A HOUSE leader has lauded President Rodrigo “Rody” Duterte for granting his proposal to provide P5,000 to 8,000 wage subsidy per eligible worker for two months to an estimated 3.4 million middle class employees in small businesses suffering from the economic impact of the Luzon-wide enhanced community quarantine (ECQ).
“President Duterte’s plan is actually more generous at 51 billion. It will cover about 3.4 million workers. I proposed a broader coverage, to include self-employed workers. I will continue to work with the economic managers and with the House leadership to see how we can help them,” said Albay Rep. Joey Sarte Salceda, co-chair of the House economic stimulus response package and chairman of the House committee on ways and means.
Salceda submitted his proposal for a wage subsidy to Duterte last April 11 following the coronavirus disease-19 (COVID-19) pandemic. His wage subsidy proposal is among several policy papers written by him for the President that have since been adopted – including the enhanced community quarantine (ECQ) and its extension, distribution mechanisms and eligibilities for the social amelioration program (SAP), fixes in the supply chain and unhampered movement of goods, and mass testing.
“My office continues to be a policy workhouse for how the country should navigate Covid-19. Our most recent policy package is the Philippine National Stimulus Strategy, which contains a structural adjustment plan to rescue critically-needed industries and keep others operating. The best way to protect incomes really is to protect jobs.
We do that by preserving going-concern – meaning companies should not fold,” said Salceda.
Deputy Speaker and Camarines Sur Rep. LRay Villafuerte also backed the proposal, which was also initiated by Finance Sec. Carlos “Sonny” Dominguez II after the government provided economic relief in the form of cash grants to some 18 million poor households.
Villafuerte said the government is on the right track in following this up with wage subsidies for those belonging to the lower and medium middle class whose salaries are just enough for them to meet their daily needs and those of their families.
“President Duterte is right to approve the recommendation of the Department of Finance (DOF) under Secretary Sonny Dominguez to throw a lifeline to workers employed in small business enterprises. These are the workers whose employers have been left with no means to cover their overhead costs following the implementation of the ECQ that has led to the sudden stop of economic activity," said Villafuerte.
Villafuerte, an entrepreneur, noted that even if employers of small businesses would want to pay the wages of their workers, most of them are constrained by their lack of resources to do so, given that they still have to attend to rental dues, amortizations, and other capital expenses that they still have to pay once the ECQ is over.
Payments for such business-related expenses have been put on hold by the government only for the duration of the ECQ, said Villafuerte.
“Operators of small businesses earn nothing during the ECQ because they have been forced to close shop or are operating only with skeletal forces.
They have no cash to pay their workers even if they want to. Government intervention is necessary to help these businesses and their workers survive,” said Villafuerte, who is a member of the House Defeat COVID-19 Ad Hoc Committee (DCC).
Villafuerte is co-chairman of the DCC subcommittee on social amelioration and lead author in the House of Republic Act (RA) No. 11469 or the Bayanihan to Heal as One Act, which gave President Duterte special but limited powers to best deal with the global health crisis.
“The employees that the government is helping under this rescue plan for small businesses are not those in the upper middle class who can afford to stay home without earning any income for the duration of the ECQ. We are referring here to employees in micro, small and medium enterprises (MSMEs) who earn just enough and maybe save a little for their needs and those of their families. These are the ones who need the government's immediate help,” Villafuerte said.
The micro, small and medium enterprises (MSMEs), which comprise 98 percent of all businesses in the country, employ the majority of the Filipino work force.
Unlike Salceda’s 3.4 million estimated workers who will be given assistance, Dominguez explained that wage subsidy program will benefit 2.6 million workers whose employers are compliant with the Bureau of Internal Revenue (BIR) and Social Security System (SSS) regulations and thus can be easily identified and automatically processed for coverage if they are eligible.
He said the program will also support another 800,000 workers whose employers are not fully compliant with the SSS or BIR as the government understands that the non-compliance may have been caused by inadvertent mistakes on the part of the employer.
These workers who belong to the low-to medium-middle class, are employed in some 1.6 million small businesses in the formal sector that are affected by the ECQ.
Dominguez and Finance Undersecretary Karl Kendrick Chua presented the wage subsidy program during a televised meeting presided by President Duterte late Monday night.
The Finance secretary said that while the ECQ has affected most workers in both the formal and informal sectors, the President’s swift decision to implement it to contain the spread of COVID-19 had probably saved 100,000 Filipino lives, according to World Bank estimates.
“I had a meeting with the World Bank a few days ago, and they said that your decisiveness in first reducing the number of people coming into the Philippines in February and in March, followed by the lockdown, probably saved 100,000 lives in the Philippines," Dominguez said.
“Thank you again for being very decisive in protecting the Filipino people against this COVID-19 outbreak,” Dominguez said, addressing the President during the meeting.
According to the Department of Finance (DoF), under the Small Business Wage Subsidy Program (SBWS), the subsidy will range from P5,000 to P8,000 per beneficiary. The subsidy will be for two months and will cost a total of P50.8 billion.
Under this program, small businesses are defined as those not belonging to the top 2,745 large taxpayers of the BIR.
Dominguez said the details, mechanics and eligibility criteria under the program will be announced this week.
The online system for business owners to submit their list of employees via the SSS website is currently being pilot tested and is scheduled to go live this week.
An overview of the program was presented by Chua during the televised meeting, and was submitted as part of the President’s report to the Joint Congressional Oversight Committee on the implementation of Republic Act (RA) No. 11469 or the Bayanihan to Heal as One Act.
"Basically we are going to help the middle class because in one of your speeches a few days ago, you wanted to help the middle class and so we have proposed a program to help the middle class," Chua said, addressing the President during the meeting.
The report to Congress said the “DOF is also studying the proposal to guarantee loans of small businesses affected by the COVID-19 pandemic. This will provide them easier access to bank financing”, which tends to contract during crisis periods.
During the meeting, Chua said that some 436,300 small businesses were forced to stop operations while some 1 million are only able to operate with skeleton forces after the national government placed Metro Manila and, later, the rest of Luzon, under the ECQ to stop the further spread of COVID-19.
Only around 117,666 essential small businesses such as those involved in food service, logistics and some retail outlets like drugstores and supermarkets, have been allowed to operate since the ECQ was carried out, he said.
“Apart from the P205 billion that the government is giving to the informal sector, or those with low-income, we are giving P51 billion to the employees of small businesses. We will improve upon the social amelioration program because this plan to give the subsidy is automated, not manual, so (it will be) faster,” Chua said.
He said the distribution of the wage subsidy will also be better targeted because those who are registered with the SSS and BIR are easily identifiable and eligibility under the program can be determined quickly. Bank and e-wallet accounts can also be registered with the SSS for the efficient disbursement of subsidies. The program also aims to incentivize better compliance in registering with the BIR and SSS “because these workers are the ones who would be first covered by the subsidy,” Chua explained.
To avoid duplication, beneficiaries of the COVID-19 Adjustment Measures Program (CAMP) of the Department of Labor and Employment (DOLE) who already received P5,000 will only be eligible for a one-month wage subsidy, he added.
The subsidy amount will be aligned with the emergency subsidy given to the informal sector, except that the P8,000 per month estimated for all eligible workers in Metro Manila, will also cover Regions III (Central Luzon) and IV-A (Cavite-Laguna-Batangas-Quezon area or Calabarzon).
“The reason for this is that there are many workers who live in one region and work in another region,” Chua said.