Tax break for labor


The Aquino administration is facing a tricky situation on the labor front. With the number of unemployed Filipinos swelling to an estimated three million in July, labor groups continue to clamor for higher wages.

The position of the government so far is to avoid any salary increase. Economic Planning Secretary Arsenio Balisacan has argued that it would be imprudent given the government’s desire to bring down the rising unemployment rate. He explained that any increase in wages over the short term would drag down efforts to create more jobs and reduce the jobless rate. “We cannot afford to further raise wages at this time when unemployment is still high. What should be done is to open more employment opportunities so that more people can find work,” he suggested.

Balisacan said any proposal to further raise wages in the coming months should be shelved, and stressed the need to focus efforts on making the Philippines more attractive to investors and creating more jobs. Only two weeks ago, the wage board for the National Capital Region approved a P10 increase in the daily minimum wage in Metro Manila, raising the total to P466. Labor groups were incensed at the paltry increase. But Balisacan said that the amount approved was intended only to prevent the erosion of the average household’s purchasing power, and that any further wage increase would run counter to efforts to cut the unemployment rate.

According to the latest data released by the National Statistics Office, the unemployment rate rose to 7.3 percent in July from 7 percent in the same month last year despite a robust economic growth that ranked the Philippines among the fastest-growing economies in Asia. The National Economic and Development Authority said the increase in the jobless rate was due to an unusual jump in the number of entrants to the labor force. There were 41.18 million people comprising the labor force in July, of whom around 3 million were unemployed. Neda noted that the labor force increased by 786,000 from 40.39 million in July last year but that only 620,000 additional jobs were created during the period.

However, the unemployed are just part of the problem. A bigger problem is the underemployment rate, which the NSO reported at 19.2 percent in July, although this was better than the 22.8 percent recorded a year ago. This translated to nearly 9 million Filipinos. In the official definition, the “underemployed” are those who desire additional work hours.

Balisacan acknowledged that the labor situation, as reflected by the unemployment and underemployment rates, indicated that efforts at creating more jobs needed to be doubled. President Aquino has promised to reduce the unemployment rate to 6 percent at most by the end of his term in 2016. Proposals to achieve this target include easing restrictions on the entry of foreign investments, boosting tourism and infrastructure to generate more work in the provinces, and expanding farming and fishing.

In the meantime, the government can study proposals to link wage increases to the level of skills of workers—instead of adjustments across the board. By giving fair salaries based on qualifications, the Philippines may be able to keep its skilled citizens and stem the continuing exodus of its workers to foreign markets.

One proposal that will greatly help the working class is the grant of a tax break. Why not reduce the amount of taxes withheld from middle-income and salaried workers in lieu of any wage increase? To offset this, the Bureau of Internal Revenue can treble or even quadruple its efforts in going after tax evaders—professionals and corporate—who must owe tens of billions of pesos in taxes. NSO data show that of the more than 38 million Filipinos who had jobs as of July, 57.5 percent (or about 22 million) fell under the category of “wage and salary earners.” These are the people that will stand to benefit from a tax reprieve.

The government is correct in giving priority to addressing the unemployment—plus the bigger underemployment—issue. However, it cannot overlook the fact that the struggling, salaried middle class also deserves a break. A little reprieve in the tax payments of salaried workers will definitely go a long way in helping them cope with everyday life that gets harder by the day.

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  • Arnold Cesar Romero

    I agree! Labor unions need some re-imagination and drop the usual catch calls.

  • talagalangha

    Noynoy is the worst, inept president we have ever had…and THE MOST CORRUPT, too!

    The 24 Napoles pics are the last straw…and then Kit Tatad’s revelation, na scripted nga pala talaga ang surrender ni Napoles…

    The end for Pnoy is in sight….yellows, time to jump ship….

    • shane oy

      oo na ikaw na. May tama ka din – kaso sa utak.

    • Ragna_rok

      If Noynoy is worst, so you think GMA, Erap,FVR, Cory and Macoy is all better than him? And your basis is just the 24pics and Tatad’s revelation o 6hour meeting for being the worst president?

      So you are wishing Erap or Gibo or Villar won?

      I think if that is your basis you can even plead for insanity in any court.

      I think there is no better President than PNoy, and don’t conclude that I support or even voted for him. I feel sad that this lack of good leadership scenario makes the situation of Philippines as it worst..

  • unokritiko

    About pork barrel scam,i am just wondering, big wonder why the BIR does not even bulge into this mess.
    they dont even have any study or even parallel investigation into this mess.
    very wondering>>henares should resign and all the BIR staff for negligence and palusot sa mga taong ito.
    nakakasuka ang opisinang ito and yet they are very strict to other personalities.

    • shane oy

      lols cge ikaw pumalit sa kanya mas magaling ka eh.

      • unokritiko

        Hindi ako tumatanggap ng alok ng ibang tao na may kasamang pangangailangan sa iyo.

  • Oscuro

    Many companies face high operations costs due mainly in fact to high cost of energy (fuel and power) and manpower. Power cost could easily be addressed by the government however as it is in the control of a cartel of oligarchs, too bad for us. Sad face there. These two things are the main apprehension of foreign investors. That’s not counting taxation as well. Some will argue that there are more, like ownership but I will not get into that.

    My biggest question is….contractual employment? This was a remedy presented to Cory as a guise of easing unemployment but is now an institution for major corporations such as SM. Yes, boys and girls. The SM employees you see there, most of them work less than 6 mos. at a time for less than minimum wages. So are many factory workers.

    It is surprising to read on business newspapers the quarterly announcement of blue chip corporations such as MERALCO, SMB, SM etc…..about their increased profitability as opposed to the previous quarters disclosure. That to me is pure WIN.

  • bulong…weh

    YES! tama ito, ang laki laki ng tax na kinukuha nyo sa amin, ninanakaw lang naman…ibig sabihin nito, sobra talaga ang taas ng tax, ibaba nyo na yan sa 15%!

  • hosay

    tax break, only in your dreams, general strike and demand income tax free for minimum wage earners. period


    Unemployment and underemployment can’t be solve by giving the labor the tax break.
    What is Balisacan thinking? Another mediocre cabinet member courtesy of the mediocre president.

  • Anti-Pork lover boy

    Mas maraming pinapangak bawat minuto kesa ang isang matanda magkakatrabaho. Ayaw niyo ng RH-Bill cge mag apply kayong lahat sakristan ng simbahan.

  • farmerson

    “Don’t look for a job, Create a job”. Do not hire people who are already retired.

  • Nic Legaspi

    The entry of foreign corporations is a big problem in this country. It costs simply too much to do business here. Industries that employ huge numbers of workers, like manufacturing, also consumes huge electricity, and with power rates as high as ours, our country will always miss the opportunity.

    I believe the reason why there are lots of underemployed people is because of job satisfaction. How can one be satisfied when around a third of his income is taken by the government? People who are trying to make ends meet would then look for another job to augment his income. The government’s lax implementation of tax laws only serve to penalize the middle-income workers who get automatic deductions come payday. What happened to BIR’s proposal of coordinating with the PRC regarding the licensing of professionals who evade paying taxes? Wala pa din.

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