Manila, Philippines — It will either be a “delicate balance” that employers have to contend with or more of a bane than a boon for workers.
These were the parallel reactions issued by Malacañang and the labor department on the Senate bill mandating a 14th month pay for workers.
Through Deputy Presidential Spokesperson Abigail Valte, the Palace expressed apprehension that while the proposed law on workers’ benefit has its good intentions, it would also need to take into consideration the employers’ capacity to provide the proposed additional benefits to its employees.
Further consultations, particularly with employers, are needed, said Valte.
Senate Bill 1645 proposed by Sen. Vicente Sotto III benefits both government and non-government employees.
The Sotto bill aims to augment the income of workers in both the private and the public sector in the country by providing them with an across-the-board bonus pay that amounts to not less than 1/12 of the total basic salary earned by the employee within the calendar year.
It also says that the Secretary of the Department of Labor and Employment (DOLE) shall promulgate the implementing rules of this law within 60 days from the enactment of this law.
Labor Secretary Rosalinda Baldoz, meanwhile, said “(the bill) is not feasible” since it will put an unnecessary financial burden to the country’s struggling small and medium enterprises (SMES), which compose majority of the country’s business establishments.
Baldoz said while DOLE has support measures providing additional income for workers, the benefits should be based on their performance or coursed through their collective bargaining agreement (CBA).
“Over and above the mandatory benefits, we should promote productivity based-performance benefits and incentives or leave it at the collective bargaining of the unions,” Baldoz explained.
She cautioned that if approved, the bill could force thousands of local establishments to shutdown or reduce their operations that will worsen the country’s burgeoning unemployment and underemployment rate.
“Everybody would like additional benefits but it’s a matter of how you can give it. Mandating it under the law would affect 99.6 percent small and medium enterprises. Its affordability will become the issue,” Baldoz said.
“And even if it is mandated, many will not be able to comply, wiping out existing jobs. We should be thinking of the 2.9 million unemployed and 17 million underemployed,” he added.
The Employers’ Confederation of the Philippines (ECOP) also aired a similar stand on the issue, saying the proposal should be reviewed since it will have significant negative impact in the economy.
“More study on the 14th month pay should be conducted since based from the reports that I received, it is only a two-page bill,” ECOP president Edgardo Lacson said.
Baldoz said a review had been commissioned on a possible alternative for the 14th month pay.
“We are already quantifying these benefits. The minimum wage is just among these mandated benefits. There are still many other administrative order and laws that provide additional benefits to our workers,” Baldoz said.

Source: Manila Bulletin - September 21, 2013