BUSINESS leaders in Cebu expressed apprehensions on the bill filed by Sen. Vicente Sotto III on Monday, July 1, 2019, mandating a 14th month pay to the private sector, saying this may affect business competitiveness.
Cebu Chamber of Commerce and Industry (CCCI) president Virgilio Espeleta said the bill would cause business competitiveness to decline.
“This is adding pressure to the business and threatens further our competitiveness. Without asking for it, many companies who are performing well are giving more to their employees. However, legislating a 14th month pay will force companies to streamline their workforce, delay or cancel hiring and resort to automation, substituting labor with machines,” he said.
Rey Calooy, president of the Filipino-Cebuano Business Club Inc. (FCBI), said the bill would endanger startups that are labor-intensive and not capital-intensive.
“Startup business are in peril. This is okay for large companies but not small and medium businesses who cannot afford,” he said.
“This move further pushes back the government’s already less than desirable efforts to help our country’s lagging startup ecosystem in exchange for votes from the majority of the masses who are not (and will not become) entrepreneurs,” he added.
With the bill, startups would be burdened and would pull the country back from being a business-friendly destination.
According to Calooy, while developed countries help startups with various initiatives from its inception to providing tax breaks or tax cuts, the Philippines is making it harder for startups to survive, on top of the staggering failure rate of startups at more than 90 percent.
“Most of the startups may last only for three years or they might close. The government can start giving them business holidays for starters,” Calooy said.
FCBI suggested that the lawmakers can support the bill but with the exemption on micro and small enterprises, while medium businesses should be limited to 13th month pay only.
He said large companies may have the option to give the 13th and 14th month pay if they are able.
Proposal bill
Sotto filed Senate Bill 10 that seeks to require employers in the private sector to remunerate the 14th month pay.
“The 13th month pay is gobbled up by Christmas expenses. We need extra earnings in the middle of the year to help ordinary workers in school and medical expenses,” said Sotto in a statement.
“Health and education needs of the ordinary Filipino must be assisted by our government,” the Senate chief said, stressing that the latest wage increase of P25 is too small compared to the daily expenses of ordinary workers.
He said improved business earnings have not cascaded on its own and that several labor groups have been petitioning for the increase in minimum wage.
The Department of Labor and Employment has said it continues to study current settings for minimum wages after various wage hike petitions were filed before Labor Day.
Under the proposed measures, the bill covers all non-government rank and file employees regardless of their employment status, designation and irrespective of the method by which their wages are paid provided that they have worked at least one month during the
calendar year.
The bill also said the 13th month pay shall be paid not later than June 14th and the 14th month pay shall be paid not later than December 24th of every year provided, however, that the frequency of payment of this monetary benefits may be the subject of agreement between employer and employee or any recognized/collective bargaining agent of employees.
The proposal pegs the minimum amount of the 14th month pay at not less than 1/12 of the total basic salary earned by the employee within the calendar year.
The 14th month pay should not be below the employees’ basic salary.JOB with KOC