Economy


Employers say profit-sharing proposal hurts small businesses




Posted on February 21, 2017


THE Employers’ Confederation of the Philippines (ECoP) said a proposal to enact into law profit sharing will hurt the country’s micro, small and medium-sized enterprises (MSMEs.)

The Employers’ Confederation of the Philippines said a proposal to enact into law profit sharing will hurt the country’s micro, small and medium-sized enterprises. -- BW FILE PHOTO
Under House Bill 2625, filed by Buhay party-list Rep. Jose Lito L. Atienza, all profitable businesses are required to annually distribute 10% of their net profit to employees, whether regular or contractual.

In a position paper sent by the ECoP to the House labor and employment committee, the group said that the proposal is “destructive” to the viability of MSMEs.

The association said that most MSMEs are already “hard put to comply with the periodic increases in minimum wage granted by the Regional Tripartite Wages and Productivity Board” and requiring them to share profits on top of the wage increases “would in most likelihood impair their viability.”

The ECoP noted that MSMEs constitute more than 98% of the total number of registered businesses and accounted for more than 55% of total employment in 2014.

The group also called the proposal “anti-investment,” saying that the measure, if enacted, “would sharply impair capital formation by reducing the ability of enterprises to reinvest retained earnings or net profits for expansion, growth and ultimately the creation of jobs.”

It added that HB 2625 would “deter” foreign direct investment and it would also impact on the ability of the country to reduce high levels of unemployment and poverty.

“In the light of the forgoing considerations, with due respect, the ECoP hereby manifests its objection to the bill,” according to the position paper.

Meanwhile, the ECoP also backed proposals to regulate the practice of employers of posting notices of termination of former employees in newspapers, social media, and other venues.

“ECoP finds the bills reasonable and just, as it offers some measure of protection for faultless former employees against undue and or unnecessary publicity by the former employer that may prejudice their search for new employment,” the group said in a separate position paper. -- Raynan F. Javil