THEME: ANY PREVAILING CURRENT ISSUE OF NATIONAL AND LOCAL INTEREST

INVOLVING LABOR AND EMPLOYMENT

TITLE: Proposal for Wage Subsidy in the Private Sector Amidst Pandemic
Nikka Doria, JD2-B

Introduction
Economic growth is a result from a suitable integration of increase in employment and
labor productivity.1 A country’s effort towards the attainment of growth is based on the premise
that growth purports service to people, uphold development and impliedly supports the reduction
efforts of the government. According to World Bank, Philippines is one of the most dynamic
economies in the East Asia Pacific region which is rooted in strong consumer demand
collaborated with vibrant labor market and robust remittances. 2 However, this strong economic
growth that the country relished for the previous years, has been challenged by the outbreak of
coronavirus. This abrupt situation brought the country’s economy into recession. The severity of
the economic condition is on account of the alleviating level of employment and income in the
country. Based on the Philippine Statistics Authority data, the number of unemployed persons
was 7.2 million resulting to an unemployment rate of 17.6 percent. 3 Moreover reported 8.7%
unemployment rate in October 2020 worse than October 2019 record of 4.6%. 4 This severe
current unemployment rate is the effect of the economic shutdown to the Philippine labor market
as a consequence of the outbreak of corona virus. This virus brought a significant adverse
repercussion on the Philippine economy as a consequence of the reduction of productivity due to
business closures and trade disruption which negatively affect the employment of individuals in
the country. In response to this unfavorable circumstance, various labor groups such as the Trade
Union Congress of the Philippines (TUCP) urges the government to provide wage subsidies to
workers. According to the President of TUCP, Raymond C. Mendoza, the government shall get
ahead of the economic recission and emphasized that wage subsidy is urgently needed as the
Philippine economy has yet to recover from the pandemic surge.5 Concerning the petition of the
labor groups, the Department of Labor and Employment considered the matter and committed to
discuss and consult the proposal with other government agencies. Labor Secretary Silvestre
Bello III said that the proposal was submitted for the purpose of the retention of the existing
workforce and prevention of job termination.6

Discussion and Conclusive Position

1
Employment-Rich Economic Growth. International Labor Organization.
2
The World Bank in the Philippines.
3
Melissa Lopez, (2020). CNN Philippines. 3.8 Filipinos unemployed in Oct. as some jobs restored, but still far from
full recovery-PSA
4
Employment Situation in April 2020. Philippine Statistics Authority.
5
Varcas, (2021). TUCP calls for wage subsidy in the wake of dismal GDP news. Business World.
6
2021. DOLE to review calls on a wage subsidy. Department of Labor and Employment.
 The issue in the labor market signifies a prompt and efficient action by the government as
labor represents the human factor in the production of goods and services of country’s economy.
The purpose of the wage subsidy proposal which is the protection of employment of the
individuals as several private sectors still in the midst of redeeming its stable financial standing,
is anchored on the provisions of the 1987 Philippine Constitution which provides that the State
shall afford protection to labor, local and overseas, organized and unorganized, and promote full
employment and equality of employment opportunities for all.7 Moreover, Sec. 9, Art. II of the
Constitution guarantee to promote a just and dynamic social order that will ensure the prosperity
and independence of the nation and free the people from poverty through policies that provide
adequate social services, promote full employment, a rising standard of living and an improved
quality of life for all.8 Based on the actual situation of the labor market in the year 2020
commencing from the virus outbreak, several businesses operations were disrupted, business
establishments closed which consequently affect loss of revenue and negatively affect the status
of employment. This was manifested in various lay-offs done by employers which includes the
reduction of workforce by the Philippine Airlines as it is in the process of surviving the downturn
as the travel restrictions still persists, demand for flights remained weak and the costs of running
an airline.9 Another report recorded by the DOLE on August 2020 was the job displacement of
16,134 workers due to the downsize or cessation of business operation. 10 Further reported that in
the month of November, they have recorded the highest job losses of about 94,711 in 4,838
establishments.11 These situations urge labor groups to call the attention of the government in
order to provide wage subsidies to the workers as a foreseen solution for the increase job
termination in this trying time. Amidst the labor market depression, the Department of Labor and
Employment continued its efforts in preserving jobs in consonance with the mandate of the
Constitution emphasizing the protection to labor, promotion of full employment and providing
social services for the welfare of workers. These efforts include the assistance distributed to
several workers that were displaced during the economic downfall. A wage subsidy amounting to
Php 5,000 was given to workers affected with the strict quarantine protocols. This action made
by DOLE is manifestation of the constitutional provision which affirms labor as a primary social
economic force.
Providing a wage subsidy in private sector promotes welfare of the workers as they will
be financially supported and their security of tenure will be protected. Much as it is beneficial to
the workers, there is still a need for further review on the proposal as this will involve significant
amount which the government needs to assess where to acquire the desired financial matter. The
end of this proposal is to curb job termination of workers which will not worsen the
unemployment status of the country which means that business establishments will retain and

