PAL to drop 2,700 ‘non-core’ workers despite strike threat

Despite a labor dispute that threatens to erupt into a crippling strike, the country’s flag carrier Philippine Airlines (PAL) will still proceed with plans to close down three departments and outsource “non-core” positions, a spokesperson said.

An estimated 2,700 positions will be contracted out, PAL spokesperson Cielo Villaluna told GMANews.TV.

The move is expected to cut the airline’s labor costs, which are currently the equivalent of about 40 percent of revenues, Villaluna added.

By trimming its workforce to just over 4,000 from its current 7,000, the company expects to save anywhere from P500 million to P1 billion in monthly salary costs.

The company claims it incurred losses of at least P15 billion during its last two fiscal years, blaming high oil prices, cut-throat competition, and the slowdown in passenger traffic brought by the global economic meltdown, among other reasons.

However, for the second quarter of its fiscal year ending March, its net losses narrowed to $54.1 million from $158.1 million in the same period last year.

Three departments to be outsourced

Employees in the airlines’ three departments — airport services, inflight catering, and call center operations — are expected to be absorbed by PAL’s partner service providers, possibly by MacroAsia which has already been handling similar operations in the past years.

According to a Bulatlat.Com report, the outsourcing of the three departments will affect “almost half of all PAL employees, 13 of 21 union officers, and more than three-fourths of the rank-and-file union.”

The report also said the PAL plan “threatens to downgrade their status from regular, unionized employees to probationary, non-unionized employees” facing reduced wages and benefits.

Under the plan, which was proposed in August last year, 2,000 workers in the airport services department (ASD) will be outsourced, the PAL Employees Association (PALEA) said in a document that opposed the initiative.

ASD covers a wide array of employees who work in ground, ramp and cargo handling, which include passenger check-in and boarding, luggage loading, and various technical checks before the plane takes off, among others.

Some 400 positions in inflight catering services, a department that prepares meals, snacks, and drinks for all PAL flights, will likewise be contracted out, the document said.

Three hundred call center workers — who handle reservations and bookings through phone, email, fax transmissions, and telexes for all PAL flights — will also be outsourced.

The total number of employees to be “outsourced” comprise an estimated 70 percent of PALEA’s membership, prompting the workers’ union to allege that the move is a form of “union-busting.”

The militant Kilusang Mayo Uno also criticized the flag carrier’s management, saying that the outsourcing move was intended more to “maximize company profits rather than reduce losses.”

DOLE okays PAL contractualization

Union-busting and profit-maximizing or not, PAL’s outsourcing plan was approved.

In a June 15, 2010 decision, the Department of Labor and Employment (DOLE) said that the closure of PAL’s “inflight catering operations, airport services operations, and call center operations and the consequent severance from employment of all affected employees…as well as the contracting out of these operations to the named service providers, are based on lawful ground.”

The decision, issued by then DOLE office-in-charge Romeo Lagman, also said that PAL’s outsourcing strategy “was a valid exercise of a managerial prerogative and as such valid and lawful in all respects.”

The decision was made ten months after both PAL management and the PALEA were unable to settle the disagreement at the National Conciliation and Mediation Board (NCMB), a DOLE agency tasked to resolve labor disputes through mediation, conciliation and voluntary arbitration.

During mediation conferences held from September to October last year, both parties were unable to agree on the proper venue to settle the dispute.

The workers’ union insisted, among others, that outsourcing was contrary to the previous collective bargaining agreement (CBA) covering the period 1995-2000, to which both the PALEA and PAL management were principal signatories.

Meanwhile, from September to October last year, some 444 workers took management’s offer of an early retirement program (ERP) that paid workers a month’s salary for every year of service.

The PAL workers’ union said that the proper venue to discuss the company’s outsourcing plans should be held during the new CBA negotiations for the 2009 to 2013 period.

After the last CBA expired in 2000, no new CBA talks were held since the union agreed to suspend negotiations as part of its bid to “help the airline recover,” PALEA president Gerardo Rivera told GMANews.TV in an interview.

From 1998-2008, the airline sought — and eventually secured — court approval for its rehabilitation, a ten year period in which it was allowed to, among others, temporarily suspend payments to creditors.

PALEA files notice of strike

Since no progress was made in resolving the labor dispute, the union was forced to file a notice of strike on January 28 this year.

The strike notice cited “intended mass layoff of union members and officers by April 2010, illegal outsourcing of regular positions, direct negotiation with union members to avail of ERP with promise of re-employment, unresolved issues during preventive mediation,” among others.

On April 16, PALEA received a letter from PAL informing the union of the closure of the airline’s several departments and the abolition of all affected regular positions by May 31.

Ten days later, the DOLE assumed jurisdiction over the labor dispute between PALEA and PAL.

A Marcos-era law incorporated into the Labor Code allows the Labor Secretary to “assume jurisdiction,” which means to take a direct hand in resolving a labor dispute, either directly or by certifying it to the National Labor Relations Commission for compulsory arbitration, when the dispute is “likely to cause strikes or lockouts adversely affecting the national interest.”

“The order enjoins parties from committing any act that would worsen the situation,” PALEA said.

In the meantime, the DOLE’s decision approving PAL’s outsourcing plan has been appealed by the PALEA last June 28.

It remains pending at the Office of the DOLE Secretary.

As of posting time, PAL president Jaime Bautista has yet to reply to GMANews.TV requests to confirm the plan to push through with the closure of the three departments.

Meanwhile, Malacañang said Wednesday that DOLE is now looking into alleged problems with the working conditions at the PAL, although it focused more on the recent resignation of pilots and the threat of the Flight Attendants’ and Stewards’ Association of the Philippines to stage its own strike in protest of “gender discrimination” within PAL and the non-raising of flight attendants’ salaries. (See: DOLE looking into PAL working conditions)

The PALEA and the FASAP are separate unions with their own efforts to re-negotiate their respective CBA’s with the airline company.—JV, GMANews.TV