After the Herrera Law weakened workers’ rights, another Labor Code revision in the offing?

Two decades after the Aquino government successfully rammed through the first major revision of the country’s Labor Code to the detriment of workers’ rights, the Employers’ Confederation of the Philippines (ECOP) recently aired its desire to revise it anew. As with previous attempts to change the Labor Code, their stated reasons boil down to the ‘imperatives of creating jobs to improve the economy.’

Their announcement followed the first major public appearance of ex-Senator Ernesto Herrera, leader of the government-backed Trade Union Congress of the Philippines (TUCP). Herrera is the principal author of Republic Act 6715 of 1989, dubbed as the Herrera Law, the first major revision of the Labor Code, which was passed in 1974 during the Marcos dictatorship. It was followed a few weeks later by the “Wage Rationalization Act” or RA 6727, which provided for the creation of regional wage boards, composed of representatives of the government, corporations, and labor, for the purpose of determining wage increases. This, workers asserted, was meant to weaken the national unity and struggle of workers for legislated wage increases.

After his role in changing the Labor Code, Herrera lost his reelection bid for the senate. But recently, he came out of hibernation to lead TUCP in the filing of wage hike petitions in some regional boards, while the rest of the labor sector have given up on these “inutile” wage boards and are lobbying instead for a legislated wage hike.

What is in store for private sector employees and workers now that the ECOP and TUCP, which progressive unions accuse of conniving to mangle workers’ rights, are again actively pushing for their respective agenda? These two groups, who are favored by the government and the International Labor Organization (ILO), also often represent the two sides of the tripartite body that formulates proposals for labor legislation.

Will another round of revisions of the Labor Code result in jobs creation and improvements in the economy, which is reeling from a crisis?

Past Labor Code Revisions Made Workers Poorer, More Exploited

Experience hardly exhibited what ECOP president Edgardo Lacson said last week, that “the Constitution and the Labor Code have a preferential bias for labor as based on a time-honored principle of social justice observed in almost all democratic countries.”

Corporate profits have been rising in double digit rates up to 2007, before the crisis hit the economy. In 2004 the aggregate net profit of the top 1000 corporations in the Philippines increased by 160 percent.

In 2006, the top 20 percent of the population, numbering around 3.5 million families account for 52.8 percent or more than half of total family income, while the poorest 80 percent or 13.9 million families have to contend with the remaining 47.3 percent. The income of the top 10 percent is 19 times more than that of the poorest 10 percent.

Since there were no wage increases at all since June 2008, the ‘inconvenient truth’ about rising profits vs falling incomes is evidently still in effect.

As far as job creation is concerned, from 25.37 million to 32.41 million Filipinos are either jobless or in poor quality work. This is equivalent to 64.4 percent or to as much as 82.2 percent of the country’s labor force of 39.39 million in 2009.

As such, far from making it possible to give Filipinos more and better-paying jobs, the last major revisions in the Labor Code have resulted in the opposite. In fact, the rise in profits and low-quality jobs in the Philippines over the past twenty years can be attributed to the enabling mechanisms put in place by the Herrera Law, by RA 6727 (or Wage Rationalization Act) and various Supreme Court rulings that interpreted the two to the disadvantage of workers. For example, the 10-year CBA moratorium has tied the hands of workers from negotiating for wage increases and better work conditions.

Herrera Law Helped to Weaken Workers’ Unions and Strikes

Prior to the Herrera Law and RA 6727, the Philippines had a more vibrant union movement. Although it was criticized for being divided – especially between unions that call itself “genuine” and those suspected of being “yellow” or company unions – the labor movement was able to compel the government to legislate increases in the minimum wage from time to time, on top of the increases unions were able to gain in collective bargaining agreements.

And then Herrera Law and RA 6727 were enacted, and for the past twenty years since, the number of unionized workers in the country dropped from 2.97 million in 1989 to just 1.94 million in 2008, despite the rise in the labor force. More than four in every 10 wage and salary workers were unionized in 1989, but this decreased to just one in ten wage and salary workers by 2008. New registered unions dropped by more than half from 627 in 1989 to 279 in 2008. Strikes also plunged from 197 in 1989 to just 4 as of September 2009.

The fall in the number of unionized workers and their ability to fight for wage increases and better working conditions would necessarily result in worsening poverty for wage earners.

