About 2 million employees of micro, small and medium enterprises may have to spend Christmas without bonuses, the Employers Confederation of the Philippines said Tuesday.
ECOP president Sergio Ortiz-Luiz said during the Pinas Muna Tayo virtual discussion on the new normal in Christmas shopping there is no guarantee that many employees will get their annual bonus as companies and enterprises were still recovering from the crisis.
“The problem is that 90 percent of the enterprises are micro and they account for 60 percent of employees. Up until now, 50 percent of the micro enterprises are still closed. So, I expect that many of the employees from micro enterprises may not get their annual bonuses,” he said.
He said even bigger businesses and enterprises would be hard-pressed to make a profit, much more provide for bonuses of employees.
“Although, these big companies are more resilient and are more financially capable than micro enterprises, they could be extra generous as to provide their employees with Christmas bonus,” Ortiz-Luiz said.
He said the biggest attrition rate would be from the micro industries “and many of them were the first ones to close shop.”
“However, we continue to think positive. We can see that many of the enterprises that are still closed may open up as the holiday season draws near. This may encourage people to spend more during the holidays. Thus, business owners may afford to give extra pay to their crew or employees,” he said.
The Department of Trade and Industry said, however, that only 6 percent of companies in the Philippines had not yet resumed operations while unemployment rate steadily decreased from 17.7 percent in April 2020 to 10 percent in July.
Meanwhile, companies reported a deep reduction in sales despite the government’s move to ease the community quarantines in June to allow more people to work amid the spread of coronavirus disease, according to the results of a World Bank survey conducted in July in collaboration with the Department of Finance and National Economic and Development Authority.
“Reported sales revenue has gone down by 64 percent on average between April and July 2020, with 89 percent of firms reporting a continued reduction in sales. This was in addition to already significant loss by 65 percent experienced in March 2020 compared to February 2020, with 75 percent of firms reporting reduction in sales,” the survey said.
Firms across asset sizes were affected similarly. Firms outside of the National Capital Region and firms in automotive repair, tourism and accommodation, food services and real estate sectors reported a greater reduction in sales.
“Reduced sales are linked to a higher than average rate of temporary and permanent closure of firms in the tourism and accommodation, and food services sectors. Meanwhile, firms in automotive repair sectors reported reduced sales despite their operating status having been less impacted than average,” it said.
Three quarters of firms experienced a decrease in demand , with 1 in 3 of them reporting a decline by more than 50 percent. The biggest demand shock was a temporary mobility restriction that caused customers not being able to travel to firms to purchase products or services (67 percent).
The survey also found out that 70 percent of firms reported having their operations affected by a decrease in the availability of inputs and raw materials. Similar to the demand shocks, firms outside the NCR and firms in automotive repair and wholesale and retail trade sectors were more severely affected.
The most notable causes of supply shocks were local distributors (50 percent) and domestic suppliers (44 percent) having ceased or reduced operations.
“This is likely to be due to a large proportion of businesses being closed and disruption in logistics as a result of mobility restriction measures,” it said.
Alongside falling demand and disrupted supply chains, firms faced a deterioration of their cash flow. About 86 percent of firms reported reduced cash flows, with 59 percent of firms noting that access to financial services for funding also decreased.
This impact was most pronounced for firms in tourism and accommodation and arts, entertainment, and recreation sectors.
The impact on employment was also extensive, with 1 out of 2 firms having reduced payment to employees. Close to half (48 percent) of firms reported that they reduced the number of their employees.
“Job loss is most significant in the education, food services, and construction sectors, with greater than 60 percent of firms in these sectors having laid off their employees,” it said.
Job loss is less significant in the financial services and health sectors, but 2 out of 5 firms in these sectors reported to have laid off their employees. Only 1 percent of the firms reported new employment.
Forty-five percent of the currently closed firms did not know when their businesses could resume. Among the firms that were open as of July, 39 percent did not know how long they could remain open under the current circumstances, while 36 percent reported they could remain open only for the next 3 months.
Regarding expectations of sales and employment in the next 3 months, about a third of firms did not know how they would change. The level of uncertainty was greater among firms in the transportation and BPO sectors in terms of sales, and in wholesale and retail trade and rental and leasing services sectors in terms of employees.