Employers, workers facing hard times oppose looming SSS premium hike
MANILA, Philippines — Employers and workers are opposing a government plan to push through with a scheduled increase in contributions to the Social Security System (SSS) next year while the pandemic is forcing businesses to shut down and employees laid off.
“In general, we are not for any increase at this time because of bad timing,” Sergio Ortiz-Luis, president of the Employers Confederation of the Philippines (ECOP), an industry group, said in a phone interview.
Jerome Adonis, secretary-general of Kilusang Mayo Uno, a labor group, agreed with Ortiz-Luis. “Whether with or without pandemic, increasing the SSS contribution is unacceptable for labor workers because there remains no salary raise, while thousands are losing jobs,” Adonis said in Filipino in a text message.
To be fair, the SSS premium rate hike to 13% from 12% of salaries had long been planned. The increase was stipulated under Republic Act 11199 or the Social Security Act of 2018, which at the time was enacted to strengthen the fund’s viability against rising pension costs. SSS is the pension fund for private workers.
But many were hopeful that the Duterte administration would delay implementing the adjustment because of the unprecedented health crisis that did not only pull down the economy to recession, but also pushed joblessness up to a historic peak of 10.4% this year.
Establishments, which shoulder the bulk of premiums, are likewise struggling. Last month, at least 21,000 of them availed of state loans just to afford paying up mandated 13th month holiday bonuses. That number is still increasing.
However, hopes of a deferral in higher contributions were dashed Monday afternoon when Aurora Ignacio, SSS president and chief executive, issued circulars detailing a new payment schedule for salaried employees, house help, and voluntary contributors. SSS representatives, including Ignacio and Finance Secretary Carlos Dominguez III who serves as chair, have not responded to request for comment.
Once the increase is implemented, monthly earners of P24,750 and above would have to pay P200 more in their monthly contributions to P2,600. Currently, maximum earners of P19,750 and above pay only P2,430 a month.
On top of that, a “mandatory provident fund” kicks in for high-paying members beginning next year. The fund is compulsory for earners of over P20,000 and would result into additional deductions between P65 and P650, depending on salary level.
As typically practiced, employees and employers would share the burden of additional costs. Broken down, 34.9% of SSS contributions would be paid for by the concerned employee, while a higher share would be shouldered by employers. “We (ECOP) will come up with a position paper against this. Possibly a joint statement with worker groups,” Ortiz-Luis said.
The contribution hike next year would be the last under President Rodrigo Duterte which signed RA 11199 that delegated his original power to adjust contribution to the SS Commission led by the finance chief . Succeeding 1% increases are scheduled for 2023 and 2025.
With prices treading up because of supply gaps triggered by crop damage from typhoons, central bank Governor Benjamin Diokno said higher pension premiums are unlikely to fan inflation and in fact, may do the opposite with less take-home pay reducing consumer demand.
“You have to consider that SSS contribution is in the nature of a payroll tax and thus has a dampening effect on inflation,” Diokno said in a Viber message.
SSS pension and conribution had always been highly political. In 2017, Duterte deferred a pension hike without a commensurate premium increase over fears the fund would get depleted by as early as 2027. Prior to that in 2015, the previous Aquino administration lost political capital after it rejected a bill that would have lifted pensions at no additional costs to members.
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