The hand that rocks the idle

“The margin of the capitalist is directly proportionate to the level of exploitation of the laborer,” said my left-leaning classmate in college.

“But isn’t a capitalist entitled to a return on his capital?” I asked back. That academic exchange is an example of the polarity of the idea between a left and a right. In the real world, I learned that every capitalist is indeed concerned with profit, but in their best behavior will say that “our people are our best assets.”

With tomorrow being Labor Day, I objectively say that each one of us is a worker. True, some are paid more than others for their unique skills, or for being the trustworthy one, or simply lucky for being at the right place at the right time.

Without them though, fertile land will be barren, the best building design plans will be useless pieces of paper, and grand ambitions will just be beautiful thoughts that bring despair without implementation.

Without the worker, there can be no government for nothing is plainer than the fact that without profit, what is left to tax is capital – unsustainable, ruthless and chaotic taxation.

Roughly 40 percent of our country’s population are income earners and that fraction supports the rest of us. My point this Sunday is that something minimal is owed to these individuals, and while owed to all, is owed to them more because they are the ones who really work and pay for it. I refer to the debt of public service. Better public service.

There is a difference between simply buying or accessing a service in general vs. accessing a public service. In the former, you can be refused by the seller or service provider. In the latter, you have the right to demand it. In fact, the Supreme Court said that the test of whether one is a public service is that once it is made available to all, it cannot be refused to anyone, even if it is a private enterprise running it.

Understanding this is important because private companies to which the public service was delegated or contracted is just as obligated as the government who should provide that service. Even more so, in fact, because they operate on authority of the government but without the power like the government.

This is the reason why a taxi driver who refuses to take a passenger because it is inconvenient – to the taxi driver – is violating the franchise granted and should be dealt with; or why patrons who get charged by the minute even on calls lasting less than a minute deserve reprieve; or why an increase in train rates without the improvement in the service to the passenger would feel underhanded.

The issue is public service. While customers pay for service, they shouldn’t be at the mercy of the providers because they are taxpayers, too, who have the right to that service. And it will never feel right for them to pay for a service that they do not get, or pay extra for an alleged improvement that they do not feel.

Filipinos can complain a lot – in person, in social media, and in their own circles – but they are not litigious, or not as litigious as their Western friends. To the thick-skinned, gripes are just words that don’t really threaten and they simply breed complacency.

You see, corporations, including government-owned corporations, can be sued as they are considered “persons” under the law. The government though is tough to sue because per our Constitution, the government cannot be sued without its consent. This is meant to protect the government from the crippling effects of a lawsuit and to allow them to dwell instead on providing the public service vs. spending time defending left and right against lawsuits.

Lawsuit or not, it is really high time for the government to know its place vs. the workers. We expect everyone to work and contribute to the economy and to pay taxes, but we cannot even bring them convenient public transport to their work places and back to their homes.

If we cannot give more in law to those who have less in life, at the very least, we owe them the respect of better public service. Whether the powers that be admit it or not, they are the hands that feed us, not the other way around.

* * *

Alexander B. Cabrera is the chairman and senior partner of Isla Lipana & Co./PwC Philippines. He also chairs the Tax Committee of the Management Association of the Philippines (MAP). Email your comments and questions to aseasyasABC@ph.pwc.com. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

Behind the dark clouds

I recently called attention to “dark clouds” that we need to watch, seen in weakening numbers on the economy, particularly accelerating price inflation, rising unemployment, and slowing growth. These weakening signs must be arrested before they turn into a trend. Let’s take a closer look to understand where the weaknesses are coming from.

Let’s start with rising prices. Last month’s year-on-year inflation rate of 3.4 percent was the fastest seen in 28 months. It went as low as 0.4 percent in late 2015, but sped up last year, especially in the latter half, mostly owing to faster increases in food and energy prices. What’s bad about inflation that’s driven more by food prices is that it takes a heavier toll on the poor, for whom food makes up a dominant portion of the family budget. As a general category, food prices rose by 4.2 percent last month, and even though it actually slowed down slightly from 4.3 percent in February, it still rose significantly faster than overall inflation.

Price rises were notably faster in rice and meat, which led Socioeconomic Planning Secretary Ernesto Pernia to eye the government’s import constraints as the likely culprit. “Inflationary pressure may ease following the removal of quantitative restrictions on rice importation, and the timely augmentation of supplies,” he noted. Rice alone takes up almost a tenth of the average Filipino family budget, and for poor families, an even bigger share. This is why the ongoing debate on rice importation is so critical, given the profound impact of the price and accessibility of the commodity on the welfare and nutritional status of the poor. Analysts have attributed the much higher incidence of child malnutrition and stunting among Filipinos relative to our neighbors to the much higher prices Filipinos pay for rice, rendering it less accessible to large numbers of people.

