Challenges of firm adjustments social partnerships

Social Partnership Models: Challenges to IR Actors

Dean Jorge V. SibalUP SOLAIR

Rationale for Employer-Labor Social Partnership

Labor intensive operations shifted to less developed countries due to lower labor cost.

Contractualization and the race to the bottom wage rates have been very detrimental to labor.

The result is jobless growth and more poverty (ILO, UNDP, ADB and the WB)

The Emerging New IR Models

Governments, employers and labor groups have utilized various interventions to counter the negative effects of labor flexibilization.

These IR interventions use transformational methods that enhance competitiveness and productivity side-by-side with decent work through more participative rather than adversarial employer-labor relationship.

HRD employee participation as coping up mechanisms

At the firm level, Kuruvilla and Erickson (2000) spoke of another pathway where countries and industries can tread to enhance quality and productivity.

This is a functional form of flexibility that is HRD-driven employer-labor social partnership. The focus is on employee participation and skill formation.

Philippine adjustment measures

Domestic firms cope with structural, social, and economic changes of globalization thru: investment in HRD (53.3%); and improvement in quality of products

and services (79.8%)

(1999 DOLE Industrial Relations at the Workplace Survey)

Definition of Social Partnerships

1. Proactive cooperation, conflict resolution & problem-solving among employers, employees & other stakeholders

2. Outputs & outcomes are mutually beneficial to the social actors in terms of economic, social & political empowerment

Characteristics of Social Partnerships

1. Not Legalistic, prioritize use of behavioral processes

2. Goals are industry productivity & decent work for competitiveness

Characteristics of Social Partnerships

3. Promotes theory Y or organized relations with employees through unions & other labor organizations. Employee participation is also known as employee involvement or worker participation in management

Mechanisms for employee participation in decision making

J. Gordon

Autocratic

Participa-tive

Democratic

Laissez-Faire

IR/HRM Practices

Unilateral Decision Making/ Unitary

Consulta-tive, Bi/Tripartite (QCs, TFs, LMCs, CBAs)

Work Councils, Co-determina-tion, ESOPs

Committee System

PLACES OF PRACTICES

SMEs, developing countries

Japan, USA

Europe, Germany, USA

Socialist countries, state enterprises

Basic Model of Social Partnership

Social Partnership Mechanismsin the Philippines

1. Suggestion scheme, meeting, task force 2. Consultation- OSH Committee, SDWT,

QC, LMC3. Collective Bargaining, Collective

Negotiation4. Gain-sharing- Employee Coop &

Enterprise, Profit Sharing, ESOP5. Work Council, Employee representation

in the governing board

worker participation in decision making

Practices Filipino-owned

Foreign-owned

w/ Foreign equity

Union-ized

Non- unionized

Number surveyed 26.774 1,200 2,180 3,291 20,863

1. Safety & health committee

44.5% 69.1% 58.1% 61.1% 44.7%

2. Suggestion schemes 38.0 47.6 50.0 41.9 38.8

3. Quality & productivity circles

29.4 36.6 32.3 40.2 28.4

4. Productivity improvement committee

28.4 35.7 37.0 40.1 27.9

5. Grievance machinery 24.6 36.2 36.7 40.1 27.9

6. L-M council/committee 18.4 24.2 35.9 54.4 14.9

7. Joint committee & task force

16.9 32.2 25.5 26.0 17.2

LMC at Ebara Benguet, Inc Fostering principles of social

partnership and strategic management (dubbed as “Partnership for Quality, Productivity and Profitability” or PQP). (Jose Gatchalian)

LMC at Ebara Benguet, Inc- Stages of Implementation

I – Series of dialogues between consultants, management and labor

II – Strategic planning for quality & organizing the quality steering committee

III – Promotion of PQP company-wide, with group training on problem-solving techniques, teamwork, principled CBA negotiations, etc. and activation of the quality improvement teams

IV – Evaluation.

LMC at Ebara Benguet, Inc- Evaluation of Results

Measured production volume, rejection rate by weight, and profit and loss statement at period intervals

Quantitative results showed that production volume significantly increased, rejection rates by weight drastically reduced, bottom line profit reflected positive yield, while actual loss were reduced substantially.

ESOP effects on employee commitment and productivity

Employees in 4 domestic firms exhibited higher organizational commitment and greater productivity levels (Aganon 1997)

Top Phil. Telecommunications Company Guanzon (2006) assessed the readiness of

a top Philippine telecommunications company and 3 of its suppliers to the global standards of Social Accountability 8000.

