Mandatory 14th month pay not good for SMEs

CEBU, Philippines — Making 14th month pay mandatory in the private sector could significantly hit micro, small and medium enterprises (MSMEs), a business leader warned.

Philippine Chamber of Commerce and Industry president Alegria Limjoco told The FREEMAN yesterday she's "afraid" of the possible impact of the proposed bill to make 14th month mandatory could have on the MSME sector.

"The 14th month will hit the small businesses that have a hard time paying the 13th month pay," the PCCI official said.

She particularly noted that MSMEs account for most registered businesses in the country.

If this bill is passed into law, businesses might downsize or even shut down, PCCI had said.

The Department of Labor and Employment (DOLE) had said it was looking into the feasibility of the proposed 14th month pay to private sector workers.

DOLE had cited the need to maintain the "beneficial social partnership" between workers and employers.

The 14th month pay is seen to help workers to have extra earnings amid the rising inflation.

Senate Bill No. 2 or "An Act Requiring Employers in the Private Sector to Pay 14th Month Pay" is still pending in the Senate since July 2016, DOLE said.

The bill was filed by Senate President Tito Sotto in July 2016. The bill seeks to require private sector employers to give their rank and file employees 14th month pay every year.

The proposed measure stated their 13th month pay shall be given not later than June 14, while the 14th month pay shall be given before December 24 of every year. 

President Duterte can push for the swift passage of bills through certifying them as urgent.

A bill becomes a law once the President signs the version passed by both houses of Congress.