The other major reversal has been in the jobs situation. After three years of successive decline in the officially measured unemployment rate, and having already dropped below 5 percent in the last few quarters, joblessness jumped anew to 6.6 percent in January. The quarterly Labor Force Survey reports an overall loss of 700,000 jobs over the past year (from January 2016 to January 2017). This is alarming given that an average of one million new workers join our labor force yearly. The
data clearly show agriculture to be the main reason, with a recorded loss of nearly 800,000 jobs, while services also lost 64,000 jobs. The silver lining was industry’s gain of 149,000 net new jobs, almost all of it in construction. Utilities also gained 17,000 new jobs, but mining lost 36,000 jobs for reasons now well known, and manufacturing similarly lost 9,000 jobs.

Did new restrictions on contractualization have a role in the jobs decline? At first glance, it would appear otherwise; there was actually a net gain of 361,000 jobs in wholesale and retail trade (where contract employment is common), and vehicle repair. But the data don’t distinguish trade jobs in large retail establishments from those of self-employed vendors in the informal sector or “underground economy.” One gets a clue from the statistic on individually self-employed workers, whose numbers rose by 370,000, suggesting that the rise in trade jobs was mainly in the informal sector. The numbers could thus still be consistent with thousands of jobs having been lost in the formal retail trade sector, where contractuals tend to be most prevalent—but more detailed data need to be gathered for more conclusive evidence.

As for slowing economic growth, agriculture has been the main culprit, having declined by 1.3 percent last year, even as industry and services grew briskly. The sad truth is that the observed weaknesses, whether in presyo, trabaho or kita, all point to bad agricultural performance. That is how important the sector is. We simply need to stop neglecting agricultural products with high income potential because of an inordinate preoccupation with rice, and instead emulate the fast growing and much more diversified agriculture our neighbors have had. Every Filipino will be all the better off for it.

cielito.habito@gmail.com

source:  Philippine Daily Inquirer

Govt ‘won’t abolish contractualization’

The government will not likely abolish the entire system of contractualization in the country but restrict it, according to a former Labor undersecretary.

Contractualization, also known as “endo” (end of contract) and “5-5-5,” is the illegal practice of hiring and firing workers at the end of their five-month employment, enabling employers to avoid regularizing and giving them benefits such as pension coverage.

Josephus Jimenez, also former president of People Management Association of the Philippines Inc. (PMAP), told reporters at the sidelines of the 6th P&A Grant Thornton Business Forum on Wednesday that the Department of Labor and Employment (DOLE) will not likely deliver its promise to abolish contractualization by 50 percent by the end of this year, and 100 percent by 2017.

“This is my bottomline expectation: They [government]won’t abolish contractualization. They’ll only put restrictions,” Jimenez said.

Removing the contractualization system would hurt the economy as this system gives the Philippines “competitive advantage” over other regional economies, he added.

“My position is very simple, if 5-5-5 or ‘endo’ is illegal, then we have to stop it. But do not stop the entire system of outsourcing, because outsourcing is the thing that gives you competitive advantage. Without outsourcing, all the investors will go to Malaysia, Indonesia, Thailand, Vietnam, Cambodia, Myanmar, Laos, Brunei Darussalam,” Jimenez said.

He noted that a number of local companies with foreign investors have held back with their expansion and investment plans in the Philippines because of potential risks from policies of the Duterte administration.

“Yes, the economy will suffer [without contractualization]. In fact, some investors have already said, ‘[Look, we’re unstable here. Let us not put further investments because the policies are still unclear],’” Jimenez said.
He added that he knows of five companies that have withheld their expansion plans in the Philippines that would have employed 100,000 contractual workers in the transportation, food and packaging sectors.

Citing the latest Labor Force Survey (LFS) in July, Jimenez estimated that 60 percent of the 42.5 million Filipinos who are employed are regular, while 40 percent are working under contracts.

Jimenez cited 10 reasons why “legitimate” contractualization “could not be, should not be and would not be abolished in the country.”

He said “endo” contributes to the country’s competitiveness, provides employment opportunities, serves as first door to regular employment, allows on-the-job training, offers viable alternative to migration, adopts enough safety nets and gives adequate social protection, among others.