This management –initiated intervention was intended not only to prepare the company for global competition but also to “guarantee the basic rights of workers and to improve their working conditions”.

Top Phil. Telecommunications Company The focus of the study was on

compliance with international standards of child labor, forced labor, health and safety, freedom of association and collective bargaining, discrimination, disciplinary practices, working hours, remuneration, and management systems.

Top Phil. Telecommunications Company

Guanzon concluded that the Philippine telecommunications company obtained a high level readiness to SA 8000 which was equal to the compliance level of its two multinational suppliers. It has higher readiness achievement compared to its 3rd supplier.

The transformation of industrial relations at PAL

PAL’s adversarial relations with its 3 unions led by the PAL Employees Association resulted to a crippling strike in 1998. This eventually caused PAL’s closure.

(Salas-Zsal 2006)

The transformation of industrial relations at PAL

PAL’s reopening in September 1998 under State receivership was conditioned on an employer-union partnership which featured the ff: union-management cooperation employee stock option program union representation in the Board in

exchange of a 10-year suspension of the collective bargaining process.

The transformation of industrial relations at PAL

Today, after less than 9 years of employer-union partnership, PAL is in the pink of health and has recently been freed from receivership status.

Labor-Management Cooperation Practices in Unionized Workplaces

a. Central Azucarera Don Pedro, Inc., Nasugbu, Batangas

b. Mabuhay Vinyl Corporation, Iligan City

c. Energizer Philippines, Mandaue, Cebu

d. Del Monte Philippines, Inc., Bukidnon

Company

QC LMC CBA Coop. Enterprise

ESOP ERGB

1.CADPI

QC/OSHC

LMC CBA ESOP

2.Mabuhay

OSHC IPC CBA Coop

3.Energizer

TPM-AC

ERC CBA

4.DelMonte

LMC CBA

Employee Co-management

EE Rep.

Employee Consultation

CB

Central Azucarera Don Pedro, Inc. (CADPI)

Started with very autocratic leadership, labor-management relationship was unfriendly, adversarial and legalistic.

Batangas Labor Union (BLU) organized in 1954 which led to two crippling strikes in 1959 and 1971 due to bargaining deadlocks. Helicopters brought food to non-striking workers while strikers cut the drinking water to the factory site.

CADPI

The scope of LMC at CADPI was expanded to low-cost subdivision and housing project, skills training, LMC Day celebration every May 1st, giving out Model Workers awards, strategic planning, job evaluation and adjustment of allowances, giving service awards for retirees, etc.

CADPI one of the best model of employer-labor

social partnership. efficient sugar milling and refining plants and

one of the most profitable in the industry 2007 DOLE-NCMB and PHILAMCOP Hall of

Fame award, 2000 Hall of Fame Pro-Active Achievement Award of the DTI Center for Industrial Competitiveness, 1999 ECOP Kapatid Award and the 1997 Sikap-Gawa Industrial Peace award of the Bishop-Businessmen’s Conference on Human Development on LMC category.

Mabuhay Vinyl Corporation

LMC is called Industrial Peace Council (IPC) after it became part of the company’s strategic plans.

Mabuhay IPC’s basic missions: industrial peace; people empowerment and continuous improvement; and address environment and community issues and concerns.

Mabuhay Vinyl Corporation Team building and collective bargaining

negotiations and implementation are part of IPC’s agenda

dissemination of IPC activities are coursed through the company newsletter (MVC Pipeline), IPC bulletin boards, and various company meetings- planning, regular, department/section, and “magtanong sa pangulo”

Energizer Philippines LMC started in 2000 with pro-active

leadership: team-based culture; open communications to foster trust and harmony; harmonious labor-management relations; and union commitment to company programs.

The Employee Relations Committee (ERC) reversed the adversarial labor management relationship: a strike in 1988; bargaining deadlocks in 1994 and 1997; and a string of grievance cases. Plant productivity of the company was on the downtrend during these periods.

Energizer Philippines No strikes and no lock-outs Zero grievance records since 2000 5 days collective bargaining

negotiations for the 2005-2008 CBA No cases in outside venues The benefits of industrial peace based

on savings on work hours are: P500,000 for speedy CB negotiations; P3 million for absence of labor disputes; and P5 to P6 million for zero strike.