Filipino workers also practically lost their right to a minimum wage, which they have gained through the struggle of the “genuine” bloc in the 1950s, as regional wage boards fix wage rates per region or worse, per province, and for different types of jobs per different setups. At some point in the last twenty years, the Philippines had 600 to 1,000 minimum wage rates, said Remigio Saladero, lawyer of Pro-Labor Assistance Center (PLACE) and author of labor law handbook Husgahan Natin (Let’s Judge It).

In the Herrera Law-revised Labor Code, the workers’ democratic space for advancing their calls was further constricted to the point that, under a militarist president like Gloria Macapagal-Arroyo, it has almost disappeared altogether.

The provision in the Herrera law that dealt the final blow to workers’ trade union rights was the unlimited power given to the Labor secretary. The Labor Secretary was given the authority to prohibit a strike or issue a return-to-work order to striking workers. He or she could deputize the police to enforce such order. The Labor Secretary could also declare as lawful contracting or subcontracting of labor and production even in cases that are not allowed under the Labor Code.

“In court you cannot question the opinion of the Labor secretary regarding his or her basis for issuing an assumption of jurisdiction (AJ) order to quell a strike because the Herrera Law has given the Labor secretary the authority to decide which business or company is ‘indispensable to the national interest,’” said Saladero. Saladero said the Labor secretary has practically usurped the powers of Congress to decide the matter. Furthermore, he said, many anti-worker rulings of the Supreme Court used as basis the Herrera Law, particularly the provisions giving the Labor secretary enormous powers.

Ironically, Saladero said, the patently anti-worker Herrera Law was passed under the people-power installed Aquino government. Instead of repealing the repressive decrees issued by the Marcos dictatorship, including those that constricted workers’ rights and denied them of their right to strike, it even broadened the scope of companies covered under the category ‘indispensable to the national interest’ where the Labor secretary can intervene. It also “added fangs” to enforce the intervention, Saladero said.

As such, workers in the past two decades who found their strikes forcibly quelled, who sustained injuries, who were laid off or charged with “criminal” cases because they upheld their right to strike, have the Herrera Law to blame. It is the law that made it legal to lay off striking workers, deny them their wages and charge them with criminal cases if they defied the Labor department’s assumption of jurisdiction or compulsory arbitration orders. It is the law that deputized “law enforcers” such as the military, aside from the police, to attack workers and break strikes.

Such physical and economic violence against strikers help explain why strikes in the country have dwindled from its peak of 581 in 1986 to 43 in the first year of the Arroyo regime.

During Arroyo’s nine years as president, it has used the fangs of the Herrera Law to the hilt. In her first year in power alone, assaults to workers rose from 66 to 116 and recorded coercion rose from 4 to 52 cases, based on cases documented by the Center for Trade Union and Human Rights (CTUHR).

Arroyo’s first year was instructive of her nine years of cruelty to Filipino workers. She turned the picket lines of workers in Toyota, Honda, Nissan and Yokohama into a “showcase of overkill” in terms of quelling the workers’ strike.

Based on CTUHR’s documentation, in Nissan alone, 700 members of the Regional Special Action Forces (RSAF) unit of the Philippine National Police (PNP), which is normally used in counter-insurgency operations, attacked the picket of the striking workers and cracked down on its union leaders. In Yokohama, 300 members of the Special Weapons and Tactics (SWAT) unit of the PNP attacked the picket of the striking workers. Aside from violently attacking the picket of striking workers, 16 companies filed criminal cases against its workers in 2001 alone.

From 2002-2004, the attacks grew even more fierce and deadly for the workers. The most violent dispersal of strikes by “deputized” military and police forces happened at Nestle and at Hacienda Luisita, where 12 workers and two children were killed and hundreds wounded.The bloody attacks of workers in both cases occurred while enforcing the assumption of jurisdiction order of the Labor secretary. To add to the workers’ woes, 250 of the laid-off Nestle strikers have an average of 37 strike-related criminal cases to contend with.

The Herrera Law also made it more difficult for workers to strike. Aside from a deadlock in the negotiations for a Collective Bargaining Agreement (CBA), the Herrera Law allows strikes only when there are “gross and rampant violations of the CBA’s provisions.” The constrictions on the workers’ right to strike was furthered by Department Order 40A issued by the Department of Labor and Employment. Under the said order, unfair labor practices could no longer be a basis for a strike unless these were “flagrant” and “malicious.”

