Manufacturers decry additional P4.1-B monthly cost of SOT bill

The manufacturing industry might shoulder an additional P4.1 billion in monthly labor costs if the security of tenure (SOT) bill gets passed, data sent to Malacañang showed.

Malacañang had asked business groups last week to provide data on the potential impact of the bill, two ranking sources said in separate interviews.

The data, obtained by the Inquirer, gave credence to what the business sector tagged as a “populist” policy.

The additional cost was computed by taking into account the employee benefits companies would have to shoulder on top of the monthly minimum wage. These benefits include enrolling contractual workers in the Social Security System, while assuming that the country’s 311,722 agency-hired manufacturing workers had Metro Manila’s P537 monthly minimum wage.

The bill, among other provisions, will require project-based and seasonal workers to be regularized, while obligating the government to provide financial assistance and training to workers in between jobs.

The groups said over 230,000 jobs were at risk since the bill would prohibit contracting out activities deemed “directly related” to the business.

“Using the example of production/assembly line workers, which can be considered as ‘directly related’ to the manufacturing industry, the 236,697 workers will potentially lose their jobs, since these are contracted and not all workers could be absorbed/regularized by the contractee,” the report read.

The monthly figure, however, is just a conservative estimate since it does not include other factors such as overtime pay, night shift differential, and 13th month pay.

Giving out the 13th month pay, data showed, would add another P3.7 billion to labor costs per year.

The populist Mr. Duterte did not make any mention of the bill during his State of the Nation Address on Monday, giving the business groups hope that he has seen the rationale behind their objection.