ECOP presses government to overhaul Labor Code

The Employers Confederation of the Philippines (ECOP), the private sector representative in tripartite consultations on socio-economic and labor policies, is urging an overhaul of the Labor Code to encourage more small and medium entrepreneurs to invest in job-creating projects.

The ECOP proposal is in a paper written by ECOP president Rene Y. Soriano which was circulated to participants of the forthcoming 26th National Conference of Employers on May 17-18 this year and to the participants of a dialogue on "The Labor Code: 30 Years and Beyond" at the Occupational Safety and Health Center.

According to Soriano, "the SMEs, as key generators of employment, must be allowed to seek their competitive niches and business linkages such as franchising, subcontracting, under a deregulated and flexible labor market."

"Such degree of flexibility, would require a drastic reorientation of prevailing populist labor law and labor which can only be brought about by the exercise of strong political will and statesmanship particularly on the part of the political leaders of the country," Soriano said.

Micro and small enterprises comprise 99.21 percent of total establishments and absorb more than 60 percent of wage employment in the formal sector.

Soriano argued that the various labor laws that were integrated in the Philippine Labor Code 30 years ago, before the onset of rapid globalization, have been overtaken by the rapid changes that are taking place in the global marketplace.

He added that several provisions and concepts of the Labor Code that have not been amended and revised have become inflexible in providing the environment that would enable enterprises to flourish and compete in the international market.

Soriano noted that "the populist orientation in favor of labor is nurtured by the populist politics of governance and by the labor provisions of the 1987 Constitution."

He cited for instance that "the labor provisions of the Constitution protect only wage employment in the formal sector and which become operative only where there is employer-employee relationship," he said.

Furthermore, Soriano complained, "the Constitution has left out from the specific scope of its protection, millions of employed labor in the informal economy such as the self-employed, domestic help and unpaid family workers constituting over 67 percent of total employment."

However, the ECOP is also dissatisfied with House Bill No. 2728 which would require employers to post a P5 million bond to answer for liabilities under the Labor Code.

The proposed bill would also prohibit and penalize contracting and outsourcing, and would require all establishments to pay their workers an initial rate of P600 a day as statutory living wage.

Additionally, the proposed House bill would prohibit employers from dismissing workers for just causes without clearance from the Labor Court and deny employers the right of egress and ingress during a strike.

Soriano warned that the bill, if approved, would "ensure the flight of capital and the destruction of enterprises."

Soriano pointed out that there are more than 50 labor bills in the House Committee on Labor and Employment alone, most of them without due regard to their effect on the viability and competitiveness of enterprises and on employment.

He urged Congress to consider the higher national interest in deliberating on the proposed labor bills.