Wages, social security top business woes in ECQ

Payment of wages and related social security contributions were the most pressing financial concerns of businesses during the lockdown, according to an impact assessment on the Philippines made by the Asian Development Bank (ADB).

The multilateral bank conducted a Philippine enterprise survey from April 28 to May 15 to gauge the impact of the coronavirus disease on businesses during the imposition of the enhanced community quarantine.

Questions were centered on the impact of the lockdown on production, finance, workforce, supply chains and other issues. The respondents were also asked about the kind of support they need from the government and the measures they would take upon reopening.

Responses were received from 2,481 enterprises, which included micro, small, and medium-sized enterprises, as well as large firms. Because of the limitations on data gathering at the time of the survey, ADB noted that there appears to be an over-representation of businesses from the National Capital Region (NCR).

Among the key findings of the survey was that liquidity was the most serious concern among businesses as working capital became scarce.

ADB noted that by the time of the survey, one third of the respondents had run out of cash and savings, while another third expected to run out of resources in three months.

Constraints on additional credit also added to business woes during the lockdown, with half of the respondents reporting credit constraints as seen in the inability to arrange to borrow small amounts of around P50,000 within a week if needed.

“The situation and needs assessment questions in our survey revealed that the most pressing payment concern was wages and related social security contributions,” said the report.

“In line with this, a wage subsidy was the most frequently requested government support measure as cited by 57 percent of respondents.”

Some 33 percent of those surveyed availed of the Department of Labor and Employment’s grant program for workers unable to receive wages. Use of the program was higher among small and medium-size enterprises (38 percent) than for microenterprises (28 percent) or large firms (35 percent).

Deferment of tax payments was the second most common policy support desired, cited by 52 percent of respondents.

The third most common request was for low-interest or subsidized loans (36 percent) followed by tax reductions or credits (35 percent).

Businesses were also challenged to move their sales operations online because of poor access to internet-based platforms. Only 14 percent of businesses surveyed managed to sell products online during quarantine.

Businesses that intended to continue operations beyond quarantine also expressed intentions to implement the required health and safety measures but cited several challenges.

The most frequently cited challenge after reopening is providing face masks to workers (63 percent).