go through Jam Magdaleno
The proposed P200 full-payment hike is now valid for death. The House and Senate failed to reconcile their respective versions, and then Congress adjourned the Sine Death. In terms of legislative prospects, the bill is unlikely to resume. But its failure in Congress obscures its political utility. After all, it serves its purpose: to reframe the government’s post-election narrative and provide short-term populist balm after punishing the election results.
The 2025 midterm elections hit the government, with its Alyansa Para Sa Bagong Pilipinas Slate winning just six of the 12 Senate seats, lower than initial expectations. Vice President Sara Duterte and former President Rodrigo Duterte won five seats, led by the top voting awards, Bong Go and Bato Dela Rosa. Opposition numbers also broke down, with Bam Aquino and Kiko Pangilinan ranked second and fifth. The key to strategic areas such as Makati and Cebu is disturbingfPublic dissatisfaction with the government.
Despite this, despite the erosion of this epidemic, the government has gained strong support in the House of Commons. It is therefore not difficult to see why the idea of raising wages has surfaced: as a response signal to the working class plight, aiming to regain sympathy from future voters and possibly grant favors with left-leaning parties and organizations.
However, the problem is that the proposal is doomed to fail from the beginning. State-paid hiking failed on two charges: economic feasibility and political feasibility.
As I wrote here before, a P200 wage hike will make progress in the Philippines in curbing inflation (currently 1.3%). It will trigger inflationary pressures and seriously affect the micro, small and medium-sized enterprises (MSMES) as well as informal and half-body sectors, which make up most of the Filipino businesses. The proposal has been so widely criticized by economists that the government’s own economic manager issued a co-signed statement against the bill.
This leads to the second point: The proposal is politically unfeasible. One just needs to check the consistent history of the government’s opposition to blanket wage hikes. The timing of the release of the proposal and the intention of the political environment through the house are guided. As far as the Senate is concerned, the Senate proposes a more modest alternative to P100. Senate President Chiz Escudero criticized the timing and substance of the House P200 proposal, emphasizing that the Senate adopted its own version in February 2024 (February 2024).Th Congress, there is no time for two-color deliberation.
Typically, for bills of this scale and consequences, multiple Ledegas (Legislative Advisory Committee) meetings will be held to ensure proper technical review and political support. The lack of such measures suggests that the bill’s goal is to generate political noise and consolidate voter goodwill rather than to carry out actual reforms.
Is this drama display new? Of course not.
In 2009, the Arroyo government raised public spending ahead of the 2010 election due to corruption scandals and popularity. The World Bank’s Philippines: Public Spending Review (2010) marks a significant increase in public budget spending, including congressional designated expenses, which have been misplaced due to national development priorities.
In 2015, the Aquino government implemented the Wage Standardization Act IV, which increased the public sector’s salary, growing in the 2016 election.
In 2018, in response to opposition to train (accelerated and inclusive tax reform) laws and to increase inflation to 6.7%, President Rodrigo Duterte ordered the suspension of further fuel excise taxes, a move now widely regarded as a concession to public frustration.
According to this view, wage policies, like many economic policies in the Philippines, usually follow the rhythm of the political cycle rather than the guidance of data or long-term institutional plans. National scientist Raul Fabella believes that our weak institutions and non-programming parties have cultivated a system of making formulations that make formulations decentralized and opportunistic. He pointed out that legislative behavior has fewer ideologies than politics. This phenomenon is best described as electoral clientism, a democratic country with weak party systems. A 2019 World Bank study conducted through its Governance and Anti-Corruption Group found that “in the short term, distribution politics dominates policy development”, especially in countries like ours, where high turnover in leadership is high and institutional continuity cannot be eliminated.
