Aquino takes over PAL labor row; stops strike, layoffs

MANILA, Philippines (4th UPDATE) – President Aquino on Wednesday assumed the jurisdiction over the labor row in Philippine Airlines, effectively putting on hold an impending retrenchment of its ground crew employees and an impending strike that aims to cripple the operations of the Lucio Tan-controlled airline.

This is the first time that the country’s chief executive takes over a labor row at the country’s first airline, which has been battling union-related problems since Tan took over in the early 1990’s. Former presidents have simply mediated talks but never assumed jurisdiction of labor issues at PAL, Asia’s first and formerly state-owned airline.

In a statement signed by Executive Secretary Pacquito Ochoa Jr., Malacañang said on Wednesday that it is intervening in the airline’s latest labor row since PAL belongs to an “industr[y] indispensable to national interest.”

““Essentially, it stays 2 orders of the Secretary of Labor. What it plainly means is that on the part of labor, they will not engage in strikes; on the part of management, no lockout. So hold muna lahat. (Everything is put on hold),” presidential spokesperson Edwin Lacierda told reporters on Wednesday.

“By assuming jurisdiction, the government will intervene and discuss it with both parties. If and when walang agreement na mangyayari (If no agreement is reached), then the Office of the President will render decision on the petition of PALEA,” he added, referring to the labor union of its ground crew employees.

No strike

“The Orders dated 15 June 2010 and 29 October 2010 of the Secretary of Labor.. are STAYED,” the statement said, referring to the respective decisions of Labor Secretary Rosalinda Baldoz to assume jurisdiction of the case and allow PAL management to proceed with the restructuring that would result in job cuts.

That effectively means the impending strike by the members of PAL Employees Association (PALEA), a 3,000-strong labor union of the airline’s ground crew, has been put on hold.

“It is but fair and just to afford PALEA ample opportunity to exhaust its legal remedies available under the law… We hold in abeyance the implementation of the [decision of the Labor Secretary Rosalinda Baldoz dated June 15 and October 29] to give way to the overriding interests of the parties,” the statement said.

No job cuts

As for the cause of the labor row–the outsourcing of PAL’s non-core activities–Malacañang has also directed management to put that strategy on hold.

“PALEA and PAL management are directed to desist from undertainking any action that will aggravate the situation pending the resolution of this Petition,” the statement said.

That means around 2,600 ground crew members who are members of PALEA would keep their jobs–for now.

That also means the affected employees who stand to receive an aggregate P2.5 billion in separation benefits have to wait.

Legal review and negotiations

Malacañang’s approach is two-fold, explained Jose Amor Amorado, Senior Deputy Executive Secretary, during an interview over ANC’s Top Story on Wednesday afternoon.

“While the Office of Legal Affairs (under the Office of the President) will be trying to review and resolve the legal issues, the executive secretary (Ochoa) has been mandated by the president to…try to conciliate the two parties and come up with a peaceful and amicable settlement,” Amorado explained.

He stressed, too, that President Aquino is not trying to undermine Labor Secretary Rosalinda Baldoz whose previous decisions did not result in a peaceful resolution of the labor row at PAL.

“The matters now are with the Office of the President because of the appeal, which PALEA lodged with the Office fo the President… The acts of the labor secretary, who is the alter ego of the president, stays. Her decision stays. But since it (decision) was appealed at the Office of the President, then we have to review it,” Amorado said.

In the Order released on Wednesday, the two parties–PAL management and PALEA–have been mandated to “desist from undertaking any action that will further aggravate the situation,” he added.

President Aquino did not give a deadline when this labor issue should be resolved, but, according to Amorado, “Immediately after the holiday season, the series of talks might be conducted between the two camps.”

Responses

Both PAL and PALEA welcomed Malacañang’s move.

In an interview over ANC on Wednesday, PALEA lawyer Marlon Manuel said, “We are hoping that the President will uphold the rights fo the workers to security of tenure. [We hope] the govt will not uphold business interests above the human rights of the employees.”

In a statement, PAL president Jaime Bautista said, “The strike ban will assuage the anxiety of our passengers in the midst of PALEA’s repeated strike threats… The order stopping the strike is the best Christmas gift the Palace can give to thousands of anxious PAL passengers with scheduled flights this holiday season.”

On the impact of the Order to their business plans, Bautista wrote that “PAL’s spin off program can wait.”

PAL spokesperson Cielo Villaluna explained this further during an ANC interview: “We would just like to make it clear that this does not mean that the spin off program has been shelved. This simply means that it is up for review.”

PAL has opted to outsource 3 non-core operations–airport service, inflight catering and call center reservations–to cut costs amid stiff industry competition.

The Lucio Tan-controlled airline has been dislodged by Gokongwei-led budget carrier Cebu Pacific in the domestic airline market but PAL remains the largest local carrier operating overseas.

Background

Labor Secretary Baldoz had required PAL management to increase separation benefits from the original P2 billion proposal last October in the hope of ending the labor row.

It did not. PALEA questioned the DOLE’s decision, conducted street protests, and eventually held a strike vote on December 7.

After 86.138% of PALEA’s members voted to proceed with the strike as the last resort to protest the planned retrenchment and outsourcing, Malacañang intervened.

President Aquino’s latest move was a response to the November 12 petition of PALEA to transfer jurisdiction of the labor case from the labor department to Malacañang.

In late November, President Aquino mandated Executive Secretary Ochoa to resolve the labor issue.

PAL management has been facing several issues from its labor unions in recent months. Aside from the ground crew employees who belong to PALEA, which is protesting the job cuts, the airline has also previously dealt with its cabin crew employees who opposed management plans to adjust retirement age to 40 from 60.

The 1,600-strong Flight Attendants and Stewards Association of the Philippines (FASAP) was set to push a planned strike in October after last-ditch efforts to resolve the row failed. This was put on hold, too.

Malacañang had initially offered to broker talks between PAL’s management and labor unions, then adopted a hands-off policy after Labor Secretary Baldoz assumed jurisdication.

The PAL labor issue has been one of the triggers for the Aquino Cabinet to adopt a pocket open skies policy – with reports from ANC, Willard Cheng of ABS-CBN News, Lala Rimando and Judith Balea of abs-cbnnews.com