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PRRD approves Salceda’s wage subsidy proposal for MSME workers

President Duterte has already approved House Ways and Means Chair Joey Sarte Salceda’s (Albay, 2nd District) proposed wage subsidy scheme for some 5.98 million workers, small and medium enterprises, sole entrepreneurs, and freelancers who belong to the middle class category, affected by the extended enhanced community quarantine (ECQ).

In a recent letter to President Duterte, Salceda proposed a P53-billion  Payroll Support for Workers, Entrepreneurs, and Self-employed (PSWES) Program, aimed at extending support to the middle class who face or will likely face financial difficulties in the weeks after the ECQ. The subsidy will be distributed for three months.

The lawmaker said there is a sound basis for a middle-class cash transfer scheme, since a key goal of the Duterte administration’s key economic policies is the development of a resilient middle-class which drives economic dynamism and productivity. “Development gains in this area may waver unless social protection mechanisms are in place to prevent those who have breached poverty and have joined the middle class from falling back under the poverty line. They are either mostly or entirely outside the coverage of the government’s Social Amelioration Program or SAP,” he pointed out.

Salceda said he recommended to the President that “we begin calibrating a wage subsidy program for small and medium enterprises, as well as for those in the gig economy. We need these enterprises to operate. It’s essential for the economy and for job preservation, that we dupport them. A payroll support program is necessary to help sustain micro-, small, and medium enterprises (MSMEs) that will face liquidity issues after the ECQ, as well as their workers, who may be terminated if these MSMEs are unable to pay their wages and maintain operations,” said Salceda.

“Apart from supporting business, the program will also be able to provide relief to formal economy workers, entrepreneurs, and the self-employed  who typically belong to the middle class. Income support will also likely be necessary for freelancers and those in the gig economy who were unable to earn income due to the ECQ,” he explained.

Salceda said that based on the Bureau of Internal Revenue (BIR) data on small taxpayers, the country’s “MSMEs employ around 4.1 million formal economy workers while some 380,000 entrepreneurs are classified as sole proprietors. On the other hand, the 2018 Global Freelancer Insights Report says that about 1.5 million Filipinos are freelancers. Together, members of these sectors have a combined workforce of 5.98 million workers.”

“Their average monthly minimum wage is placed at around Php 9,500 per month. We propose a wage subsidy that covers around a quarter to a third of this amount. The cost of supporting their income, at P3,000 per month for three months, is P53.82 billion pesos. I suggested that we distribute most of the aid via the Social Security System (SSS), assisted by the BIR and the Labor Department for the formal economy workers. For freelancers, I propose an open-application window similar to the Covid Adjustment Measures Program or CAMP of DOLE,” said Salceda.

“I also proposed that we couple the open-application process for freelancers with cost-free BIR and SSS registration. That way, they are able to see the full benefits of being accredited with the state, while also being able to contribute in future years when they are in better conditions, ‘Kumbaga. bigyan kita ng tulong ngayon, para kapag nakaluwag-luwag ka na, makatulong ka rin sa iba. (It’s like we help you now and when you get less strained, you help others too,) We need to expand the tax base when this situation normalizes. This will be a big part of that effort,” he further noted.

He added: “As you know, I wrote HB 1527, which would essentially be a Magna Carta for the freelancers. There’s a lot of potential there if we can regularize that industry. Showing them the benefits of being part of the formal economy would be the ultimate invitation,”  Salceda said that recognizing the primacy of providing social protection to lower income households in prioritizing resources for subsidies is essential, but subsidy for the middle class should not exceed the lowest amount received by low income and vulnerable households.

“We reckon this amount, in aggregate, to be around P35 billion, which we believe is a reasonable investment in the middle class, and which will certainly support immediately the economy’s aggregate demand,” he explained, adding that middle class assistance does not have to come in the form of an outright subsidy similar to the SAP. It may come in the form of a wage subsidy to ensure that they are employed, and their employers remain in viable amid the pandemic.

A noted economist, Salceda also co-chairs the House Stimulus Cluster, the panel tasked with drafting a proposed economic stimulus plan for the country’s transitioning out of, and recovering from Covid-19. Prior to the implementation of the Social Amelioration Program (SAP), the lawmaker  also submitted a report to President Duterte that outlined modalities for an emergency subsidy for the poor and vulnerable sectors.

Salceda led the initial calls for a lockdown in Metro Manila immediately following reports of community transmission in San Juan. He has also filed a bill creating a Center for Disease Control and providing special powers to the executive to address a health emergency as early as January (HB 6096).

Also a recognized leading advocate for disaster preparedness, he was elected co-chair of the United Nations Green Climate Fund where he  represented Asia and other developing countries.

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