7
Sec. 3, Article XIII. The 1987 Constitution of the Republic of the Philippines.
8
Sec 9. Article II. The 1987 Constitution of the Republic of the Philippines
9
Camus, October 2020. PAL to let go of 2,700 employees as pandemic beats up airline. Philippine Daily Inquirer.
10
Yee, August 2020. Nearly 1,000 firms laid off workers. Philippine Daily Inquirer.
11
Pazzibugan, 2021. Mass Layoffs worst in Q4 2020.
continue its operations which in effect will facilitate the aim of the government towards
economic recovery as employment correlates with economic development. However, this kind of
program shall not be the only solution of the government in addressing the employment issues
and concerns of the country as this may not create a conducive economic condition. Providing
wage subsidy is better than implementing salary increase as the latter contemplates increase in
their capital which may affect their business cycle and may be the reason business closure.
Wherefore, in view of the foregoing, I am in affirmative on the issue whether or not the
government shall pursue the proposed wage subsidy in the private sector affected by the
disruption of coronavirus. A wage subsidy is one of the tools of the government in its
undertaking against the unfavorable consequence of the coronavirus that gravely affect the
country’s dynamic and vibrant economic condition over the years. Nevertheless, this proposal is
an apparent illustration of the constitutional guarantee that the state affirms labor as a primary
social economic force and recognizes the indispensable role of the private sector.12

References:

12
Sec. 18 & 20, Article II. The 1987 Constitution of the Republic of the Philippines.
1. Employment-Rich Economic Growth. International Labor Organization. Retrieved 4
February 2021 from https://www.ilo.org/global/topics/dw4sd/themes/employment-
rich/lang--en/index.htm

2. The World Bank in the Philippines. Retrieved 4 February 2021 from

https://www.worldbank.org/en/country/philippines/overview#1

3. 3. 2020, Melissa Lopez. 3.8 Filipinos unemployed in Oct. as some jobs restored, but still
far from full recovery-PSA. CNN Philippines. Retrieved 4 February 2021 from
https://cnnphilippines.com/business/2020/12/3/October-2020-employment-data-
PSA.html

4. Employment Situation in April 2020. Philippine Statistics Authority. Retrieved 4

February 2021 from https://psa.gov.ph/statistics/survey/labor-and-employment/labor-
force-survey/title/Employment%20Situation%20in%20April%202020

5. Varcas, (2021). TUCP calls for wage subsidy in the wake of dismal GDP news. Business
World. Retrieved 5 February 2021 from https://www.bworldonline.com/tucp-calls-for-
wage-subsidy-in-the-wake-of-dismal-gdp-news/

6. 2021. DOLE to review calls on a wage subsidy. Department of Labor and Employment.
Retrieved 5 February 2021 from https://www.dole.gov.ph/news/dole-to-review-calls-on-
wage-subsidy/

7. Sec. 3, Article XIII. The 1987 Constitution of the Republic of the Philippines. Retrieved
5 February 2021 from https://www.officialgazette.gov.ph/constitutions/the-1987-
constitution-of-the-republic-of-the-philippines/the-1987-constitution-of-the-republic-of-
the-philippines-article-xiii/

8. Sec 9. Article II. Article II Declaration of Principles and State Policies. The 1987
Constitution of the Republic of the Philippines. retrieved 5 February 2021 from
https://www.officialgazette.gov.ph/constitutions/the-1987-constitution-of-the-republic-
of-the-philippines/the-1987-constitution-of-the-republic-of-the-philippines-article-
ii/#:~:text=Section%209.,quality%20of%20life%20for%20all.

9. Camus, 2020. PAL to let go of 2,700 employees as pandemic beats up airline. Business
Inquirer. Retrieved 5 February 2021 from https://business.inquirer.net/308600/pal-to-let-
go-of-2700-employees-as-pandemic-beats-up-airline

10. Yee, 2020. Nearly 1,000 firms laid off workers. Retrieved 5 February 2021 from
https://newsinfo.inquirer.net/1320317/nearly-1000-firms-laid-off-workers

11. Pazzibugan, 2021. Mass Layoffs worst in Q4 2020. Philippine Daily Inquirer. Retrieved 5
February 2021 from https://newsinfo.inquirer.net/1386808/mass-layoffs-worst-in-q4-2020

12. Sec. 18, 20, Article II Declaration of Principles and State Policies. The 1987 Constitution
of the Republic of the Philippines. Retrieved 5 February 2021 from
https://www.officialgazette.gov.ph/constitutions/the-1987-constitution-of-the-republic-of-
the-philippines/the-1987-constitution-of-the-republic-of-the-philippines-article-
ii/#:~:text=Section%2018.,workers%20and%20promote%20their%20welfare.&text=The
%20State%20shall%20develop%20a,economy%20effectively%20controlled%20by
%20Filipinos.