Job security versus employment

Uncertainty of economic survival after losing one’s job is the underlying reason why the government opted to adopt stringent laws on job security, or “security of tenure” as we know it here. The Constitution clearly guarantees that, and so does the Labor Code.

To begin with, employment is the status of having a job where the person is paid for his services known as “wage” by one known as “employer.” On the other hand, job security is a guarantee set by law or by agreement in a collective bargaining that puts a limitation to the right of employers to terminate their workers, except for a just cause as provided in Article 282 of the Labor Code. So, for one to be protected of his security of tenure, the person must first be employed and must have been working continuously for six months (Article 281 of the Labor Code) or more than one year if his employment is broken (Article 280 of the Labor Code).

According to economist Thomas Sowell, the presence of stringent job security laws in some countries is the reason why at times unemployment is high, while in others which have relaxed or devised ways to substitute it visibly have low unemployment rate, although the avowals for their enactment is to reduce it. Such finding is a contradiction between what is supposed to be a logical theory from the hard reality about that field of science. Hence, while job security assures those who are already employed, it restricts employers to terminate employees during lean period, except in factual financial losses, or to hire new ones to cope with peak demands anticipating that if their services go beyond six months, automatically they could avail of the protective mantle of the Labor Code.

For that, employers could not easily adjust their number of manpower even in cases of redundancy as when there a need to modernize to reduce their cost of production. In effect, upholding job security has become a costly venture, especially if the company is unionized, for in that instance separation pay will no longer be based on what is provided under Article 283 of the Labor Code, but on the across-the-board benefits negotiated by the union. Invariably, employers just compel their employees to do overtime work which is quite expensive.

Most typical is that companies, fearful of being edged out of the market due to high production cost, encounter difficulties in reducing their cost of wage. This is because older employees who earned their increases through years of service refuse to accept early retirement to give way to younger employees who could be hired at lower rates. Of course, they earned their benefits through other factors like educational qualifications, promotion, efficiency, or from across-the-board adjustments as union members. But even if they were justly rewarded when the company was financially doing well, a threat to its competitiveness could radically alter that generosity.

So, if the same exigency of having to trim down the cost of salaries and benefits is carried out to keep the company financially afloat, the workers would rather go on strike than submit themselves to that humbling transition even if the minimum wage and other benefits mandated by law would not be affected. More than that, benefits voluntarily given can no longer be withdrawn without the employers being accused of diminution of benefits. Local jurisprudence simply does not recognize anticipated financial losses.

Notably, the labor problem that now plagues Philippine Airlines and many institutional companies is about job security. This is the predicament employers face with their employees because job security is the latter’s only legal protection, and employment is their lifeline to economic survival. In fact, their tenacity to resist to any move to ease our laws on job security has become insurmountable after our courts interpreted labor as a property right. It is only in situations of actual bankruptcy where employees would accept retrenchment such that it becomes a Pyrrhic victory for the two.

To my mind, this can be avoided if we adopted a law that would offer employees a premium to accept a more flexible system of job security. One formula is for the government to introduce a monthly unemployment pension to all retrenched employees to last for at least six months in addition to the separation pay and other benefits that will be given them, and by increasing the monthly pension of the retired members of the SSS and GSIS. The giving of unemployment pension would put an end to their anxiety of economic uncertainty.

However, to ensure that those who will be retrenched would not forever depend on their monthly unemployment pension, companies should prioritize their rehiring once they are able to financially recover, but those rehired should be willing to accept the new wage rate, provided they have not yet reached the compulsory retirement age. One must take note that they were retrenched not because of inefficiency, but to prevent company losses. That way, companies could not be accused of circumventing their security of tenure. Most important, this new approach would give them the leeway to adjust and resuscitate their competitiveness, while assuring those retrenched they will not be disqualified from being rehired due to over age. After all, rehiring efficient workers, as a cost saving device, is still a better option than training new ones or hiring contractual but inefficient workers.

Besides, unemployment pension could prevent a recession that could deteriorate to economic stagnation for in that case the government is the one that would pump prime the economy. The level of demand for consumer items could be maintained for as long as those retrenched have something to spend. The advantage is it would allow companies to financially recover, and even hire more employees than before with the prospects of becoming permanent. In the end, flexibility in job security could ease out the new slave traders or labor-only contractors as they would lose their viability under an open labor market system of direct hiring. –Rod Kapunan, Manila Standard Today

rodkap@yahoo.com.ph

Copyright Manila Standard Today 2005-