The Social Security System (SSS) is prepared to pay unemployment benefits to some 30,000 to 60,000 workers projected to lose their jobs as a result of the possible layoffs in, or closures of, private companies hit by the economic fallout from the fast-spreading new coronavirus disease 2019 (COVID-19).
Finance Secretary Carlos Dominguez III, who is concurrent chairman of the Social Security Commission (SSC), said he was assured by SSS president and CEO Aurora Cruz Ignacio that the state-run pension fund is ready to shell out P1.2 billion under a worst-case scenario in which as many as 60,000 of its premium-paying members lose their jobs in the months ahead and apply for unemployment benefits.
SSS premium-paying members can avail of unemployment benefits equivalent to a half of their average monthly salary credit (AMSC) for a maximum of two months if they are displaced because of redundancy, installation of labor-saving devices, retrenchment, closure or cessation of operation, and disease or illness.
They should have paid the requisite minimum number of monthly contributions for three years to qualify for this unemployment benefit, twelve of which should have been made in the last eighteen months.
The unemployment benefit is one of the landmark provisions of Republic Act (RA) No. 11199 or the Social Security Act of 2018.
Dominguez said he expects affected workers mostly in the travel, tourism and hospitality industries, and, to some extent, those in the manufacturing sector to apply for the unemployment benefit.
“The estimate of the Department of Labor and Employment (DOLE) is that there will be a drop in employment of 30,000 to 60,000 jobs. This is going to affect mainly the tourism industry, the hotels and airlines. The job displacement will probably last six months,” Dominguez said during his meeting Wednesday (March 11) with SSS officials.
“There might be some manufacturing jobs that are going to be affected because of the disruptions in the supply chain. But I just got a message today that imports in China are already picking up,” he added during the Wednesday meeting.
In response to a query by Dominguez, SSS Senior Vice President and Chief Actuary Edgar Cruz said the SSS is ready, at the minimum, to provide P660 million for the unemployment benefits of affected SSS members, and up to P1.2 billion under a worst-case scenario.
The average unemployment benefit that qualified members receive is about P11,000.
Assuming that the 60,000 workers in the worst-case scenario will be dislocated and avail themselves of the benefit, this would amount to around P660 million, Cruz said.
If the computation is based on the maximum cash benefit of P20,000 per applicant, the total amount will reach P1.2 billion, he said.
Cruz said with the current cash position of the SSS at P21 billion, it can well afford to pay unemployment benefits, given that P660 million is just a fraction of the more than P16 billion that SSS paid monthly for members’ pensions in 2019.
He said, though, that the projected financial claims for unemployment benefits are just estimates because several factors have to be considered, such as the number of actual job losses; the number of jobless workers who are actually SSS members; the number of SSS members who are qualified to receive unemployment benefits; and their average salary credits.
During the meeting, Dominguez also asked the SSS to be ready with its business continuity and clean-up plan in all of its branches to ensure the non-interruption of social security services even in the event of a limited operation in its offices or a possible lockdown.
SSS Executive Vice President Judy Frances See said that 40 percent of SSS transactions are already done online, with its system prepared to accommodate 100 percent of transactions online by April.
“We continue to register new members, so some shifted to online channels already. As we register new members, we are able to accommodate them online. Some shifted already to mobile. Some are on the learning mode using our E-centers to familiarize themselves in using our electronic channels,” See said.
Cruz said that in case of a total lockdown in the main office, SSS can continue to provide pension and salary benefits as it has at least a four-month buffer in terms of liquidity made up of cash and near cash investments, like government securities.
“Even if everything goes down, we will be able to maintain pension benefits and salaries for a little over a month and after that, we will have to start liquidating more liquid assets,” he said.