The sacrifice of this move is an opportunity for a discourse on meaningful reform. In a discussion of wages alone, an Asian Development Bank study in 2023 showed that targeted wage subsidies, enhanced social protection mechanisms and support for corporate productivity are more effective in sustainable improvement of real income. Programs such as small business technology upgrade programs (setup) or shared service facilities in trade and industry can be expanded to increase labor productivity and generate quality employment. However, such interventions are complex, technical, and seldom aligned with politically.
From a broader perspective, the Philippines is at a critical moment and can rethink its economic direction in response to major global changes. U.S. President Donald Trump’s tariff judgment undermines international trade, labor flow and supply chains. This ever-evolving global environment is defined by protectionism, fragmented trade relations, and the redevelopment of the industry, challenging the globalized version we have long relied on. The traditional Philippines export processing and BPO-driven growth model may not be enough anymore. Instead, the country needs to reassess its position in the global value chain and adopt policies that promote comparative advantages, technological adaptation and domestic productivity.
Imagine the structural reforms that could shape the economy in the next few decades if the political capital of the government was discussed by channels. A bold proposal comes from political economist Calixto Chikiamco, who advocates for strategic devaluation of the pesos to promote export leadership and agriculture-driven growth. This idea solves a long-term imbalance in the Philippines economy: an overestimated peso, often mistaken for economic strength, favors imports and foreign consumption, but harms local producers. It makes the Philippines less competitive in exporting abroad and prevents investment in domestic manufacturing and agriculture.
Weak, more competitive peso will help reverse this trend by making exports more attractive and imports more expensive, encouraging local production and potentially revitalizing neglected areas such as agriculture and light industries. Mr Chikiamco also believes that artificially strong currencies have deepened the country’s reliance on OFW remittances and imports, thus increasing our impact on external shocks. If carefully managed, through inflation control and targeted investments, calibrated depreciation can generate jobs in the tradable sector and build economic resilience.
Another area of reform is the country’s approach to industrial policy. The Philippines has long relied on tax incentives as a major tool to attract investment, but many studies, including those from the Ministry of Finance and the Philippine Development Institute (PIDS), found that many of these incentives are targeted poor, redundant, and fail to bring corresponding economic benefits. While the creation of laws (the Corporate Recovery and Tax Incentives of the Enterprise Act) aims to introduce incentives based on performance and time constraints, the implementation gap remains.
Governments can strive to support industrial clusters and special economic areas rather than relying on tax allowances, which cultivate chains of sunrise industries such as electronics, electric vehicle components and agribusinesses – Philippine Development Program (PDP) 2023-2028 and the Strategic Investment Program (SIPP) (SIPP) (SIPP) of the Investment Commission.
According to JICA and the World Bank, modernizing the country’s modern port infrastructure and addressing high logistics costs will greatly improve our trade competitiveness. Philippines ranking 60Th Among the 139 countries in the World Bank’s logistics performance index in 2023, they are far behind Vietnam and Thailand. Given the emerging global model, these reforms are particularly urgent: As multinational corporations diversify from China due to geopolitical tensions and tariff restructuring, countries with agile and responsive domestic institutions (such as Vietnam, Malaysia and Indonesia) have captured greater dividend investments.
The focus here is not only on pushing one policy to another. Instead, argue that if the political capital currently used in populist drama is introduced into serious, evidence-based decisions, we may eventually escape the cycle of reactive and short-term governance. Ideas such as monetary reform, land market liberalization and industrial clustering are not populists. They are radical in the best sense of the word: their goal is to attack the roots that have brought our economy back to its original state for decades.
Therefore, the broader argument is not to prescribe which reform is objectively best. This question should always be the subject of rigorous analysis, deliberation and empirical testing. What really matters is whether our political institutions are incubating this idea, whether complex or risky, and giving them the oxygen they need to survive. Because in the absence of this, we are left with only the politics of wonder, and the substance required for the long-term prosperity of a country.
Jam Magdaleno is a political and economics researcher, writer and communications strategist. He is the head of information and communications at the Philippine think tank Economic Freedom Foundation (FEF).
