Wage subsidy for MSME employes proposed

A House leader on Wednesday proposed a wage subsidy for employees working at micro, small and medium enterprises (MSMEs) to help them cope with the coronavirus crisis.

House Deputy Majority Leader and Bagong Henerasyon (BH) party-list Rep. Bernadette Herrera said the government may come up with an emergency wage subsidy program designed for MSMEs to maintain an employment connection and ensure income for affected employees even if they are not working due to the Luzon-wide enhanced community quarantine.

“The idea behind this proposed wage subsidy program is to preserve jobs as we help MSMEs keep workers to their payroll amid the challenges posed by the COVID-19 pandemic,” Herrera pointed out.

Under her proposal, Herrera seeks a payroll support for MSMEs for two months based on the prescribed minimum wage of workers by region.

“A payroll support for two months equivalent to the minimum wage by region is reasonable, but not for an extended period of time,” Herrera said.

According to the House Deputy Majority Leader, a payroll subsidy is one way of giving back to the MSME sector that substantially contributes to the country’s economic growth, accounting for 99.52 percent of established businesses and employs 63.19 percent of the nation’s workforce.

“We must understand that MSMEs generate most of the jobs for ordinary Filipinos and also they’ve got their share of GDP,” Herrera explained. “And if only for the equity aspect of it, it will be critical to prop them up in difficult times, such as this ongoing coronavirus crisis.”

A wage subsidy, Herrera said, would not only prevent job losses, but also help small businesses to easily resume normal operations following the crisis.

“This wage subsidy would be beneficial to MSMEs, such as shops in the malls, which are forced to temporarily close their businesses during this lockdown period but want to keep their workers so that they can quickly restart their businesses, thereby supporting a quick enonomic recovery,” Herrera stressed.

“This puts in the hands of the workers the money they will use as consumers,” she added, noting that “other countries are experimenting with minimum basic income, precisely to ensure the viability of a consumer-oriented economy.”

Herrera, a known champion of MSMEs in Congress, had earlier proposed a number of measures to help small businesses and their employees weather the COVID-19 crisis.

Aside from providing more fund allocations for them to borrow capitalization, Herrera said that MSMEs should also be given tax breaks so that their savings may be used as additional capital to revitalize their businesses and to avoid laying off of workers in the middle of the pandemic.

She also proposed a six-month moratorium on credit card payments and bank loans for a period of six months to allow MSMEs to normalize their operations and save enough funds to start paying their loans.

In a related development, Deputy Speaker and 1-Pacman party-list Rep. Mikee Romero renewed his call for President Rodrigo “Rody” Duterte to use government savings in the fight against Covid-19 and to help those affected by the extended enhanced community quarantine (ECQ).

Romero, president of the 54-strong Party-list Coalition Foundation, Inc. (PCFI), reiterated his appeal a day after the President told the nation that the P275 billion his economic team is trying to generate both from the budget and non-budget sources may not be enough for the P5,000 to P8,000 in financial assistance to poor families.

“Because of the ECQ that has forced many government offices to temporarily close and their personnel are compelled to stay home, the bureaucracy is naturally generating a lot of savings in funds for maintenance and other operating expenses (MOOE),” said Romero.

Romero added the only state agencies operating are those essential in the fight against COVID-19 like the Department of Health (DoH), Office of the President (OP), Philippine National Police (PNP), the military, and Department of Social Welfare and Development (DSWD).

“Even in these agencies, non-essential personnel are told to stay home and offices not directly involved in the war against the coronavirus disease are closed,” said Romero.

He pointed out that MOOE expenses the bureaucracy is saving include those for fuel and other oil products, electricity, water, supplies and materials, communication, advertising, representation or dining out and entertainment, and travel.

Romero said the MOOE allocation in this year’s P4.1-trillion national budget amounts to P1.6 trillion.

“If we save 10 percent of that during the 45-day ECQ up to April 30, that will come up to P160 billion. If we save five percent, that is P80 billion in additional funds for financial aid to 18 million poor and near-poor families affected by the lockdown,” he stressed.

The House leader said the Department of Budget and Management knows where to get the savings.

He added savings from the low cost of crude oil in the world market could also be used for financial assistance to the poor or for procuring essential supplies for healthcare workers.

Romero, an economist, noted that the cost of crude has been steadily decreasing since January from $54-$55 per barrel to less than $25.

“Since the administration’s economic team projected crude to cost between $60 and $75 per barrel when it proposed the 2020 budget, this means that the government is not spending tens of billions in appropriations for oil-related expenses,” said Romero.