13th month pay

A Quick Introduction to 13th Month Pay

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The 13th month pay is a type of bonus given to employees in certain countries. The bonus was mandated a few decades ago in the Philippines and later came into effect in some Latin American countries also. But, what exactly is a 13th month pay? And why is it such an attractive tool for employers to use to attract new talent? During this article, we will first discuss what 13th month pay is, before moving on to how it works and finishing with why it’s so popular. 

What Exactly Is 13th Month Pay?

13th month pay is an annual bonus that employers give to their employees. This bonus is usually 1/12 of the employee’s basic salary, and it is given out on December 15th, just in time for the holiday season.

13th month pay was first mandated by President Ferdinand Marcos in 1976 through Presidential Decree No. 851. The decree aimed to “provide additional income to cushion the effects of inflation and rise in prices of commodities.” Since then, the bonus has become a standard benefit in the Philippine labor market. In fact, many companies now use it as a tool to attract and retain talent.

What Is The Computation?

The benefit is based on the employee’s basic salary, and it is typically given out at the end of the year. In terms of understanding the computation of 13th month pay, there are different ways to compute the bonus, but the most common method is to take the employee’s basic salary and divide it by 12. This amount is then added to the employee’s regular monthly salary for the last month of the year.

There are some companies that give out the bonus as a lump sum, while others spread it out over the course of 12 months. Some employers also offer other benefits along with this one, such as holiday bonuses or allowances. Employees who are entitled to this bonus should check with their employers to see how it will be given to them.

What Are The Benefits?

There are many benefits that this mandatory bonus can add to your life in the Philippines, including helping you to:

Stay Financially Afloat

One of the biggest financial differences between living in most Western cultures and the Philippines is the cost of living. In general, the cost of living is much cheaper in the Philippines than it is in more developed countries. This means that people who live in the Philippines can often stretch their money further than those who live in the US or the UK. Additionally, wages tend to be lower in the Philippines than they are in Western countries.

However, there are financial advantages to living in the Philippines. For example, healthcare tends to be much cheaper in the Philippines than it is in developed countries. Additionally, many Filipino citizens are able to send money back to their families who live in Western countries. This can help to support families who are struggling financially.

The cost of living in developed countries has also been rising steadily for years. The price of food, housing, healthcare, and other basic necessities have all gone up, while wages have remained relatively stagnant. This has made it increasingly difficult for families to make ends meet.

In some cases, people are even forced to choose between paying their bills and buying food. Factors that have contributed to the cost of living in places such as the US and the UK are, for one, the increasing inequality of wealth and income. As the rich get richer, they have less money to spend on goods and services, which drives up prices for everyone else.

Another factor is the weakening of trade unions, which has led to a decline in workers’ bargaining power and hence their ability to demand higher wages. Additionally, globalization has put downward pressure on wages, as companies can often find cheaper labor elsewhere.

It makes sense why a lot of people from Western cultures are choosing to move to the Philippines. With a cheaper, more relaxed way of living, and of course, the mandated 13th month pay benefit all employees are entitled to. If the Philippines isn’t quite your desired relocation of choice, there are many Latin American countries that also offer this benefit.

If you have an area in mind, make sure to do your research beforehand to see if this area offers the bonus. 

Save For The Holidays

For many people, the holidays are a time to celebrate with family and friends. However, the holidays can also be a very expensive time of year. From buying gifts to travel costs, there are a lot of expenses that can add up quickly. This is why, for most people, it’s important to start saving for the holidays well in advance.

By starting to save early, you can avoid going into debt or having to use your credit cards to pay for holiday expenses. Additionally, you’ll be able to enjoy the holidays more if you don’t have to worry about money. 

However, the perk of the 13th month in the Philippines means you can enjoy the holidays, without needing to do any savings at all! By instantly receiving a whole extra month’s salary, you can use that cash to purchase your holiday goods and gifts and deposit the leftover cash for the rest of the holiday outings and expenses.

Health Care Is More Affordable In The Philippines

And lastly, if the yearly mandated bonus wasn’t enough of a reason to jump ship, other benefits of living in the Philippines include access to affordable healthcare and education, as well as a lower cost of living overall. This, along with the perk of the yearly bonus, makes moving to the Philippines a desirable option for many US citizens.

Enjoy The Pay Perk And Other Perks

To recap, 13th month pay is a benefit offered to employees in the Philippines and certain Latin American countries. This bonus is usually 1/12 of the employee’s basic salary, and it is given out on December 15th, just in time for the holiday season.

Many companies use it as a tool to attract and retain talent. Along with this pay perk, life in the Philippines is more relaxed and laid-back than in more developed countries. While there are some challenges, such as a higher crime rate and less developed infrastructure, these are offset by the many advantages of living in this wonderful country.