Expand payroll aid!

April 24, 2020

There’s got to be more for the small business and industry players who are greater in number and employ more than their bigger counterparts.

Their structural nature – small asset and capital base and relatively lean workforce – makes them vulnerable to any extended cessation of operations.     

And so we fully agree and strongly support Sen. Imee Marcos urging the government to expand payroll aid beyond its Small Business Wage Subsidy program to prevent micro, small and medium enterprises  from laying off workers or folding up altogether if a lockdown to stop the spread of the 2019 coronvirus disease is extended.

Marcos noted that the present P51-billion SBWS budget leaves some 4.6 million workers in MSMEs vulnerable to job losses, especially in sectors hit hardest by the lockdown, as those in trade, transportation, accommodation and food, manufacturing, and construction.

To cover them all, the government would need almost P63 billion in the first month alone, she said, if subsidies are computed at 75 percent of the average monthly wage, pegged at P18,108 in the last Occupational Wages Survey in 2018.

The chairperson of the Senate committee on economic affairs estimates that up to three-fourths of MSME payrolls must be subsidized by government while community quarantine restrictions remain in place.

An MSME is defined as any business activity or enterprise engaged in industry, agri-business and/or services that has  an asset size (less land) of up to P100 million and an employment size of less than 200 employees.

Based on these categories, it is classified as micro, small or medium regardless of the type of business ownership (i.e., single proprietorship, cooperative, partnership or corporation).

As of 2010, there were a total of 777,687 business enterprises in the country. Of this figure, MSMEs represented 99.6 percent with 774,664 establishments while large enterprises represented 0.4 percent with 3,023 establishments.

Micro enterprises comprised 91.6 percent (709,899) of the total number of MSMEs while small and medium enterprises accounted for eight percent (61,979) and 0.4 percent (2,786), respectively.

Overall, 49.7 percentof MSMEs are engaged in the wholesale/retail trade and repair services with 384,746business establishments while 14.4percent (111,366) and 12.5 percent (96,989) are in the manufacturing and hotels/restaurants industries, respectively.

MSMEs in real estate, renting and business activities represent 6.1percent (47,569),and those involved in other community, social and personal service activities account for 5.7percent (44,209).

Other MSMEs (11.6 percent)  are engaged in health and social work (31,547);financial intermediation (26,350);education ( 13,930);transport storage and communications(9,010);agriculture, hunting and forestry (3,829);construction (2,292);electricity, gas, and water (1,307);fishing (1,126);and mining and quarrying (394).

In terms of employment generation, MSMEs provided a total of 3,532,935 jobs2 in 2010 or 62.3 percent of the total jobs generated by all types of business establishments.

 The Department of Finance has reported that more than 436,000 small usinesses have closed shop since mid-March when a lockdown was imposed throughout Luzon and in some areas in the Visayas and Mindanao.

"The true engines of the economy are the daily wage earners and rank-and-file employees. Greater payroll subsidies mean giving MSMEs a greater chance of survival," Marcos said.

Besides the 75-percent payroll subsidy laid out in Senate Bill 1431, dubbed the Economic Recovery Act of 2020, she  also proposed that zero-tariff rates be temporarily applied on imports of essential raw materials to help cut company costs and stabilize the prices of goods.

"Regulatory forbearance" will also keep MSMEs afloat while the duration of the COVID-19 crisis remains unknown, Marcos said, urging that 2020 tax payments be suspended for up to six months after enhanced community quarantines are lifted.

"We are only in the early stages of a global economic crisis due to COVID-19. The government must find more solutions to craft a long-term plan for economic recovery," she said.