Fate of MSMEs hang in the balance

Lucia has known her mother’s weavers nearly all her life, calling them aunties years before they became her employees. So when the lockdown in March closed the shop after nearly five decades of operations, she didn’t just feel worried for her workers, she felt worried for her family.

She had all 60 workers of Narda’s Handwoven Arts and Crafts on her mind. The shop in Baguio remained closed for two months, at a time when they expected better sales from tourists for the Holy Week.

Without any business to run, there was no money for daily wages. She tried applying the workers for subsidy under the Department of Labor and Employment (Dole). Only 20 of them got subsidized because the Dole fund ran out.

“When the employees found out not everyone was given subsidy, one of our weavers said she would give up her share so the others could have it,” Lucia said. Later on, the rest got wage subsidies under the Department of Finance.

Lucia didn’t love weaving when her mom made her learn it when she was nine years old. But she loved her aunties, who, by being there with her at the workshop, also helped raise her. This time, however, she does not just need to be there for them. Their jobs need to be there for them, too.

“From a business point of view, it’s easy to close shop,” she said. However, closing was not an option for her, despite the odds.

The same cannot be said of other small businesses. There were 7.3 million unemployed Filipinos in April, or an unemployment rate of 17.7 percent, the highest in 15 years, latest data from the Philippines Statistics Authority showed.

Since the start of the year, Dole said 1.9 million workers went jobless because of temporary closures and 1.1 million were displaced because of “flexible work arrangements,” which included forced leave and reduced workdays.

From January to July 19, more than 5,600 businesses across the country told the Dole’s regional offices that they were either laying off their workers or closing shop for good. This displaced 127,962 workers.

How did it get this bad, when the warning signs were loud and clear since March? Five months into the lockdown, after numerous late-night speeches and now at his fifth State of the Nation Address (Sona), President Duterte still does not have an encompassing economic stimulus program.

Rep. Stella Quimbo, one of the proponents of the P1.3-trillion stimulus bill called Arise (Accelerated Recovery and Investments Stimulus for the Economy of the Philippines), is concerned. Without any aggressive government intervention, Quimbo, an economist, is worried that micro, small and medium-sized enterprises (MSMEs) might have to lay off workers to just save on costs, especially since selling assets might not be an option.

‘Not fundable’

There are more than a million businesses in the economy, most of which are MSMEs that have as few as 10 workers. The bill, which was passed in the House of Representatives in June, was supposed to prevent massive layoffs. It would provide wage subsidies on the condition that business owners keep their workers. It would also let businesses borrow money at zero interest, while promising to shoulder the loan in case the shop goes bankrupt. There will also be regulatory relief.

However, Acting Socioeconomic Secretary Karl Kendrick Chua said in an earlier media interview that the P1.3-trillion economic stimulus package was “not fundable” because of limited revenue sources during the pandemic.

But Quimbo said the country should make use of its good credit rating by borrowing money.

The administration, however, is leaning toward spending less. Malacañang said Mr. Duterte was expected to certify the Senate’s Bayanihan to Recover As One Act, which would only allot P140 billion to stimulate the economy.

Intervention

“Any which way you look at it, P140 billion is really not sufficient to avert a loss as big as P2 trillion,” Quimbo said.

She added that she hoped Mr. Duterte would certify the House bill instead as urgent during his Sona today. But other than that, she said she wished there would be a clear plan on what to do about the COVID-19 situation.

But every day wasted without any meaningful intervention is a day an MSME is left to die on its own during a health crisis. Hans Cerdenia, who cofounded a small cafe in Sikatuna Village in Quezon City, could not wait any longer.

In June, Cerdenia said they decided to close the Hilcrest Cafe after six years in the business.

“No matter how we flip the numbers, the numbers were against us. It just wasn’t going to work,” he said in a Zoom interview with the Inquirer this month. “By the look of things, it really didn’t look like things would get better by next year. You have to face the hard truths and the hard facts.” INQ