Labor favors 10% SSS share in P100-B crisis fund

The Trade Union Congress of the Philippines (TUCP) favors the planned P10-billion contribution of the Social Security System (SSS) in the proposed P100-billion public-private crisis fund meant to help stimulate the national economy and keep the country from being dragged down by a menacing global recession.

However, TUCP secretary-general and former Senator Ernesto Herrera stressed the need for the government to fully guarantee the P10-billion that would be contributed by the SSS to the fund, which, as planned, would be invested in new infrastructure projects.

“Besides guaranteeing that the entire P10 billion will be returned to the SSS within a certain period, the government should also ensure the investment a fixed rate of return equal to or slightly higher than prevailing benchmark Treasury bill rates,” Herrera said.

Herrera pointed out that once the SSS takes P10 billion out of its investment portfolio in order to put the cash elsewhere, the pension fund would in effect be waiving any potential income from the money, had it been stashed in fixed-income instruments such as government securities.

“The SSS cannot contribute the money if the government will not vouch for the return of capital and a definite return on investment,” stressed Herrera, former chairman of the Senate labor, employment and human resources development committee

“If the government does not warrant the P10 billion and does not provide a fixed return, then there is absolutely no incentive for the SSS to pitch in,” added Herrera, a former commissioner of the SSS representing the labor sector.

“Without extra incentives, the SSS would be better off keeping its money where it is now stashed — in high-grade, dividend-paying publicly traded shares of stock and interest-paying government securities,” he said.

Herrera said the planned contribution to the crisis fund actually jibed with TUCP’s previous proposal for the SSS as well as the Government Service Insurance System to directly invest in gainful infrastructure projects, provided these are guaranteed by the government, just like private sector ventures in build-operate-transfer contracts.

Herrera said construction activities associated with new projects such as road tollways and mass rail transit systems not only create thousands of new jobs that directly benefit poor families, but are also badly needed to spur new productive investments by manufacturers, corporate farmers and service providers.

The National Economic Development Authority and the Philippine Chamber of Commerce and Industry have agreed to put up a P100-billion crisis fund that would bankroll new infrastructure projects intended to soften the impact of the global economic slump.