With its promise to abolish “endo,” the government through DOLE is amending Department Order No. 18-A — dubbed as the “Endo Law” — which is set to be released by the end of this month.

When asked about the Department of Trade and Industry’s proposed “win-win solution” on contractualization, Jimenez said he agrees with the DTI proposal, suggesting some improvements.

source:  Manila Times

Women not legally married can avail of maternity benefits

Dear PAO,
My application for paternity leave was denied by my company for the reason that I am not yet legally married to the mother of my child. Does this mean that since we are not yet married, my girlfriend can also not avail of her maternity leave benefits?

Sincerely yours,
Yulo

Dear Yulo,
For your information, Article 14-A of Republic Act (RA) 8282 or the Social Security Law states:

SEC. 14-A. Maternity Leave Benefit. – A covered female employee who has paid at least three monthly maternity contributions in the twelve-month period preceding the semester of her childbirth, abortion or miscarriage and who is currently employed shall be paid a daily maternity benefit equivalent to one hundred percent (100 percent) of her present basic salary, allowances and other benefits or the cash equivalent of such benefits for sixty (60) days subject to the following conditions:

a) That the employee shall have notified her employer of her pregnancy and the probable date of her childbirth which notice shall be transmitted to the SSS [Social Security System] in accordance with the rules and regulations it may provide;

b) That the payment shall be advanced by the employer in two equal installments within thirty (30) days from the filing of the maternity leave application;

c) That in case of caesarian delivery, the employee shall be paid the daily maternity benefit for seventy-eight (78) days;

d) That payment of daily maternity benefits shall be a bar to the recovery of sickness benefits provided by this Act for the same compensable period of sixty (60) days for the same childbirth, abortion or miscarriage;

e) That the maternity benefits provided under this Section shall be paid only for the first four deliveries after March 13, 1973;

f) That the SSS shall immediately reimburse the employer one hundred percent (100 percent) of the amount of maternity benefits advanced to the employee by the employer upon receipt of satisfactory proof of such payment and legality thereof; and,

g) That if an employee should give birth or suffer abortion or miscarriage without the required contributions having been remitted for her by her employer to the SSS, or without the latter having been previously notified by the employer of the time of the pregnancy, the employer shall pay to the SSS damages equivalent to the benefits, which said employee would otherwise have been entitled to, and the SSS shall in turn pay such amount to the employee concerned.

Unlike in RA 8187 or the Paternity Leave Act of 1996, none in the above-stated provision of law does it state that the mother giving birth to a child or the one who suffered a miscarriage is required to be lawfully married first, before she could avail of the maternity benefits. Hence, since there is no restriction or distinction, your girlfriend can rightfully avail of the said benefit provided she qualifies to all the other requirements of the law.

Again, we find it necessary to mention that this opinion is solely based on the facts you have narrated and our appreciation of the same. The opinion may vary when the facts are changed or elaborated.

We hope that we were able to enlighten you on the matter.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net

Negative economics of no-contractualization

One of the principal socio-economic issues that were raised during the 2016 electoral campaign was labor contractualization, i.e., the practice of employers’ signing workers to renewable contracts of less than six months’ duration instead of making them regular employees. Realizing that from the standpoint of competitiveness they had no choice but to match the other candidates’ commitment, all of the five presidential candidates promised to work for the ending of labor contractualization immediately upon election.

The issue of putting an end to contractualization brings to mind the old saying, “The road to hell is paved with good intentions.” With regard to the contractualization issue, the saying should be changed to “The road to no-more-contractualization is paved with good intentions. Here the good intention is to provide all workers with the legally mandated benefits—chiefly coverage by SSS, Philhealth and Pag-IBIG—that come with regular-employee status. No conscientious and fair-minded employer wants to deprive his employees of these and other legally mandated benefits.

For any contractualization-related government action to be widely acceptable and easily implementable, it is necessary to determine the reasons why some employers resort to contractualization. The reasons will determine whether the Department of Labor and Employment will experience much difficulty in enforcing a no-contractualization law. There are three reasons.

The first reason is, quite simply, an employer’s instinctive desire, in the absence of adverse government policy, to derive the maximum profit from his business operations. Additional costs reduce profit and SSS, Philhealth and Pag-IBIG coverage for employees are additional costs. Why, the typical businessman asks himself, should I provide benefits for my workers if with the use of legal savvy, I can get away with not providing them with such benefits? The tactic for such legal evasion is of course the hiring of workers for periods shorter than the six-months threshold for compulsory regularization. “Endo,” the shorthand for end of contract, usually comes after five months’ employment.