Del Monte Philippines LMC started as a CBA provision in 1983

but did not become active. In 2001, the LMC was re-launched with

the opening of the plantation-wide sportsfest.

It started as communication mechanisms and activities revolved around sports, socials, safety and grievance handling.

Del Monte Philippines Now, livelihood and income

generating projects are concerns of LMC

Involved in community relations CSR projects like tree planting, Pasko sa Baryo (“Christmas at the Village”) program, and Pineapple Pre-school Learning Center.

Practices in Non-Manufacturing Unionized Workplaces

Bank of Philippine Islands, Makati City

GMA Network, Inc., Quezon City Manila Electric Company, Pasig City University of the Philippines, Quezon

City SM Shoe Mart, Manila

5. BPI OSHC LMC CBA

6.GMA OSHC LMC CBA Coop

7.Meralco

OSHC LMC CBA Coop Mesala, etc

ESOP

8. UP Com-mittee

Coun-cil

CNA Coop PF BORReps

9. SM OSHC CBA

Employee Co-management

EE Rep.

Employee Consultation

CB

Company

QC LMC CBA Coop Enterprise

ESOP

ERGB

Bank of Philippine Islands Partners with 24 rank-and-file unions

nationwide Mechanisms used for industrial peace

and harmony- collective bargaining, labor management conferences, open communications /open door policy, and training program on value-based labor relations.

GMA Network, Inc. 3 decades of employer and union

partnership operating on mutual trust and cooperation

Jointly decides and consults through: collective bargaining; organization of company events; the GMA 7 Employees Multipurpose Cooperative; the GMA Kapuso Foundation; communications mechanisms; occupational health and safety committees; and grievance machinery.

GMA Network, Inc.

Manila Electric Company

Transformed hostile and legalistic union-management relations to an HRD-focused employer-union partnership

MERALCO has high regard for the employees’ primary role in boosting the company’s productivity.

Partners with the academe, notably UP and AIM

Manila Electric Company MERALCO has reinforced employer-

union cooperation in other HR productivity interventions such as the LMC, pension fund, voluntary separation program, employees’ savings and loan association, multi-purpose cooperative, health maintenance plan, mutual benefit association, livelihood training for employees’ dependents, etc.

University of the PhilippinesGood practices in social partnership in

governance namely:1) voluntary austerity program; 2) provident fund managed by the employees; and 3) democratic representation at the Board of Regents, the University’s highest policy making body.

University of the PhilippinesThe 11 regents include the University

President as Co-Chairperson: 7 seats are allotted to the major

stakeholders- one seat each for faculty, students, staff (employees) and the alumni association President;

3 seats for professionals (2 should be alumni);

3 seats for government

Practices in Unionized Workplaces in the Regions

Holcim Philippines, Inc., La Union Holcim Philippines, Inc., Lugait,

Misamis Oriental Philippine Associated Smelting

Corporation, Isabel, Leyte Coca Cola Bottlers Phils.-Ilocos Plant,

Ilocos Norte

10. Holcim

OSHC LMC CBA

11. Pasar

OSHC LMCC

CBA

12. Coke

OSHC WIP CBA

Employee Co-management

EE Rep.

Employee Consultation

CB

Company

QC LMC CBA Coop Enterprise

ESOP

ERGB

Holcim Philippines, Inc. LMC has developed good relations with

the local community, and improved labor-management climate.

Good labor-management relations impacts directly on profitability, productivity, job security and quality of life.

LMC was institutionalized in the CBA on May 11, 1957

Philippine Associated Smelting and Refining Corporation The successful social partnership brought

improvements in the workplace- recreational facilities, sports programs and regular bus

services for employees and dependents, labor education initiated by the union, safety and health programs (P13

million), scholarship for dependents, skills and competency-based training programs (P15.5 million),

medical services with a hospital, etc.

Practices in Non-Unionized Workplaces

Ford Motor Company Philippines, Sta. Rosa, Laguna

Moog Control Corp., Baguio City SPI Technologies, Inc., Paranaque

City United Laboratories, Inc.,

Mandaluyong City

13. Ford

PP / SMT

OBM

14. Moog

OSHC ERC Coop PS

15. SPI OSHC EC Coop

16. Unilab

OSHC EC UBF PS

Employee Co-management

EE Rep.

Employee Consultation

CB

Company

QC LMC CBA Coop Enterprise

ESOP

ERGB

Ford Motor Company Philippines Social partnership in Ford is inculcated

through shared corporate values and open door policy in communications. Conflicts are resolved through various communications mechanisms such as the corrective action process, people development committee, HR-department meetings, manufacturing functional meetings, lunch with HR Director, Usapang Ford, SMT steering committee and partners’ pillars.

