Local economists said deciding whether to defer the 13th-month pay of employees working for “distressed” small and medium enterprises (SMEs) could either weaken the economy, lead to a legal question, or protect the jobs of millions. These are just some of the possible implications should the Department of Labor and Employment (DOLE) decide to push through with exempting “distressed” firms from following the law of providing a 13th-month pay to their workers.

The Covid-19 pandemic has caused the Philippine economy to contract 0.7 percent in the first quarter and 16.5 percent in the second quarter. This led to a decline of 9 percent in the first semester of 2020. However, if the deferment of the 13th month would mean that workers would be able to keep their jobs, Dr. Cid L. Terosa of the UA&P School of Economics would side with the DOLE on the matter.

Dr. Terosa said the deferment is reasonable considering the impact of the pandemic on thousands of SMEs this year. Based on the July 2020 Labor Force Survey, 4.571 million Filipinos were considered unemployed, an 87.5-percent increase from the 2.437 million it posted in July 2019. In April, the number of unemployed Filipinos reached 7.254 million, a 220-percent increase from the 2.267 million recorded in April 2019.

“I believe it is better to secure jobs at this time than to guarantee momentary monetary benefits. Of course, this will cut purchasing power and  its multiplier effects,” Dr. Terosa said. “Also, it will deprive poorer households of an expected source of financial relief. I want, however, to take a long-term perspective and support short-term sacrifices for long-term gains.”

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