Questionable pro-labor bills

The four-decade old Labor Code of the Philippines is in the crosshairs of the House of Representatives.

As of latest count, 25 bills have been filed to amend the law that then President Ferdinand Marcos promulgated in 1974, by way of a presidential decree, to govern the relationship between labor and capital in the country.

The proposed amendments may, among others, make up for the failure of the Department of Labor and Employment to fulfill President Duterte’s campaign promise to put an end to the practice of some business establishments of entering into five-month contracts with their employees to avoid granting them regular employment status.

The Employers Confederation of the Philippines has expressed its opposition to the bills on the ground that they “conflict with the basic nature and accepted concepts in law and jurisprudence on job contracting, employment relations and security of tenure.”

The bill that has raised most the hackles of the employers’ group is House Bill 5018, which proposes the following:
“Employers shall pay their employees’ premium contributions in the Social Security System, Philippine Health Insurance Corp. (Philhealth), Home Development Fund (Pag-IBIG) and other social security and welfare benefits;

“Payment of all wages and wage-related benefits of employees shall be made through automated teller machines (ATM) of banks;

“Nonpayment of wages and wage-related benefits shall be punished by a fine of not less than P200,000 but not more than P5,000 and/or imprisonment of not less than four years but not to exceed six years, or both;

“In the case of contractual employees, the principal employer shall be jointly and severally liable with the service contractor for unpaid wage-related benefits, including the premiums for social security and welfare benefits.”

For the country’s top 100 companies, making social security and other welfare benefits non-contributory, i.e., their premium payments shall be solely shouldered by the employers, would probably not be problematic. The additional financial obligation may not cause a significant effect on their profit margin.

But the same cannot be said for thousands of medium and small scale enterprises in the country for whom every centavo counts in their business.

It is common knowledge that, at present, many of these businesses are unable to pay the required employer’s counterpart premium contribution due to financial constraints. What more if they are obliged to also pay for their employees’ contributions. This plan, in case it pushes through, could drive them out of business.

The proposal to require employers to pay the wages and wage-related benefits of their employees through ATMs may appear simple but the reality on the ground is it is a financial arrangement that not all businesses can easily enter into.

ATM service is not cost-free. Banks require businesses that want to pay the wages of their employees through ATMs to maintain a monthly standing balance (without interest) to defray the costs of providing the service and, of course, to get something in return for the service. After all, banks are not charitable institutions.

That deposit requirement may not be easy to comply with by medium and small scale businesses with limited capital and can ill-afford maintaining non-interest bearing bank deposits.

Besides, not all places in the country are capable of being served by ATMs. This service requires efficient telecommunication links between banks and ATM outlets, which the country sorely lacks.

With regard to the proposals to increase the penalty for nonpayment of wages and wage-related benefits and make the employer liable for unpaid wage-related benefits of employees, it is doubtful if these measures would, if enacted into law, accomplish the objectives.

Strict monitoring and graft-free implementation are required to ensure the effectiveness of these sanctions.

If we go by the record of the government office tasked to enforce the regulations in relation to the same subject matters, the suggested amendments would, in case they become law, simply join the long list of moribund and unenforced labor laws.