The second reason for the resort of many employers to contractualization is pure-and-simple avoidance (not evasion) of the law. The choice for employers has been clear-cut. They can place their employees on regular status after six months in the establishment—and begin incurring the costs of the legally mandated benefits—or they can avoid incurring those costs through the before-six-months “endo” arrangement. Why incur all those additional costs when the nation’s labor laws leave you a way out?

The third reason for many employers’ resort to labor contractualization is the most important because of its virtually certain negative impact on the economy, especially on investment and employment.

The plain truth is that the great majority of contractualizing business establishments—mostly small and medium-scale entities, who, according to the government statisticians account for approximately 99 percent of all business establishments—simply cannot afford the financial trappings that go with regular-status employment. They can afford only the basic costs of operating a business, such as rent, wages, utilities and business fees; they cannot afford separation pay, paid leaves, bonuses and social welfare coverages (SSS, Philhealth and Pag-IBIG) for their employees.

Putting an end to contractualization has been declared to be one of the legislation priorities in the House of Representatives; the Duterte administration should be able to obtain passage of a no-contractualization law. What would be the impact of such legislation and how are prospective investors likely to react to the enactment of a no-contractualization law?

Employees of most of the one percent of business establishments that are classified as big already enjoy the benefits due regular-status employees and those who do not yet enjoy such benefits will be given them once a no-contractualization law is passed. Because they are big—and therefore conspicuous—will have no choice but to comply. The SMEs have a choice: they can either decide to close shop (if their owners are unwilling to break, or are fearful of breaking, the law) or they can decide to defy the law (if their owners are not law-abiding and believe that they can get away with law-breaking).

The danger to the economy will come from the reaction of law-abiding would-be investors to a no-contractualization law. If paying the benefits required by such a law will mean that they will not be able to derive profits from their capital, they will not establish businesses. There are such people; they will not go into business if they will be able to make money only by breaking the law.

A halfway point, a win-win solution, to the negative economic impact of a no-contractualization law would be to replicate what was done by Congress to mitigate the harshness of the Minimum Wage Act, viz., make allowance for SMEs. In the same manner that business establishments with less than a certain number of employees are exempt from the operation of the Minimum Wage Act, so similarly situated business establishments can be made exempt from no-contractualization.

The probable negative impact of a no-contractualization law on investment and employment is one pitfall of legislation placing a ban on contractualization. The other is the usual bugaboo of regulating legislation in this country: enforcement. Not so long ago the head of the Department of Labor and Employment estimated that the agency was able to effectively monitor only around 11 percent of business establishments for compliance with the nation’s labor laws. Given the Labor Department’s present enforcement capability, I doubt very much if a no-contractualization law will be effectively enforced. It has been asked before, but I will ask the question again: what is the point of passing a law that will be widely violated?

If the proposed no-contractualization law is not tweaked so as to not discourage investment in SMEs, such a law should, in my view, not be passed at all. 

source:  Manila Standard Column of Rudy Romero

Placing employee on ‘floating status’ not unlawful per se

Dear PAO,
My sister works as a security guard. She was assigned to a private college in Manila. She was on that assignment for about 15 months already when the school asked her to return to her agency. It turned out that she was assessed to have a poor performance, for which reason the school asked for another guard to replace her.

My sister reported back to her agency but it has been three months now and she has been on floating status. She has not been given another assignment. Is this even valid considering that she is not receiving any salary? Please give us advice on this matter.
Dek

Dear Dek,
The term “floating status” suggests a situation where an employee is temporarily placed out of actual work. Although not particularly mentioned under our Labor Code, it is not per se unlawful or illegal. In fact, the code recognizes instances where an employer is allowed to place an employee on bona-fide suspension, but without severing their employer-employee relationship. As stated under Article 286, Id.:

“The bona-fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a military or civic duty shall not terminate employment. In all such cases, the employer shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later than one (1) month from the resumption of operations of his employer or from his relief from the military or civic duty.”

