Wanted: A Labor Code for all workers, not just for a segment of the labor force

January 17, 2019

AER-Industrial Policy Team

By Rene Ofreneo – January 17, 2019

President Duterte recently signed  into  law the bill on “telecommuting”. Republic  Act No. 11165 recognizes the legitimacy of work from  home that  is voluntarily and  mutually agreed  upon by both the  employer and  the employee.  The  law specifies that the terms  and conditions in  a telecommuting  work arrangement, facilitated  by  the ubiquitous computer and the Internet, shall not be less  than the  standards set by  law.

Fine.  But where is the  labor law  for the  Grab  drivers?  Where is  the  labor law for those registered with Upwork to  do freelance  work for overseas employers?

More importantly, where is  the labor law  for the more numerous informal workers?  The  vendors? The transport workers: bus-jeepney-tricycle drivers, barkers and so on? The coastal fisherfolk?  The  landless rural workers?  And  so on and  so forth.

The  point is, we have a Labor  Code that addresses mainly the needs of a segment of the  labor force  — the  paid or  wage  workers  in the formal labor market or those  working for  a salary or  compensation in enterprises that are formally registered.

The Labor  Code  essentially has six Books. Books Three to Six are all about the  conditions of paid employment in the formal labor market. Book Three deals with hours of  work and  other working conditions, wages and  how they should  be paid, and  the  work conditions  for special groups of employees (women, minors, househelpers, homeworkers and night workers).  Book Four is about health, safety and  employee’s compensation.  Book Five, virtually half of  the Labor Code, tackles labor relations in the formal labor market, from  union formation to dispute settlement.  Book Six,  a short one,  covers post-employment: termination  of  employment and retirement.

As to Book  One and  Book Two, they deal  with pre-employment concerns — recruitment and  placement of  workers, and the  training of the  future wage  workers.

The labor laws  contained in the  above Books strengthen the rights of  those working as  wage workers in the formal labor market.  They are rights won  by the unions  through more than a century of struggles, dating  back to the early years of  American occupation.

The problem is that in a segmented  and  globalized  Philippine economy, the Labor Code appears meaningless to more than  half of the labor force, in particular to  those in the informal sector.   And yet,  the  Philippine Constitution, under Section  3, Article XIII, is unequivocal:  All  workers, without any exception, should enjoy the  right to self-organization, collective  bargaining and negotiations, and peaceful concerted activities.

Under the present Labor Code, these rights are enjoyed by only the paid  workers in  the formal sector.  Moreover, the  rules and  jurisprudence on unionism and  collective bargaining have been so restrictive these rights are enjoyed  by only the regular  workers in  the formal labor market, who  are easily  outnumbered by the non-regulars.  And  as  discussed in  an  earlier piece, the  economic  environment  (stagnant industrialization,  Race to the  Bottom  culture among  capitalists, globalization, etc.) is stacked  up  against unionism.

Also, 99 percent of  the  registered enterprises are micro-small-medium enterprises (MSMEs).  Many paid  workers  in these  enterprises, specially in micro and small enterprises employing less than  20 workers  or  so, do not have  formal  employment contracts, and  many MS employers do not even bother to  read  the  Labor Code.

Thus, not surprisingly, a 2017 ILO “diagnostics” study found  out that only a little over 200,000 workers, out of  a labor force of  43 million in 2016, were covered by the registered collective bargaining agreements.  But why is the  Labor Code silent on  the  concerns  of the most numerous in the labor force —  the huge  army of informal  sector  workers?  The sector accounts for at least  two-thirds of  the  labor force.  There  is  a long-pending legislative  proposal titled  “Magna Carta  for  Workers in the  Informal  Economy” (MCWIE), which seeks to establish a system of recognizing and  registering the unions or  organizations  of  informal sector  workers at the  local  and  national  government levels.   The  MCWIE bill  can  help  make  the Labor Code truly inclusive.  MCWIE outlines  how organizations of workers in the informal sector can be  recognized  and  registered.

So the next question  is, why is  Congress so hesitant to  pass MCWIE?

One possible  answer is that  the  policy framework in the enactment of  labor legislations is  based  primarily on the need  to  protect  wage  workers  in the  formal sector.  The country’s  major labor  standard and  labor  relations  laws  such as the  minimum wage  law, collective  bargaining law  and social  security law, enacted in  1952-1954, were originally  patterned  after the  American labor law  system.

In turn, the American labor  law system is  based  on the Dunlopian  tripartite framework on industrial relations.  As outlined in the seminal book of John Dunlop, Industrial Relations System (1958), American industrial  relations is all about tripartite  rule-making  involving the  three actors – industry, unions and  government. To Dunlop, who  eventually became  US  Secretary of  Labor  in the  1970s, industrial  relations system is  governed  by the  dynamic interaction  between  and  among the three parties in  a  highly industrialized  and organized  American economy.

In an envisioned industrial society, the  preoccupation  of  those  seeking to protect workers is  to pass protective labor laws in favor of the  wage  workers in  the industrialized formal sector. There are  even proposals  for  the  informals  to “transition” to  formality  so that  they can be covered by these protective labor laws.

The reality is  that the  formal-informal divide is likely to persist.  And  so is  the  reality is  that  the economy and  the  labor market is  likely  to remain uneven and  segmented.   Both the  formal and informal labor markets  shall also remain segmented and uneven.

In short,  if  the  country wants  to have an inclusive Labor  Code, one  that covers all  workers, it should  re-think its industrial  relations  framework.  The Dunlopian tripartite rule-making among the three actors – industry, unions and  government – is  narrow and outdated. It  should give  way  to a system of  multi-partism, one that recognizes  the voice of  various  segments of the  labor force.  There is also a need for the  trade unions to respond to the multi-dimensional challenge of  how  to develop new forms of worker organizing, new  forms of worker representation and various  forms of worker empowerment.

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