MANILA, Nov. 21 (PIA)- -The Department of Labor & Employment (DOLE) and Bangko Sentral ng Pilipinas (BSP) have partnered to promote financial inclusion of workers through the electronic payment of wages and benefits.
In a forum with the labor sector jointly conducted by the DOLE and Bangko Sentral ng Pilipinas on Monday, Labor Undersecretary Claro Arellano highlighted the need to do away with manual cash disbursements and instead open formal accounts for payment of wages to enable easier verification and validation.
Citing the 2017 Global Findex Report, the labor senior official said that only 6.6 percent of the country's private sector wage earners receive their salaries through a formal account, which is a deposit or e-money account held in a supervised financial institution.
"A low financial inclusion among the wage earners may be a source of abuses against the workers and violations of labor laws as there can be difficulty in verifying and validating the payment of correct wages and other mandatory benefits," he added.
The initiative is part of the National Strategy for Financial Inclusion which signifies the country's commitment to pursue a state wherein there is effective access to a wide range of financial products by all.
Although there is no law or regulation yet, Arellano underscored the advantages of paying salaries through formal accounts.
For the employers, electronic payment of salaries will not only cut the transaction, administration, and overhead costs but will also reduce the incidence of leakages during disbursements.
For the employees, meanwhile, a formal account translates to easy access to financial products, including savings, credit, insurance, and investment.
Among the groups in the workers' sector identified by the Financial Inclusion Steering Committee which may immediately benefit from the electronic payment of wages are the construction workers, bus drivers and conductors, Kasambahay, factory workers, and workers in the retail and service industries.
The value of the payment of wages and salaries through formal accounts has also been acknowledged in countries such as Thailand, Qatar, India, Finland, Singapore, and Bangladesh. (PIA-NCR/DOLE)