Unrest between labor and management

Business groups in the country are hoping that the latest daily wage increase orders issued by the regional wage boards across the country during the last few weeks will mollify employees badly hit by rising prices of goods for most part of the year.

Employers are also crossing their fingers that this increased minimum wage will buy more time in delaying legislative initiatives aimed at removing all forms of contract work, and allow them to discuss more extensively with relevant lawmakers, as well as the President himself, the folly of such a move.

The clamor for higher wages and the proposed ban on all forms of contract work are two of the biggest concerns that employers and potential investors in the country are closely monitoring as key indicators to any future capital outlays.

Labor groups have been bargaining for a bigger daily wage increase – initially at a high of P334, and later, pared down to P100 – to compensate for inflation levels that had steadily climbed during the year, reaching as high as 6.7 percent the last two months of September and October.

The decision of the Regional Tripartite Wages and Productivity Board (RTWPB) for NCR, which accounts for the biggest number of workers in the country, was for a P25 daily wage increase and the integration of the P10 cost of living allowance into a wage rate.

Compromise

As expected, militant labor organizations expressed dissatisfaction with the wage boards’ decisions, although from the overall reaction of employed workers, even in regions that traditionally have lower wages and allowances, this did not translate to an actual disappointment.

Other labor groups pointed out that the wage increase order was not even sufficiently enough to cover for rising living expense costs, and definitely did not compensate for increased labor productivity as measured against business profitability.

Employers, on the other hand, had cautiously accepted the compromise amount, having initially offered a P20 wage hike. The biggest concern of companies led by the Employers Confederation of the Philippines (ECOP) was the whittling of business competitiveness with a wage increase.

The ECOP voiced out that daily wages in the country are now one of the highest in the region, next only to Singapore, Thailand, and Brunei – all of which have higher GDPs. Any wage increase would significantly reflect competitive rankings that are used by investors in making a decision.

There are mixed views on whether the latest round of wage hikes would affect inflation, which was still higher than the forecasted range by the Bangko Sentral ng Pilipinas (BSP) for this year of two to four percent. However, inflation seems to have reached its peak with recent government countermeasures and the softening of crude oil prices.

Dangerous situation

The perils of the President’s campaign promise to put a stop to “endo” or “555 hiring,” a practice that some companies employ to skirt around a labor law which promises permanent job positions for hires after six months of undergoing probationary status, is what worries employers more.

While admittedly prejudicial to workers, some lawmakers are taking the opportunity to expand the President’s campaign promise to include all forms of contractual hiring, including those taken in as seasonal labor or specialists for projects.

This is a dangerous situation because many workers are hired for jobs that are for limited periods, although beyond six months. Given the stringent labor laws that protect permanent employees, terminating project-based workers from their posts when they are no longer needed is difficult.

Small companies providing sub-contracting services to big companies would likely suffer worst. Transportation services to big companies, for example, hire drivers based on a service contract. If, however, its contract expires or is not renewed, the drivers will need to be terminated.

There are many similar cases where big companies have devolved work “not within their core business” to smaller companies, opting for the subcontractors to carry the burden of wages and benefits to be able to save on manpower costs.

For sure, what is needed are measures that can guarantee worker benefits even in areas where salaries are dependent on contracts that carry fixed tenure. At the same time, subcontractors need to quantify the cost of providing acceptable and humane wages to their workers that are hired for a fixed number of months.

Rising labor militancy

Having a President that champions workers’ rights is laudable, but it could also wake up a sleeping giant, similar to one that unleashed so much economic uncertainty in the late ’60s and early '70s, which ultimately became a reason for the institution of martial rule and the three-decade rule of Ferdinand Marcos.

The Nikkei reported that the number of strikes in 2016, when Duterte became President, grew to 15 which was three times the number in 2015, and more than the total number of work stoppages since 2011. Last year, there were nine strikes and from January to September this year, there were already 10 strikes.

With the Senate putting off the discussions on contractual labor by another half year to give way to the coming May elections, this may give employers more time to work on a better law that would protect worker rights, but not impinge on business competitiveness.

On the other hand, the delayed action of the problem could also turn into an opportunity for worker movements to rally more support for labor issues, thereby exacerbating a further souring of labor-management relationships.

The issue of contractual labor has been festering too long, and a speedy resolution is needed, but not at the expense of business or labor.

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