FOR A country so dependent on its workforce, there has been relatively little focus on labor policy. At a time when workers are faced with an unprecedented shutdown of the economy as a result of the enhanced community quarantine, we are all treading on uncharted waters, and some clarity from the government is in order. The government needs to articulate a clear policy for the coming months.
Luckily, workers have much to look forward to in the Bayanihan to Heal as One Act signed into law by President Rodrigo Duterte on March 25. Among the authorized powers granted by Congress to the President is a mandate to provide emergency subsidies worth Php 5,000-8,000 to around 18 million low-income households each month for two months. While far from ideal, these cash transfers will be vital in giving households a means to live in the coming months.
More importantly, cash transfers are essential to enforce “social distancing.” A sudden and abrupt lockdown without any means of relief only leaves the vulnerable squeezed out of their pockets, as most Filipinos do not have savings, and cannot endure protracted crises such as a viral pandemic. To suddenly deprive them of their livelihood would be equivalent to a death sentence.
The law is a welcome development to be sure, but it is not enough. After the COVID-19 response law, Congress should provide a plan for the next few months after the end of the quarantine, as these will be crucial in determining the fate of everyday workers. The temporary shutdown of certain sectors will hit small-and-medium enterprises (SMEs) the most, and because SMEs employ about 70% of all workers in the country, the threat of job loss as a result of businesses shutting down is very real and imminent.
How should we address this? Policy should also be geared towards encouraging what economists call “labor hoarding.” Labor hoarding refers to when firms, faced with unfavorable market circumstances, choose to retain, rather than lay off, its workforce because it would be more costly to recruit and retrain new workers. In order to protect workers from the threat of being terminated from work, the government must step in to give relief to firms feeling the crunch from the coronavirus.
It must be noted that our labor laws are strict as to the causes by which employers can terminate employees. Retrenchment may only be effected according to the stringent requirements of the Labor Code. Nevertheless, it would be best for all that businesses would not have to make this choice.
How do we encourage labor hoarding? Local governments may provide local business tax relief to businesses to help them recoup their losses. The national government may
offer to reimburse firms that continue to pay staff despite temporary closure of operations. It may even extend low-interest loans to provide capital for firm growth. Even the cash assistance provided by the government can help by inducing consumer spending on goods produced by these SMEs.
In fact, faculty members of the Ateneo de Manila University Department of Economics and the Ateneo Center for Economic Research have also called for similar measures to address the looming economic disaster. The situation is dire, but the solutions are aplenty.
After the quarantine will come the hardest part—getting back our economy in order with as minimal disruption as possible. To do this, we need to put the needs of our workers first, and ensure that they continue to have stable livelihoods after the crisis. After all, we are only as safe as the most vulnerable of us.
Liam C. Lu (AB EC ‘18) was The GUIDON’s News Editor in AY 2016-2017 and Beyond Loyola Editor in AY 2017-2018. He may be reached at liamlu1985@gmail.com.
