MANILA - Philippine President Gloria Arroyo has backed calls by the business community for a freeze on an increase in the minimum wage, her spokesman said yesterday.

The House of Representatives passed a bill last December increasing the daily minimum wage of Filipino workers by P125, staggered over three years, in a bid to give low paid workers more purchasing power.

Wages in the Philippines vary by region but the national daily average is around P283 , according to Labor Department data. The minimum daily wage in Manila is higher at around P350.

Businessmen, particularly those operating medium-sized enterprises, have warned of massive lay-offs and a possible increase in inflation if the pay rise had gone ahead.

The House has now deferred implementation of the bill subject to new debates.

"We support the move of the House of Representatives to withhold for the meantime the legislated wage hike," presidential spokesman Ignacio Bunye said.

"The call for broader consultations is well taken and will help in keeping economic confidence up, remove the anxieties over lay-offs and ease the concerns of small- and medium-scale enterprises," he said.

Labor groups and unions have been lobbying Congress for almost a decade to increase the minimum wage. The newly passed bill had been languishing in Congress since 2001, largely because of business opposition to it.

Rene Soriano, president of the Employers Confederation of the Philippines, warned recently of the "disastrous chain reaction" the increase could bring. "This would send the wrong signal to investors, force enterprises that are barely surviving to close shop and multinationals to pack up and rechannel their investments to neighboring countries that have lower labor costs," he said.

Leftist congressman Crispin Beltran said the proposed increase was still well below the P684 a family with six children in the Philippines needed to cover its most basic daily expenses.*AFP

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