An employers group is working with the government to map out mechanics of a loan facility to assist pandemic-hit micro and small companies in providing workers their 13th month pay which is mandatory under the law.
Employers Confederation of the Philippines (ECOP) president Sergio Ortiz-Luis Jr. said the Department of Trade and Industry (DTI), Department of Labor and Employment (DOLE), and Department of Finance (DOF) have agreed in principle for the P200 million to P500 million allocation for interest-free loans for firms to cover 13th month pay under the new lending facility.
Ortiz-Luis said the amount will be sourced from the available funding of the Small Business Corporation (SBCorp) under Bayanihan 2.
The Bayanihan to Recover as One Act or Bayanihan 2 has directed SBCorp, the financing arm of DTI, to expand its existing loan programs for micro, small and medium enterprises (MSMEs), cooperatives, hospitals, tourism, and overseas Filipino workers (OFWs) affected by the coronavirus disease 2019 (Covid-19) pandemic and by other socio-economic reversals.
“We also touched base with (DOF) Secretary (Carlos) Sonny (Dominguez III) and he is supportive of our initiative in the Christmas bonus window from SBCorp,” he said.
To avail of the loan program, Ortiz-Luis said micro and small companies intending to provide the 13th month pay of their workers need to secure a certification from the DOLE that they are still operating but incapable of providing such benefit due to the negative effects of this crisis.
He said it is just a one-day process for the DOLE certification.
DTI Secretary Ramon Lopez earlier said the available loans would range between P50,000 to P200,000.
Ortiz-Luis said the loan shall be payable within one to two years.
In a radio interview, Ortiz-Luis underscored the importance of assisting micro and small companies facing cash flow problems during the pandemic.
He said micro enterprises represent about 90 percent of the total number of establishments and 65 percent of employment in the country, while the small ones make up around 8.5 percent of all firms.
Ortiz-Luis said half of these businesses had to close their operations due to the pandemic, while the other half which remains open are sometimes having difficulty in paying their employees.
He said the majority of micro and small companies which are not capable of providing the 13th month pay of their workers are located in the National Capital Region.
“So when talking about 13th month pay, that is a bigger problem (for them),” he said in Filipino. “Rather than providing ‘ayuda’ (government help), loans can be given to these firms. The money will be loan that will be paid.”
In a television interview, DOLE Secretary Silvestre Bello III said the 13th month pay is mandatory under the law unless there will be an agreement between employers and employees in the arrangement based on the company’s financial status.