THE micro, small and medium enterprises (MSMEs) welcome the initiative of the Cebu City Government to provide tax amnesty to businesses amid the P31 wage hike in Central Visayas.
“We welcome it. At least the Cebu City Government recognizes the importance of the MSMEs being the provider of 64 percent of the total employment,” said Rey Calooy, chairman of Filipino-Cebuano Business Club Inc., a business chamber that represents MSMEs in Cebu.
While the wage hike is causing another challenge for the MSMEs to rise above the pandemic, Calooy said “businesses have to adjust to manage the impact of the new wage order.”
“Some MSMEs will absorb, recover in productivity. Others will invest on automation, others will pass on (cost to consumers). It depends on their strategy to stay competitive in the industry,” said Calooy.
On Tuesday, May 24, 2022, the Regional Tripartite Wages and Productivity Board 7 issued Wage Order ROVII-23 providing for a P31 increase in daily wage for minimum wage earners in Central Visayas.
The prescribed wage increase shall apply to all minimum wage earners in the private sector within the region, regardless of their position, designation or status, and irrespective of the method by which their wages are paid.
Christian Paro-an, president of Philippine Retail Association-Cebu Chapter, said the wage hike may boost consumer spending but, on the other hand, it will affect operating expenses of business owners, especially if their markets are not that active.
“The local government units should give tax incentives at this time to encourage more business to grow. We need to have balance on both sides,” he said.
Impact on struggling biz
But what worries him, is the impact of the wage hike to those that are struggling in their businesses.
He said the negative effect of this increase is the possible retrenchment of employees, especially to those business owners who can’t really afford to raise salary at this time.
According to Paro-an, the retail sector in Cebu composed mostly of MSMEs is still in a recovery stage after being badly hit by the Covid-19 pandemic and Typhoon Odette (Rai).
“We foresee more downsizing or temporary closure in the MSME sector due to increasing costs to operate,” said Steven Yu, immediate past president of Mandaue Chamber of Commerce and Industry.
Retailers are patiently waiting for the revenge shopping to translate into sales as quarantine restrictions eases and as more people go out confidently to shop, dine and travel.
“The retail sector is the most crucial because it represents almost the day-to-day needs of the consumer’s demand. During pandemic it was the retail that sustains the needs but the retail outlook in Cebu this year is not as good as 2019 since we are still in the recovery stage... Let’s wait and see for the impact in the months to come,” said Paro-an.