Both business and govt must act to avert a social crisis—labor group

Photo by Patrick Adalin

The labor group Partido Manggagawa asserted that both business and government must act to avert the covid pandemic turning into a social crisis. This was the group’s reaction to the call by 32 business organizations for deficit spending by government for assistance to workers and the poor.

“Employers must bear temporary losses by paying wages to their workers during the lockdown. Businesses should go into deficit spending just like what they demand of government,” stated Rene Magtubo.

To illustate, he added that “We know of a parts supplier to car companies abroad that stopped operating this week without granting quarantine subsidy to more than 8,000 workforce and instead is applying for the P5,000 DOLE assistance to formal workers. This is a giant company that can very well afford to bear losses by paying wages during the lockdown.”

“Big businesses that employ more than 200 workers should be mandated to grant quarantine subsidy to its workers. These large establishments employ more than a third of all formal workers.”

According to PM, even micro, small and medium enterprises can shoulder temporary losses by paying quarantine subsidy to their workers. A microenterprise with 5 workers and P1.5 million in capitalization—the median numbers for the category—will incur P50,000 in quarantine subdidy for one month which translates to losses since there is no revenue. This P50,000 temporary loss is still just 3.3% of its total capitalization and should not lead to bankruptcy. These microenterprises number 850,000 and employ almost a third of all formal workers.

Magtubo explained that “For a median small enterprise with P7.5 million in capitalization and employing 50 workers, shouldering the quarantine subsidy of P10,000 in one month translates to a loss of 6.7% of their capital, which is still manageable.”

“But, assuming for the sake of argument that the SMSE sector is precisely what the government should assist, then the P5,000 DOLE assistance is wanting and must be raised to P10,000. This is what should be funded from the P280 billion in stimulus that business is proposing,” Magtubo insisted.

He furthered that “However this imply that large enterprises must take the cudgels for their own workers. But at present they are not doing that. So they must be compelled by a government order mandating that big firms pay quarantine subsidy to their workers. Employers have benefited from more than a decade of economic growth without sharing the bounty with their workers whose real wages have stagnated. Now that there is a crisis, employers are morally obliged not to pass on the burden to their hapless workers.”

March 21, 2020