Philippines gives $1 bil. wage subsidy to 3.4 mil. SME workers

15, Apr. 2020

Photo by Brett Andrei Martin on Unspla
Photo by Brett Andrei Martin on Unspla

By Darlene Basingan

MANILA, NNA – Following an emergency cash aid for 18 million low-income households recently, the Philippine government is helping another 3.4 million workers employed by small and medium enterprises with a $1 billion wage subsidy.

In another effort to stem further job losses as it extended the sweeping pandemic lockdown of the main island of Luzon, the subsidy will help 1.6 million small businesses in the formal sector and its mainly lower-rung middle-income workers tide them over a difficult period.

Cabinet Secretary Karlo Nograles, who announced on Tuesday that President Rodrigo Duterte had already approved the subsidy program for small businesses, said, “Our point here is for the employees not to lose their jobs. We want to retain the employment status of employees.” Nograles was speaking at a virtual press briefing.

Subsidies would be given to businesses already registered with the tax bureau and the state’s social pension fund agency but have ceased to operate or are now employing only a skeletal workforce because of the enhanced community quarantine.

Employed workers who have not received their pay would receive 5,000 pesos ($98) to 8,000 pesos each from May for two months, depending on the minimum wage rate in their region.

The Department of Finance said it would also give subsidies to workers of businesses not complying with regulations of the tax bureau and pension fund agency.

The latest package came amid mounting calls from various groups and local government leaders urging the Duterte administration not to overlook middle-class households in its social amelioration program as the government extended the lockdown period in Luzon to April 30.

The enhanced quarantine in Luzon forced some 436,300 small businesses to shut down while about a million businesses have been operating with much fewer workers at their premises or have shifted to work-from-home arrangement, the Department of Finance said on Tuesday in a press release. Only 117,666 small businesses providing essential services such as grocery shops, drug stores and logistics outlets are allowed to operate.

The department said the wage subsidy will complement existing measures to help small business during the crisis. They include deadline extensions on tax filing and payments, and a minimum 30-day grace period for loan and rental payment.

It also said the government will also launch a loan package worth 1 billion pesos for micro-, small- and medium-sized enterprises (MSMEs) affected by the lockdown.

Alan Tanjusay, spokesman of Associated Labor Unions-Trade Union Congress of the Philippines, expressed hope that the wage subsidy would help retain workers as many businesses might still not be able to do as well as in the past after the lockdown is over.

Noting that the subsidy program was designed to help small businesses only, he called on the government to craft a separate program to give direct cash assistance to minimum wage earners who are living hand-to-mouth and hardest hit by the economic fallout.

“Maybe in the next week or so we are going to formally propose (to the government) the subsidy to minimum wage earners,” he told NNA in a phone interview.

Last month, the government launched a massive program to give cash subsidies worth $3.9 billion to 18 million low-income households, whose jobs or livelihoods have been affected by the Luzon lockdown.

But the government’s distribution of cash subsidy for the poor has been plagued by delays as many people could not be properly identified.

For this reason, Tanjusay proposed that the industry tripartite council meet urgently to discuss ways on how to distribute wage subsidies properly to MSME workers to avoid such problems.

Data from the Philippine labor department shows that around 1.4 million workers have been displaced as of April 13. The majority belonged to manufacturing, hotel, food and beverage, and tourism-related sectors apart from others in education.

The department has also provided a one-time cash assistance to workers displaced by the quarantine.

As of Tuesday, the Philippines recorded 5,223 confirmed COVID-19 cases and 335 deaths.