In lieu of deregulation

A second look at the problem of labor-only contracting would show that it pertains to security of tenure than on the issue of wage. Thus, if we are to focus our attention on that, we could possibly resolve that problem. Remember, we can never have both, like securing their employment while guaranteeing a fixed income that cannot be diminished. So, for our insistence in maintaining a fixed minimum wage, we opened the floodgates to contractualization. Worse, we acquiesced to the continued violation of the non-wage benefits mandated by the Labor Code. As contractual employees, seldom would they bother to run after their employers for the non-payment or non-remittance of their contributions to the SSS, EC, PhilHealth, Pag-Ibig, etc. even if under the law, those benefits are not supposed to be affected by their status as contractual employees.

We have to admit that to solve the problem of contractualization, we have to deregulate wage, and demand a stricter observance of the constitutional mandate of security of tenure for our workers. Employers would have no reason to object to that extraordinary quid pro quo proposition. In the first place, companies that require from their employees a certain degree of skill or level of training actually would want to regularize them, except that many are deterred because any upward adjustment to the minimum wage would automatically affect the wages of their skilled workers even if they are already receiving above the minimum.

Second, the inability of most companies to maintain a regular pool of trained workers available at any time there is a demand for increased production eventually results in lost business opportunity. Many companies engaged in the production of ready-to-wear clothes, in shoe manufacturing, and to a certain extend, our local car manufacturing industry have been badly affected. The bottom line is they want to retain the services of their skilled employees but are affected by the ever-increasing cost of wage which has become prohibitive, and rendered our products uncompetitive to foreign competition. This, notwithstanding that we have a prosaic economy of having an unusually high minimum wage while having a very low per capita income.

Nobody has even reckoned that if the employers would sum up the cost they pay from the 13th month pay to the SSS, EC, PhilHealth, Pag-Ibig, the current minimum wage of P426 (including the P22 cost-of living allowance) would run to more than P500 a month, an amount not so small to companies surviving on marginal basis. In fact, it is not only in the cost of wage they are fighting to keep themselves afloat, but on the aggregate cost of production caused by the inexplicable high cost of rent and electricity, and to the unmitigated influx of cheap imports.

Since both the workers and the employers cannot have both, maybe the best compromise is to deregulate wage but strictly enforce the security of tenure and improve their retirement benefits. Foremost is to exempt employees from payment of contributions if they earn less than P5,000 a month. Below that, employers should be made to pay wholly the premium. Another is to remove the cap on the maximum SSS premium which at present is pegged to salaries not exceeding P14,750. So even if employees, including managers and executives are earning way above the amount of P14,750, say P25,000 to P100,000, they should be made to pay their share of SSS premiums corresponding to their bracket in wage compensation and not just limiting their joint contributions to P1,560.

Moreover, the SSS should place a cap on the monthly salary credit of only up to P25,000. Payment made by those earning above P25,000 should be used to subsidize the benefits for those earning below P5,000. In addition, there should be an automatic increase in joint contribution by the employers and the employees of 5 percent every five years based on the amount of compensation a worker would receive on the first day he was employed and registered as member of the SSS, and adjustable in the event of increase or decrease in his salary. However, the joint contribution should not be allowed to fall below P10,000 range of compensation earned by the workers, which means that they should be made to pay a minimum of P1,040 monthly to entitle them to enjoy a monthly salary credit of not less than P10,000.

The same system should apply to employee’s compensation to increase their disability or death benefits to work-related accidents or illness. Instead of the uniform antiquated P10 monthly contribution paid by their employers, the amount should be progressively increased starting with those earning above P5,000 a month paying additional one peso every two years of service irrespective of the increase or decrease in the employee’s salary, and should likewise be based on the salary he was first employed and registered as member of the SSS-EC. Likewise, the cap imposed by the EC on the salary credit of the entitled employee should be removed. Rather, it should be based on their contributions to the EC. Such adjustments would greatly help increase the amount received by workers who suffered work-related death, accident or illness.

The same should apply to our PhilHealth system; that contributions by employees earning below P5,000 should be paid wholly by employers, and the P30,000 monthly salary cap where both the employer and the employee are required to jointly pay a total of P750 monthly should be removed, and adjusted on the present salary of the employee. The same principle should apply in the Pag-Ibig Home Financing Program. Although it imposes no cap limitations, the allowable loan should be based on their present compensation, including the amount of loan they could obtain from the SSS as member.

Altogether, if we could make the necessary adjustments on the retirement benefits for our workers, only then would they accept the advantageous effects in having a system of flexible wage in return for steady employment. While the deregulation of wage could cause wages to dip, it is not really the end of the line for as soon as the economy is able to recover by way of restoring our competitiveness, wages could equally and inevitably increase. Right now, we have a fixed minimum wage that offers no job to our people, or if they could find one, they mostly land as contractual or casual employees. In that miserable status as intermittent employees, many are deprived of their retirement benefits they could otherwise use for their health and medication, for the education of their dependents, for them to own a house of their own, etc. which becomes more pressing as they near their retirement age. Stability in employment and assurance for their future are the best guarantees the government could offer them, and we could do that not by changing the system but by remodeling the present system of capitalism which is based on naked cannibalism of dog-eat- dog. –Rod P. Kapunan, Manila Standard Today

rodkap@yahoo.com.ph