Ease the 13th-month pay burden

With the holiday season just around the corner, most businesses are making provisions for the payment of the mandatory 13th-month pay of their employees.

It is in this light that the Small Business Corp. (SBC), a government institution created to provide financial, training and marketing assistance to micro, medium and small enterprises (MSMEs), announced recently its willingness to extend loans to micro and small businesses to help them pay their employees that year-end benefit.

But that loan is limited to only about 7,000 out of approximately 1 million such businesses because the SBC has only P500 million to spare for that program.Although left unsaid, following government regulations, the borrowers have to comply with some credit requirements and should pay the principal and interest on the loan within the prescribed payment period.

Bear in mind that since government loans are sourced from taxes, they cannot be treated as freebies or payable on a pay-when-willing-and-able basis.

Thus, considering SBC’s limited budget, employees of the majority of micro and small businesses face a financially bleak Christmas season.

Note that since the pandemic hit the country last year and the 13th-month pay issue had come up, the Department of Labor and Employment (Dole) has adopted a “borrow to be able to pay” approach for MSMEs.

Meaning, they should bite the bullet and apply for loans from available sources to enable them to pay their employees that year-end benefit. This would be on top of maintaining sufficient cash flow to keep the business going as the lockdown measures are eased.

Not a word has been said about making adjustments in the implementation of the 13-month pay law or putting in place measures (other than securing loans) to help employers meet the exigencies of the pandemic.

In this regard, the measures taken by various government offices to soften the adverse effects of the virus on their supervised entities are instructive.

To ease the burden of consumers and small businesses, the Bangko Sentral ng Pilipinas in November 2020 imposed a 2-percent a month interest cap on outstanding credit card debts, financial charges and other related fees.

It also called on their supervised financial entities to be considerate in the management or treatment of debtors that are unable to meet their financial obligations due to COVID-19.

In March 2020, the Civil Aviation Authority of the Philippines (CAAP) deferred the collection of takeoff, landing and parking fees from Philippine carriers. Going one step further, the CAAP has waived concessional rental payments in all airports for this year.

The Bureau of Internal Revenue extended to June 14, 2020, the filing period for 2019 income tax and final adjustment returns without penalties and relaxed the rules on the place of filing of returns and payment of taxes.

In the private sector, Meralco and the two water concessionaires suspended the disconnection of power and water facilities while the pandemic was at its peak and allowed their customers to pay their billings in installments.

These entities thought out of the box in finding ways and means to help their respective “constituencies” cope with the harsh financial effects of the pandemic without breaching their government or stockholders’ mandate.

Going back to the 13th-month pay, the Dole can tweak its implementing regulations to, say, allow the employers to pay only a portion of that benefit depending on its paying capacity on the condition that the balance shall be settled later in installments without incurring penal liability for the delayed payment.

Or if the business is really in dire straits and its owner does not have the capacity to incur loans to pay the 13th-month pay, to be more considerate in granting it exemption from or deferment of the obligation to pay it.

Given the compassionate nature of Filipinos, it is reasonable to assume that when the inability to pay that benefit is properly explained by their employer, they will take it without rancor.

The Dole’s responsibility is not limited to employees; it also covers the employers who make possible the needed employment. INQ

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