The National Economic and Development Authority (NEDA) is proposing a four-day workweek to lower energy consumption amid skyrocketing pump prices.
During President Duterte’s Talk to the People aired on Wednesday, March 16, Socioeconomic Planning Secretary Karl Kendrick T. Chua said limiting the number of workdays per week is the more prudent approach to alleviate the effects of recent big-time oil price hikes.
“Let’s try energy conservation, and one of the examples is the four-day workweek. Every Filipino will continue working for 40-hours per week but instead of five-days, it will be four-days. Instead of eight-hours, it will be 10-hours per day,” Chua said.
Chua noted that shortened workweek was also implemented in the 1990s during the Gulf War and in 2008 when the fuel prices had accelerated.
The NEDA chief believes this approach would provide savings to Filipino workers without hampering economic activity.
According to Chua, increasing the minimum wage and transport fares to ease the financial burden of the transport sector and employees would result in higher inflation that will ultimately effect everybody.
NEDA estimated that an increase in minimum base fare from P9 to P10.25 would entail 0.4 percentage point inflation, while the inflationary impact of the proposed P39 increase in minimum wage in Metro Manila is one percentage point.
Sought for comment, Finance Secretary Carlos G. Dominguez III said Chua’s proposal is “a good idea.”
“I believes so,” Dominguez told reporters when asked if NEDA’s suggestion is doable. “Working 10-hours a day for a week is a good idea.”
Meanwhile, Dominguez rejected proposals to suspend the excise tax on fuel as a way to reduce the impact on consumers of spiralling oil prices in the world market.
He asserted that the move would only set back economic recovery from the pandemic and would instead end up subsidizing the expenses of affluent families more than those of low-income households.
Suspension of fuel excise taxes would lead to a massive revenue loss of P105.9 billion, or about a half-percent of gross domestic product (GDP) this year, the government’s chief economic manager said.
Dominguez warned this expected depletion in revenues would imperil the government’s currently strong fiscal position and further widen the budget deficit, especially at this time when global interest rates are rising.
It would also force the government to borrow more to fund its programs intended to provide improved social services, create more jobs and invigorate the economy, the finance chief said.
Dominguez proposed instead for the government to continue providing targeted relief to vulnerable sectors, which would include extending a total of P33 billion in unconditional cash transfers (UCTs) to the bottom 50 percent of all households, or about 74.7 million Filipinos.
"We realize that this is not enough. But this is what we can afford as of this time, and to make sure that our finances going forward and especially for the next Administration are still going to be healthy. This, I believe, is what we can afford," Dominguez said.
The fund for these targeted interventions will be sourced from the excess value added tax (VAT) collections resulting from higher fuel prices, he said.
He said that as a matter of principle, the Department of Fiannce (DOF) strongly opposes any proposal that aims to suspend fuel excise taxes because it will translate into significant foregone revenues, will be detrimental to our recovery, and is inequitable.
From a cost-benefit standpoint, the proposal’s adverse impact on growth and economic recovery will also be permanent and more significant than its temporary and much smaller impact on overall inflation, he added.
Dominguez pointed out that the primary beneficiaries of the fuel excise tax suspension would actually be the top 10 percent of the country’s households, as they are estimated to use up around 48.8 percent of the Philippines’ total fuel consumption this year, while the bottom 50 percent will only consume around 13.9 percent.
“This means that with the suspension of fuel excise taxes, we are supporting higher income households more than lower income households,” he said.
Dominguez said the proposal to suspend fuel excise taxes will only provide temporary and minimal relief to consumers, as the prices of goods are expected to go down by only 0.03 percentage points in 2022.
The trade off would be unrealized government spending from the foregone revenues, which will hamper the Philippines’ economic recovery and result to slower growth by 0.4 ppt in the short run and 0.03 ppt in the long haul, he said.
The excise tax on gasoline before the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Law was P4.35 per liter, while there were no excise taxes collected from diesel, kerosene and liquified petroleum gas (LPG).
This tax remained unchanged from 2005 to 2017, even when the prices of petroleum products increased.