November 7th, 2021
House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) thanked the Small Business Corporation (SBCorp) for offering a lending program that will allow private corporations to borrow from the state-run firm at relatively low interest rates to fund the 13th month pay of their employees.
In an aide memoire last October 2020, Salceda suggested that the Department of Labor and Employment (DOLE) and government financial institutions (GFIs) such as the SBCorp lend money to private firms to allow them to comply with Presidential Decree No. 851, instead of the earlier suggestion of the Labor Department that firms be allowed to skip the benefit.
Back then, Salceda warned that the DOLE suggestion could be both “illegal and contractionary for the economy.”
“I thank the SBCorp for this enlightened decision. I think other GFIs, such as Landbank, can also do it, especially for sectors where it already has existing partnerships, such as private schools,” Salceda said.
“The 13th month pay is something like a private-sector induced economic stimulus. I reviewed the Labor Force Survey, and job numbers from April to September practically stagnated, even when vaccine coverage increased. That means we really need to stimulate the economy with more than just reopening. There needs to be more money in the pockets of the people.”
“If the national government will continue to hesitate with stimulus, the least we can do is allow the private sector to do its own stimulus by financing the 13th month pay with cheap loans.”
“Liquidity is still very high, given that interest rates are at their lowest ever. We should take advantage of this situation by leveraging it towards labor benefits such as this one.”
In his October 2020 proposal, Salceda said that “In terms of both economic and legal considerations, the DOLE proposal appears to be unsound.” Salceda also co-chairs the Economic Stimulus and Recovery Cluster-Defeat COVID-19 Committee.
He said the government can, however, exempt “distressed businesses from providing these benefits to management-level workers and executives.”
Considering that rank-and-file benefits are direct labor costs, Salceda said, their deductibility from taxable income should be on peso-per-peso basis.