The government will provide some 3.4 million employees in small businesses a wage subsidy of P5,000 to 8,000 per eligible worker affected by the Enhanced Community Quarantine (ECQ) in Luzon and other parts of the country that is currently being implemented to contain the spread of the 2019 coronavirus disease (COVID-19) disease, Finance Secretary Carlos Dominguez III has said.
This wage subsidy program will benefit 2.6 million workers whose employers are compliant with the Bureau of Internal Revenue (BIR) and Social Security System (SSS) regulations and thus can be easily identified and automatically processed for coverage if they are eligible. The program will also support another 800,000 workers whose employers are not fully compliant with the SSS or BIR as the government understands that the non-compliance may have been caused by inadvertent mistakes on the part of the employer.
These workers who belong to the low- to medium-middle class, are employed in some 1.6 million small businesses in the formal sector that are affected by the ECQ.
Dominguez and Finance Undersecretary Karl Kendrick Chua presented the wage subsidy program during a televised meeting presided by President Duterte late Monday night.
Dominguez said that while the ECQ has affected most workers in both the formal and informal sectors, the President’s swift decision to implement it to contain the spread of COVID-19 had probably saved 100,000 Filipino lives, according to World Bank estimates.
“I had a meeting with the World Bank a few days ago, and they said that your decisiveness in first reducing the number of people coming into the Philippines in February and in March, followed by the lockdown, probably saved 100,000 lives in the Philippines,” Dominguez said.
“Thank you again for being very decisive in protecting the Filipino people against this COVID-19 outbreak,” Dominguez said, addressing the President during the meeting.
According to the Department of Finance (DOF), under the Small Business Wage Subsidy Program (SBWS), the subsidy will range from P5,000 to P8,000 per beneficiary. The subsidy will be for two months and will cost a total of P50.8 billion.
Under this program, small businesses are defined as those not belonging to the top 2,745 large taxpayers of the BIR.
Dominguez said the details, mechanics and eligibility criteria under the program will be announced this week.
The online system for business owners to submit their list of employees via the SSS website is currently being pilot tested and is scheduled to go live this week.
An overview of the program was presented by Chua during the televised meeting, and was submitted as part of the President’s report to the Joint Congressional Oversight Committee on the implementation of Republic Act (RA) No. 11469 or the Bayanihan to Heal as One Act.
“Basically we are going to help the middle class because in one of your speeches a few days ago, you wanted to help the middle class and so we have proposed a program to help the middle class,” Chua said, addressing the President during the meeting.
The report to Congress said the “DOF is also studying the proposal to guarantee loans of small businesses affected by the COVID-19 pandemic. This will provide them easier access to bank financing”, which tends to contract during crisis periods.
During the meeting, Chua said that some 436,300 small businesses were forced to stop operations while some 1 million are only able to operate with skeleton forces after the national government placed Metro Manila and, later, the rest of Luzon, under the ECQ to stop the further spread of COVID-19.
Only around 117,666 essential small businesses such as those involved in food service, logistics and some retail outlets like drugstores and supermarkets, have been allowed to operate since the ECQ was carried out, he said.
“Apart from the P205 billion that the government is giving to the informal sector, or those with low-income, we are giving P51 billion to the employees of small businesses. We will improve upon the social amelioration program because this plan to give the subsidy is automated, not manual, so (it will be) faster,” Chua said.
He said the distribution of the wage subsidy will also be better targeted because those who are registered with the SSS and BIR are easily identifiable and eligibility under the program can be determined quickly. Bank and e-wallet accounts can also be registered with the SSS for the efficient disbursement of subsidies.
The program also aims to incentivize better compliance in registering with the BIR and SSS “because these workers are the ones who would be first covered by the subsidy,” Chua explained.
To avoid duplication, beneficiaries of the COVID-19 Adjustment Measures Program (CAMP) of the Department of Labor and Employment (DOLE) who already received P5,000 will only be eligible for a one-month wage subsidy, he added.
The subsidy amount will be aligned with the emergency subsidy given to the informal sector, except that the P8,000 per month estimated for all eligible workers in Metro Manila, will also cover Regions III (Central Luzon) and IV-A (Cavite-Laguna-Batangas-Quezon area or Calabarzon).
“The reason for this is that there are many workers who live in one region and work in another region,” Chua said.
Chua said the wage subsidy program will complement the measures extended by the government under RA 11469 to help small businesses during the crisis, which include granting extensions on tax filing and payments, a minimum 30-day grace period on the payment of loans and rentals, and a a minimum 30-day grace period in the payment of rentals.
Earlier, Dominguez said the Philippines is “financially able” to meet the unexpected challenges to the Filipino people and the domestic economy from COVID-19, owing to President Duterte’s policies since the beginning of his term in 2016 of maintaining fiscal discipline, exercising prudence in state spending, and embarking on the comprehensive tax reform program.
The President’s conservative economic policies have enabled the government to mobilize P1.17 trillion-worth of fiscal and monetary measures to date to help defeat the highly contagious virus and provide relief to the poor and other sectors reeling from this pandemic’s economic hit, he said.
The Congress has enabled the government to meet the new set of priorities triggered by the COVID-19 outbreak by providing the President with the power under the Bayanihan Act to realign and reallocate savings from the 2019 and 2020 national budgets.
These savings were used to finance the emergency subsidies for vulnerable sectors, notably the P205-billion emergency subsidy program (ESP) for 18 million poor and low-income households most affected by the crisis, and boost the capability of the country’s healthcare system and its front-liners in caring for the ill and defeating the pandemic.