No to 14th month pay; productivity-based incentives pushed

PRIVATE companies shouldn’t be required to release 14th month pay to employees, but they should be encouraged to pursue productivity-based incentives instead.

Philip Tan, the management sector’s representative to the Regional Tripartite Wages and Productivity Board in Central Visayas (RTWPB-7), gave this statement as a reaction to the proposed bill by Senator Vicente “Tito” Sotto III requiring all private companies in the Philippines to grant 14th month pay to their employees every year.

Tan said this dole out is an inflationary expense that would affect the overall cost of goods and services.

“What we, the private sector, are expounding in the wage board right now is productivity gains sharing,” he said in a phone interview.

He said providing incentives based on the employee’s input or contribution on top of the minimum wage is better than “giving away” a fixed amount in the form of 14th month pay or similar dole outs.

According to a recent Inquirer report, the Senate majority leader’s Senate Bill No. 2 provides that all non-government rank and file employees should be entitled to 14th month pay aside from the regular 13th month pay they receive.

The bill provides that employees should get not less than 1/12 of the salary they receive for the whole year.

Tan, who is also the president of the Mandaue-based Wellmade Motors and Development Corp., said a 100-employee company would have to spend at least P800,000 annually if the bonus were to be at P8,000.

“Now, imagine if a company had 400 employees. Won’t that hurt the employers’ pockets? We’re talking about millions here. Some firms don’t even give out 13th month pay, how much more 14th,” said Tan.

CBC, MCCI heads

Gordon Alan “Dondi” Joseph, president of the Cebu Business Club, echoed Tan’s sentiments.

“I am not sure Sen. Sotto really understands business, productivity and human resources,” said Joseph.

He said his position has always been to reward productivity and efficiency, to incentivize good performance, and not give charity that rewards poor performance.

Joseph said this practice is demotivating for the good performers.

For MCCI President Glenn Soco, what workers need more are better benefits and services from government agencies.

Soco said that Sotto’s reasons in filing the bill were unjustifiable and that his proposal could lead to job loss or even business closure.