Acts constituting unfair labor practices such as the arbitrary termination of union officers, but were not deemed as “flagrant” and “malicious” would have to pass through grievance procedures, voluntary arbitration, the Court of Appeals, and finally the Supreme Court. However, the National Labor Relations Commission (NLRC) admits that it has a huge backlog of cases for arbitration. Some arbiters are even suspected of accepting bribes to favor the case of management. So in effect, concluded Saladero, the legal redress for workers’ complaints is just as inutile.

Less Unions, Less Labor Standards

Despite the chilling effect of violence against strikers and workers, the Philippine Labor department’s Bureau of Labor Relations (BLR) is often swamped with petitions and appeals for recognition of new unions. Every now and then, newly-unionized workers would hold protest rallies in front of the BLR office to urge it to listen to their plea for recognition. The companies where the newly-unionized workers come from vary –recently, employees of a big broadcasting company, assemblers of computer and electronics, makers of footwear, bottled tea drink, bread, among others trooped to the BLR.

So, if it is not for lack of trying, why is it that over the years, the number of unions and union members continued to fall? Aside from the lengthy, complicated requisites in registering unions, many new unions during the past twenty years have been denied recognition because of job contracting. Companies deny that they employ the newly-unionized workers, claiming that another entity, the job contracting agency, is the employer.

“Although the Labor Code did not detail what constitutes legal and illegal labor contracting, it authorizes the Labor secretary to issue orders such as Department Order 18-02,” said Saladero. He explained that the said order purportedly bans labor only contracting, but it provides guidelines on how capitalists could legally resort to labor contracting.

Saladero said the six prohibitions to contracting out labor, as listed in the DO18-02, are only a ruse. In real life, he said, firms have been doing these things. Besides, Saladero added, aside from the tangled and protracted process of winning a legal case against contractors doing labor only contracting, the penalty for such acts is too negligible: delisting the contractor’s registration and exacting from them a small penalty.

Given less and smaller unions, and as more workers are being forced to enter contractual and non-regular employment, the workers’ power to bargain for wage increases and humane work conditions correspondingly weakens.

Contractual and non-regular workers are often paid the minimum wage or a percentage of it. Yet, the past twenty years under the RA6727 (Wage Rationalization Act) showed how wage boards have been used to “keep wage increases at the slightest and company profits at its highest,” said Elmer Labog, president of KMU (May First Movement).

From 1989 to 2008, Philippine labor productivity, measured in terms of Gross Domestic Product per employed person, at 1985 prices, grew 30.4 percent. At current prices, the labor productivity in 2008 increased more than four times since 1989, from P42,242 per employed person in 1989 to P217,760 (US$4,894 at today’s rates) per employed person in 2008.

Yet, since 1989, wage hikes in different regions have amounted to an average of only P172($3.85), or an increase of P8.60 ($0.19) year-on-year. “This is an insulting pittance for the hard work of Filipino workers,” lamented Labog.

In all Philippine regions today, prescribed minimum wages are less than half of the cost of living. In the National Capital Region, for example, the P382 ($8.55) daily wage is way too little compared to the P920 ($20.609) cost of living in the region.

Not only are the wage increases granted by the wage boards too measly for wages to catch up with price increases, its enforcement is also weak. The RA6727 itself said that the non-implementation of regional wage orders is not ground for a strike. Without the strike card, and with the amount of wages varying across regions, provinces and municipalities, how can workers press the government for a living minimum wage?

In 2003 DOLE also exempted firms registered as BMBE (barangay micro-business enterprises) from paying the minimum wages. Though in real life, workers in small firms and its owners have their own informal way of wage setting. Big firms hiding behind a subcontractor can register as a BMBE to evade paying the minimum wages. The KMU- affiliated National Federation of Labor Unions (NAFLU) discovered a company registered as a BMBE in Rizal province employing nearly 200 employees.

Further Deregulation of Labor Standards?

Its 20-year track record shows that the Herrera Law has weakened the Philippine strike movement and unionism while the Wage Rationalization Act has effected a deregulation of minimum wages. The two laws that revised the Labor Code have in effect reversed the hard-fought gains of the Philippine labor movement.

It bodes ill that employers are again pushing for more revisions in the Labor Code, especially in provisions that “limit or restrict the avenues by which business can exercise management prerogative.”

Gauging from government statistics itself on today’s state of unionism, collective bargaining and real wages, Filipino workers still have to catch their breath from the last major ‘dusting off’ of the Labor Code. (MARYA SALAMAT, Bulatlat.com)