‘Outsourcing now a fact of life’— labor chief

By Michael Lim Ubac
Philippine Daily Inquirer
Posted date: November 11, 2010

MANILA, Philippines—Labor Secretary Rosalinda Baldoz said Wednesday that “outsourcing is already with us,” defending her decision to allow Philippine Airlines (PAL) to spin off three non-core services that would result in the layoff of 2,600 workers.

Citing a global trend, Baldoz pointed out at a public hearing called by the House committee on labor and employment on Wednesday that outsourcing has become an accepted business practice even in the United States.

Baldoz, however, said her October 29 decision giving PAL the go-signal to proceed with its plan to spin off in-flight catering, airport services and call-center reservations had no prior clearance from President Benigno Aquino.

PAL’s plan to outsource these services is being protested by the PAL Employees Association (Palea), which has filed a notice of strike.

Baldoz appeared at the House of Representatives upon the invitation of Northern Samar Representative Emil Ong, chairman of the committee tasked with checking whether PAL has been lawfully allowed to engage in contractualization and outsourcing because of losses it incurred in 2008 and 2009.
Ong also invited representatives of both labor and management groups—Partido ng Mangagawa, Bukluran ng Manggagawang Pilipino, Philippine Trade Alliance and Federation of Philippine Industries, among others.

At the hearing, Baldoz was grilled by Ong and Representatives Emmeline Aglipay of the Democratic Independent Workers Association party-list group, Philip Pichay of Surigao del Sur, Ben Evardone of Eastern Samar, JV Ejercito of San Juan and Bingbong Crisologo of Quezon City.
“We're talking here about outsourcing. May I ask the labor secretary if it is the policy of the administration now to promote outsourcing?” said Evardone.

Baldoz cited business process outsourcing (BPO) as an example of an outsourced activity even from the United States.

She noted that trade unions in the United States were also opposed to outsourcing. “Nonetheless, employers who look at outsourcing as one way of reducing cost to make them competitive, outsource (jobs) to countries like us," she said.

As a result, jobs in the United States have been transferred to countries like the Philippines, Baldoz said. The BPO industry, including call centers, in the Philippines has generated tens of thousands of jobs.
According to Baldoz, the Labor Code allows contracting out jobs as long as it is done by an independent contractor.

She said a labor department previously signed an order providing guidelines on how to do it.
Asked if, given a chance, she would recommend her policy of promoting outsourcing in the country to Aquino, Baldoz said: “For as long as it is done in accordance with the law and unless the law is changed—it is still the (same) Constitution and the Labor Code—then that outsourcing should be recognized in the country.”

Asked pointblank if she would recommend this new policy to the President, Baldoz retorted: “Well, if he will ask me, that will be the same answer that I will give him.”

Told that she was appointed by Aquino to “protect the interest of labor,” Baldoz said: "In this case, we talk of outsourcing always in relation to the different nature of employment—regular, contractual.”
She said even regular employees could be retrenched for justifiable causes. “(T)here could be closure, and for as long as the due process requirement of the Labor Code are satisfied and benefits the workers, again, based on law are provided, then that is also allowed,” she said.

During a three-hour hearing, Baldoz and PAL management defended the ruling. Palea said 70 percent of its members would lose their jobs because of the Baldoz ruling.

Bataan Representative Herminia Roman reminded Baldoz that the justification for the contractualization and outsourcing at PAL should be “shown by clear and convincing evidence” and that “these losses must also be substantial in nature.”

PAL intends to spin off the three non-core services to survive industry competition and stay afloat. It said it lost P13 billion in the past two years.

Explaining her October 29 decision, Baldoz said she was merely affirming the previous order of then acting Labor Secretary Romeo Lagman denying the motion for reconsideration of the ground crew union at the national flag carrier.

She based her decision on the provisions of the existing Collective Bargaining Agreement (CBA) between Palea and PAL “on the exercise of management prerogative and on certain limitations that have been placed by agreement of the parties.”

She was referring to Article 24 of the CBA. “The entire decision has been focused on that,’’ she said.
Palea president Gerry Rivera, who was present at the hearing, disagreed, pointing out that the CBA only contemplated “temporary” contracting out jobs in case of company restructuring or spin off and joint venture.

Rivera pointed to Section 3 of Article 24 which, he said, was explicit in saying that contracting out regular positions should be temporary.

Still, Baldoz insisted that the whole Article 24 “to my interpretation is more of a permanent measure being done by the company.”

She said the only condition required of PAL was to ensure that the mass layoff of PAL employees “has to be done with lawful, just, reasonable and humane manner.”