Labor Secretary Silvestre Bello III on Tuesday said the proposals for a wage subsidy are better than calls for a salary increase that might drive some employers to closure.
“If we receive a formal request from the labor groups, first, we will discuss this with the concerned government agencies and explore possibilities on how we can address this proposal. It will all depend on the capacity of the government,” Bello said.
Last week, various labor groups such as the Trade Union Congress of the Philippines (TUCP) urged the government to provide workers with wage subsidies amid the economic decline brought about by the COVID-19 pandemic.
“We will have an in-depth consultation with other agencies of the government especially for those who will shoulder the expenses of the subsidy such as the [Departments of] Finance, Trade and Industry, and NEDA. We need to know if the government can shoulder all of this because we are talking about millions of workers,” he added.
Bello said he submitted a wage subsidy proposal worth P20 billion for employers, but it was declined.
Meanwhile, Senate Minority Leader Franklin Drilon warned of more serious consequences—including an increase in crimes, extreme poverty, hunger, and joblessness—may result if the government fails to address the sinking economy.
He called on the government economic managers to lay down a comprehensive and realistic plan to address the weakening economy.
He also urged the Duterte administration’s economic managers to throw a lifeline to the poor and the most vulnerable sectors amid these trying times.
“I agree with the President. That Philippine economy is ‘sinking and sinking.’ It is a grim reality that we have to face. I am extremely alarmed by the continued decline of our economy and the rising inflation. Let us face it as a nation,” Drilon said.
The economist of the House of Representatives on Tuesday told the government’s economic managers to prioritize three solutions and avoid what he said were “temptations” of policy in trying to resuscitate the economy that saw a record 9.5 percent contraction in gross domestic product in 2020.
Albay Rep. Joey Sarte Salceda, chairman of the House Committee on Ways and Means, said: “I don’t want to cry over spilt milk anymore. It’s the largest decline in generations. I do not want us to be distracted by any attempt to make it look better than it is, because it is bad. I want to focus on the solutions. I can see three main ones at our easy disposal.”
Those would be to roll out the COVID vaccine, to spend the 2021 budget and exhaust the 2020 budget “completely” this year, and to push the CREATE act that would “signal to the domestic and international investing communities that we are serious about being open for business,” he said.
Senator Panfilo Lacson said the economy is definitely in a bad shape, made even worse by the difficult choice between addressing health-related problems and the sinking economy.
He said a classic example is the National Economic and Development Authority (NEDA) recommendation to the President to allow 10-year-old kids and above to go out of their homes with their parents as family activities could improve the economy.
The recommendation was later rejected for safety reasons.
On Monday night, the President said that the Philippines is “sinking deeper and deeper” and is losing P2 billion a day due to COVID-19.
The economy suffered the worst economic contraction post-World War II of 9.5 percent in 2020 due to the ongoing coronavirus pandemic. Inflation in the country continues to rise, which was aggravated by the typhoons that hit the country in the last quarter of 2020, Drilon noted.
“The question now is, what do our economic managers plan to do? The people would want to see a clear plan to address our worsening economic situation,” Drilon said.
“Failure to address it will create more serious problems: high crimes, extreme poverty, hunger, and joblessness,” Drilon said.
Drilon urged the government to be more aggressive in addressing red tape and corruption, citing a decline in the latest Corruption Perception Index wherein the Philippines slipped 115th place while retaining its poor score of 34, with 100 points being the best.
Congress, Drilon said, should give top priority to measures that will aid the government in handling the pandemic, provide for fast economic recovery and institute fiscal discipline.
In raising the alarm against what he said were “temptations” on policy, Salceda said: “There are three things that we should not do.”
“One is to deplete the revenue base by making redundant incentives too generous, or by making unreasonable or impulsive tax exemptions. Apart from those we can clearly justify, I am averse to any more erosion of revenues, as House tax chairman,” he said.
“The second temptation is to build credit barriers. I find the tightening of rules on borrowing recently issued by the Bangko Sentral objectionable. It does not make sense to impose a one-size-fits-all restriction when you also want to attract credit. The economic sense eludes me,” Salceda said.
“If we want to protect banks from non-performing loans, let us encourage restructuring and credit mediation. It makes no sense to restrict credit and lower interest rates at the same time,” he added.
“The last temptation we should avoid is the fear of the deficit. These are extraordinary times. The best way to protect credit ratings is not to avoid borrowing, but to avoid further economic decline. The measure of our borrowing capacity is economic health, not debt stock,” the solon said.
“If at some point, we need to supplement social spending, we should be open to it. I would rather have high growth and high deficit than low growth and low deficit. Low growth is the enemy, because it is what drives people to poverty and hunger,” Salceda explained.
Duterte said the government is doing its best to endure the crippling effects of the pandemic and expressed confidence that the mass inoculation could reverse the present economic situation.
The President made the statement in his weekly public address Monday night where he said his Cabinet is responding to the problems brought by the pandemic after the government released the nation’s recent gross domestic product (GDP) figures.
The country is losing billions in lost productivity as a result of the raging pandemic as the government carries out restrictions to contain the further spread of the virus, the President said.
The economy was doing well before the pandemic, he noted.
Citing reports from the Secretary of Finance, Duterte said “every day, until this COVID is over, every day, we are losing P2 billion intended for the Filipino people, workers. The Filipino workers would have earned that money if our economy is moving.”
“So, we are sinking deeper and deeper, but we are not alone. But we are trying our very best to keep us afloat,” he added.
The country’s economy suffered a record annual contraction in 2020, after the GDP shrank in the fourth quarter, according to the preliminary figures from the Philippine Statistics Authority (PSA).
PSA data showed that the country’s GDP contracted by 8.3 percent in the fourth quarter, in contrast with the 6.7 percent growth it posted in the fourth quarter of 2019.
The Philippines’s full year GDP plunged 9.5 percent, which the PSA said, was the country’s steepest economic contraction in history. The PSA has been collecting annual data since 1947.
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