EDITORIAL
A triple whammy of increases in statutory contributions
Working individuals, professionals, and businesses must brace themselves as a triple whammy of increases in statutory contributions is here.
This year, PhilHealth and Pag-IBIG will start increasing statutory contributions for both employers and employees.
Beginning January 2024, the PhilHealth premium rate is set to rise from four percent to five percent. Concurrently, there will be an increase in the maximum monthly basic salary ceiling, escalating from P80,000 to P100,000. This is part of the implementation of the Universal Health Care Program which was approved during the Duterte administration.
Pag-IBIG, on the other hand, will also implement an increase in statutory contributions starting January 2024. The monthly fund salary (MFS) will increase from P5,000 to P10,000, accompanied by a contribution rate hike from one percent to two percent. This adjustment will cause an increase in the contributions from P100 to P200 from the employer and the employee.
In 2023, the SSS implemented a one percent increase in the contribution rate. Additionally, there was an adjustment to the minimum and maximum monthly salary credit (MSC), increasing it from P3,000 to P4,000 and P25,000 to P30,000, respectively.
There will be no increase in SSS contributions in 2024. Employers will continue to contribute 9.5 percent, while employees will retain their 4.5 percent share. However, there is an impending increase in 2025, aligning with the provisions of the Social Security Act of 2018.
The anticipated increases in statutory contributions are long overdue, with the pandemic cited as the main reason for their deferment.
Although the overall inflation rate for December 2023 further slowed down to 3.9 percent from 4.1 percent in November 2023, bringing the full-year average inflation rate to 6.0 percent, many basic commodities are still beyond the reach of ordinary citizens.
We have observed during the pandemic that the government provided financial assistance to the most vulnerable sectors of society but left the working class with meager or even without financial assistance.
To the working class, the increases in statutory contributions are additional burdens that can significantly reduce their budget for food, housing, clothing, and other basic necessities.
The average salaries of employees are barely enough to buy their basic necessities, yet they are also made to bear the burden of populist government programs such as Universal Health Care and free college education. Can we not spare the government’s cash cows and let the legislative and executive departments find better ways of funding these programs?