13th month pay subsidy to be limited to micro, small firms —DOLE

Should the government move forward with subsidizing the 13th month pay for employees of “distressed” employers, only the businesses categorized as micro and small can be granted the assistance, the Department of Labor and Employment (DOLE) said Friday.

In a virtual press conference, Labor Secretary Bello III said employers who may apply for a government subsidy to comply with the payout of the 13th-month pay must prove they are either a “micro or small business establishment tapos nalulugi sila.”

Micro and small businesses must indicate their losses during the period covered upon their application.

As whether medium enterprises can also apply for the 13th-month pay subsidy the Labor chief said, “Hindi na siguro.”

“Maganda-ganda ang kanilang katayuan ito ‘yung mga umaabaot sa P100 million ang capitalization nila... [so] hindi na siguro, micro na lang tsaka small,” Bello said.

In the Philippines, an enterprise is considered “micro” if its asset size is at least or below P3,000,000 with only one to 9 employees.

A “small” business, meanwhile, has an asset size ranging between P3,000,001 and P15,000,000 with 10 to 99 workers.

A “medium” business has P15,000,001 to P100,000,000 asset size with 100 to 199 employees.

Data from the Department of Trade and Industry show that MSMEs account for 99% of business enterprises in the country. The sector also accounts for more than 60% of the Philippines’ total employment.

On Thursday, Bello announced that deferring or exemptions to the payout of the 13th-month pay benefit is no longer on the table.

The Labor chief said the government will either provide a subsidy or create a loan facility for distressed employers to enable them to comply with the labor standard.

As to how much of a subsidy is needed to cover the 13th-month pay of affected workers, Bello said that based on the Philippine Statistics Authority’s data that there are about 5.5 million workers affected by the COVID-19 pandemic, the government would need P13.7 billion.

If based on the DOLE’s figures that there were only 1.3 million workers affected, the subsidy needed will be around P5 billion.

As to what data will be used to come up with how much money is needed for the 13th-month pay subsidy, Bello said a consensus would be arrived at at the IATF level.

“Depende ‘yan because we are talking of the affected workers, coming from micro and small business enterprises,” he said.

Meanwhile, if the government did not have enough funds to cover the cost of subsidizing the 13th-month pay, employers will be encouraged to borrow from state-owned banks such as the Land Bank of the Philippines and Development Bank of the Philippines.

“Depende sa DOF kung anong loan facility ang ie-extend nila sa micro and small businesses,” Bello said.

Presidential Decree No. 851 mandates employers from the private sector to pay their rank-and-file employees a 13th month pay not later than December 24 every year.

The 13th-month pay should be equivalent to 1/12 of an employee's basic annual salary.

Last week, Bello floated the possibility of giving exemptions or deferring the payout of the 13th-month benefit amid the challenges brought by the pandemic on the economy.

The proposal, however, was met with opposition from the labor sector as well as from lawmakers. The Palace, itself, said employers cannot defer the release of 13th-month pay. — DVM, GMA News