners from P 250,000 to P 600,000. 
• Review the EPIRA law, unnecessary fees, and the other factors that lead to higher electric rates. Power costs in the Philippines is one of the highest in Asia and continues to be a deterrent for investors. A pro-people, pro-MSME policy shift is long overdue. 
• Pair any wage adjustment with concrete, time-bound relief on fuel and logistics costs — such as the excise tax suspension authority already granted to the President — so that the burden is shared across government, industry, and labor rather than resting on the entrepreneur alone.
• Offer more assistance and direct subsidies to MSMEs to ease our burden and reduce the overall costs of doing business. Tax regimes must reflect a more seamless and pro-MSME set-up that provides the needed respite from increasing costs and soaring prices.
• Open a formal consultation with MSMEs and franchise sector representatives, including AFFi, before further wage tranches are finalized, so that implementation timelines reflect actual conditions on the ground rather than a fixed calendar set before the oil crisis began.

Every closed franchise outlet is not an abstraction. It is a family that loses its livelihood as an owner, and several families that lose their livelihood as employees. AFFi’s members are ready to do their part in raising the standard of living for Filipino workers. We simply ask that the timing of this particular increase account for a global crisis that neither government, nor labor, nor business created — but that all three must now navigate together.

We renew our call for the rule of law, for good faith compliance once conditions allow, and for a wage policy process that treats the survival of small business as a precondition for, not an obstacle to, the welfare of Filipino workers.