Government to consider funding 13th month pay of small firm workers

MANILA, Philippines — The Duterte administration is studying the likelihood of financing the 13th month pay of workers in small and medium sized enterprises this holiday season, Finance Secretary Carlos Dominguez III said on Thursday.

“I have asked (Labor) Secretary (Silvestre) Bello (III) for the details of his proposal so we can determine if we have the budget cover for it,” Dominguez said in a Viber message.

The finance chief’s statement came after Bello clarified that his department would no longer be seeking the deferral of 13th month pay for small firms, which was met by harsh public condemnation and was later on fell unsupported even by Malacanang. 

He earlier floated the proposal in an apparent attempt to assist small companies struggling on their cash flow due to limited operations forced on them by the pandemic and movement restrictions.

“We will not postpone, we will not defer and we will not give any exemption to the payment of the 13th month pay,” Bello said on the Laging Handa briefing aired on state television PTV-4.

With that, the labor chief said companies must ensure that their employees get their 13th month benefit on or before December 24 as mandated by law. The compensation is equivalent to 1 month of salary for workers employed for a year and above. 

Meanwhile, it remains to be seen how the finance department would fund the 13th month pay for SMEs, which account for 98% of local firms. If that ultimately becomes unfeasible, Bello said the government would personally ask banks to extend loans to SMEs so they can make the holiday payouts. 

At the height of lockdowns in May, the finance agency led the payout of P51 billion in cash assistance worth between P5,000 and P8,000, depending on regional location, to around 3 million SME workers.

The law says pay their workers their 13th month pay on or before December 24,” Labor Secretary Silvestre Bello III said Thursday on the Laging Handa briefing aired on state television PTV4.

Sought for comment, Jerome Adonis, secretary-general of militant labor group Kilusang Mayo Uno, welcomed the decision of the labor department. “It's good that Secretary Bello stood by giving workers the 13th month pay for whatever reason because that's in the law,” Adonis said.

Philstar.com has also reached out to industry group Employers Confederation of the Philippines for comment.