Around half of establishments with productivity schemes in 2015 availed of tax incentives — PSA

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By Mark T. Amoguis, Researcher

OF THE 2,448 establishments that set up productivity schemes in 2015, around half availed themselves of tax incentives under the Productivity Incentives Act of 1990 (Republic Act 6971), according to the latest biennial Integrated Survey on Labor and Employment conducted by the Philippine Statistics Authority (PSA).

For firms that have productivity programs in place, 94.4% of those that availed themselves of tax incentives were in the arts, entertainment and recreation sector, followed by water supply, sewerage, waste management and remediation activities (81.8%), real estate activities (74.2%), mining and quarrying (72.7%), and accommodation and food services activities (60.1%).

PSA defines productivity program as “a workplace program aimed at improving worker and/or enterprise productivity.”

Firms that have productivity programs in place will enjoy the incentives provided by RA 6971. For one, a firm can deduct half of the total productivity bonuses given to employees from its gross income. Furthermore, firms that conducted “manpower training and special studies” for their employees are also entitled for a special deduction equivalent to 50% of expenses incurred from its gross income.

Having productivity programs is said to encourage higher levels of productivity, thereby tightening the link between one’s output and pay.

In setting up productivity schemes, firms could either give employees cash or non-cash benefits.

Among those who received cash benefits, 70.9% (or 140,868) were rank-and-file employees, 72.9% (15,734) were supervisors, and 70.4% (7,259) were managers.

Cash benefits vary between employee type. For rank-and-file employees, 53.6% (or 75,572) received cash incentives below P5,000 while 15.4% (21,742) received P20,000 and over.

Meanwhile, 38.8% (6,097) of supervisors that have cash benefits received amounts below P5,000 while 26.6% (4,183) received cash amounting P20,000 and over.

Finally, 19.6% (1,424) of managers received below P5,000 worth of cash benefits. On the other hand, 45.3% (3,291) of managers with cash benefits received P20,000 and above.

For firms that provided non-cash productivity-based incentives, more than two-thirds distributed plaques, trophies or certificates to their workers. Other forms of non-cash benefits include food incentives (41.7%), free/subsidized travel (22.5%), non-food incentives (20.6%), and scholarships (9.1%)

Some 3,339 productivity programs were implemented in 2015, according to the PSA survey.

By sector, around 31.1% were carried out in manufacturing, followed by wholesale and retail trade (19.6%) and accommodation and food services activities (15.3%).

By agency, the Regional Tripartite Wage Productivity Boards of the Department of Labor and Employment’s National Wages and Productivity Commission provided the most support to establishments at 18.9% of the total. Other organizations that provided assistance were private organizations, government agencies, and the Philippine Red Cross.

According to the survey, most of the assistance provided by these agencies were skills training in nature, which account for 26.2% of the total. Other types of assistance include providing information/advise, skills assessment and certification, technology acquisition/upgrade, and credit/financial assistance.