Furthermore, the Supreme Court has recognized, in a long line of cases, the validity of placing employees, security guards in particular, on floating status. In one case, the High Court ruled:

“x x x While there is no specific provision in the Labor Code which governs the ‘floating status’ or temporary ‘off-detail’ of security guards employed by private security agencies, this situation was considered by this court in several cases as a form of temporary retrenchment or lay-off. The concept has been defined as that period of time when security guards are in between assignments or when they are made to wait after being relieved from a previous post until they are transferred to a new one. As pointed out by the CA, it takes place when the security agency’s clients decide not to renew their contracts with the agency, resulting in a situation where the available posts under its existing contracts are less than the number of guards in its roster. It also happens in instances where contracts for security services stipulate that the client may request the agency for the replacement of the guards assigned to it, even for want of cause, such that the replaced security guard may be placed on temporary ‘off-detail’ if there are no available posts under the agency’s existing contracts.

As the circumstance is generally outside the control of the security agency or the employer, the court has ruled that when a security guard is placed on a ‘floating status’” he or she does not receive any salary or financial benefit provided by law. x x x” (Exocet Security and Allied Services Corporation vs. Serrano, G. R. No. 198538, September 29, 2014)

In the situation that you have presented, we cannot immediately conclude that your sister’s employer has committed wrong against her by simply placing her on floating status. First, if the contract between her agency and the school allowed the latter to seek a substitute or replacement, then her recall is in order and her employer is bound to place another guard in her post. Second, as mentioned by the court, those on floating status do not receive salary during the period. Finally, the employer may not be forced to deploy her if there is really no other available assignment.

It should be stressed, however, that the floating status must not go beyond the six (6)-month period allowed by law. If her employer fails to assign her after the expiration of the six (6)-month period, she will be deemed to have been constructively dismissed. Consequently, she will be entitled to receive separation pay pursuant to Section 6.5 of the Department of Labor and Employment Department Order No. 14, Series of 2001.

We hope that we were able to answer your queries. Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net

Prescription determined by date of last written demand for benefits

Dear PAO,
My boyfriend was employed as a private company driver. He had family problems, which greatly affected his work. He unintentionally incurred absences, which later resulted in his termination in February 2012. He accepted the termination but he wanted to insist on the payment of his last salary and other monetary benefits. He tried to demand from his former employer, but all his efforts were in vain.

Can he still legally demand his benefits now? He is contemplating on filing a case, but he is not sure if he can still do it considering that several years have already passed. Your advice will be highly appreciated.
Triza

Dear Triza,
An employee who has rendered service in favor of his employer, in compliance with the provisions of their employment contract, is entitled to receive the adequate salary or compensation as agreed upon by them. They have the right to demand the same once it becomes due. And if there is unjust refusal on the part of the employer to pay such salary or compensation, the employee concerned may bring the necessary legal actions.

You mentioned in your letter that your boyfriend was terminated in February 2012 and, while he accepted his termination, he demanded from his former employer to pay him his last salary and such other monetary benefits that may have accrued in his favor. Such demands were not met by his former employer, however. Thus, he considers filing a case against the latter.

We wish to emphasize that the filing of monetary claims must be done within the three-year prescriptive period provided for under Article 291 of our Labor Code. To be specific, the law states:

“All money claims arising from employer-employee relations accruing from the effectivity of this code shall be filed within three (3) years from the time the cause of action accrued; otherwise they shall be forever barred. x x x”

Accordingly, your boyfriend must institute his monetary claims within three (3) years from the time the same has accrued. But the common question is: When do monetary claims start to accrue? As explained by the Supreme Court:

“x x x The Labor Code has no specific provision on when a claim for illegal dismissal or a monetary claim accrues. Thus, the general law on prescription applies. Article 1150 of the Civil Code states:

Article 1150. The time for prescription for all kinds of actions, when there is no special provision which ordains otherwise, shall be counted from the day they may be brought. (Emphasis supplied)

The day the action may be brought is the day a claim starts as a legal possibility. In the present case, January 1, 2000 was the date that respondent Pingol was not allowed to perform his usual and regular job as a maintenance technician. x x x”(PLDT vs. Pingol,G.R. No. 182622, September 8, 2010)

Accordingly, the three-year period when your boyfriend may file his claims began to run on the date of his termination in February 2012, ending three (3) years thereafter.

It bears stressing, however, that the running of the three-year prescriptive period may be interrupted by the filing of an action in court, by a written extra-judicial demand, and by a written acknowledgment of the debt by the debtor (Article 1155, Civil Code; PLDT vs. Pingol, Ibid.)

Thus, if your boyfriend has made written demands after February 2012, this may have taken its toll on the running of the three-year prescriptive period. The counting of the period will be continued from the date of his last written extra-judicial demand. Correspondingly, he may still file his claim before the Department of Labor and Employment if the total period that has lapsed is still within the three-year prescriptive period.

We hope that we were able to answer your queries. Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net