MANILA, Philippines - The business community expressed its strong objection yesterday to the planned establishment of a Philippine Workers’ Compensation Authority (PWCA) to replace the existing Social Security System and Government Service Insurance System.
The Employers Confederation of the Philippines (ECOP), in a statement, said the proposed PWCA is not financially feasible and unfair to private employers.
ECOP president Sergio Ortiz-Luis Jr. questioned the proposal to abolish the existing employee compensation program, which he said has been functioning relatively well for the past 34 years — in so far as the private sector participation is concerned.
“Why place the management of social security in an independent government financial institution that is yet to be established and whose operational capability has still to be tested,” Ortiz-Luis asked?
Ortiz-Luis noted that at present, the contributions to the State Insurance Fund (SIF) are administered separately by the Social Security System (SSS) for the private sector and the Government Service Insurance System (GSIS) for the public sector.
As of 2006, Ortiz-Luis said the government is in arrears to the fund by about P4 billion while the share of the fund pertaining to the private sector has increased to nearly P23 billion.
He said it is not financially feasible and fair to the private employers to mix the two funds under the proposed system.
The funding problem, he said, cannot be corrected by systemic change or supplemental appropriation of P3 billion as provided in Article 35 of the bill which the government cannot afford under fiscal constraints and huge budget deficit arising from the ongoing economic crisis.
Under a proposed measure crafted by the House committee on labor and employment chaired by Rep. Magtanggol T. Gunigundo I, PWCA will take over the control and administration of the existing employees compensation program and State Insurance Fund (SIF) established under Chapter III, Book IV of the Labor Code from the Social Security System (SSS) and the Government Service Insurance System (GSIS).
“This, in effect, severs such program from an integrated social security system and in the process abolishes the Employees Compensation Commission (ECC) and the Occupational Safety and Health Center (OSHC),” the ECOP official pointed out.
The bill also vests the PWCA with the “status and category of a government financial institution” without accountability to any higher oversight body, he said.
As proposed, the PWCA has a board of trustees which exercises similar policy-making and appellate functions as the ECC. One of the two main differences is that the SSS and the GSIS are no longer represented.
While the ECC is attached to the Department of Labor and Employment for program and policy coordination, ECOP said the PWCA as an independent government financial institution is not.
“This raises concern on the part of the employers’ sector on the social orientation and responsiveness of PWCA to the needs of the constituency which it is supposed to serve, Ortiz-Luis said.