Moog Controls Corporation No time clocks but the employees report

accurately their performances. Profit sharing program that returns a

significant part of the company’s earnings to the employees.

Employee relations committees (ERCs), continuous peer training and performance reviews, performance and conduct counseling and disciplining, grievance machinery, employee volunteer welfare committees and an employee cooperative.

United Laboratories, Inc. Employees Council (EC) was set up

in 1959 to serve as the voice of the employees and a partner of management in providing for the needs and improving the quality of life of employees.

Profit sharing program, etc.

Challenges to the IR Actors The country has numerous successful

practices and experiences on employer-labor social partnership.

There is no theoretical guidance on which combination of interventions in social partnership may prove effective in achieving organizational productivity.

Challenges to the IR Actors

In the meantime, the problems of enterprises and labor in preserving and expanding workplaces and jobs in the country need daringness in planning and implementing employer-labor partnership interventions.

Benefits from social partnership Increased productivity; Industrial peace- no strike and no lock

out, minimal to zero grievances, minimal union-initiated labor cases; speedy collective bargaining negotiations, etc.;

Better communications between labor and management; and

Above industry compensation and benefits.

Policy Recommendations

1. While social employer-labor partnership is fast being implemented in large Philippine enterprises as shown in this paper, there is need to cascade these good practices to the smaller firms that employs the bigger bulk of the labor force.

Policy Recommendations2. Employer initiatives in promoting good

practices of corporate social responsibility (CSR) should be supported not only by their employees but also by other stakeholders. This was illustrated in both unionized and non-unionized establishments shown in this paper. Another example of this initiative is SM’s “Big Brother, Small Brother” partnership in job preservation and job creation.

Policy Recommendations3. The various social accords among

employers, trade unions and government like the “Social Accord for Industrial Peace and Stability” signed in October 4, 2004 by ECOP, trade union federations (TUCP, FFW and TUPAS) and DOLE should be transformed into concrete activities, projects and programs and not limited to contract signing and publicity events.

Policy Recommendations

4. The operations of the Tripartite Industrial Peace Council (TIPC) should be expanded to provincial, city, municipality, barangay and industry levels.

Policy Recommendations5. Trade union organizing and collective

bargaining through RA No. 9481 should be supported by the social partners. As illustrated in the case studies, employers and trade union cooperation contributes to productivity and decent work. For those who opted for non-unionized form of social partnership, alternative interventions featured in this paper has resulted to the same outcomes- industry productivity, labor empowerment and improved working conditions.

Policy Recommendations

6. The campaign of the IR actors for patronage of locally-made products following Philippine quality standards and the campaign against smuggling are effective mechanisms for job creation and job preservation. This is another area ripe for social partnership interventions.

Policy Recommendations

7. The voluntary adoption of ESOP in Philippine enterprises can be refiled at the Philippine Congress now that the success of ESOP’s experiences in the country especially on PAL has shown very positive results.

Policy Recommendations8. Employee representation in the

governing boards of government corporations like those at the University of the Philippines and tripartite representation at the GSIS, SSS, ECC, OWWA, etc. should be expanded to other state corporations, and possibly encouraged for adoption in private enterprises.

Policy Recommendations10. Voluntary compliance with the

Philippine Quality Award Act (under RA No. 9013) should be given more incentives by the social actors. The PQA standards should be divided into various categories similar to the ISO standards (ISO 9000, 14,000, etc.). The social actors especially the civil society should campaign for patronage of PQA complaint enterprises.

Policy Recommendations

10. Philippine retailers like SM should also champion compliance to all Philippine standards like DO No. 57-04 for labor standards, PS standards of DTI for electrical products, BFAD standards for food and drugs, ban in selling pirated DVDs and CDs of local films and music and other smuggled products.

Policy Recommendations

11. The Securities and Exchange Commission should encourage elected employee representatives as possible occupants of the 2 seats allotted for independent directors for publicly-listed firms.

Policy Recommendations12. Social partnership should also be

expanded among principals and subcontactors and suppliers. Big enterprises should extend educational and technical assistance to subcontractors and suppliers to enable them to comply with local and international quality standards in exchange for continuous patronage of their products and services.

In closing, Pope John XXIII (1961) “…the relations between the employers

and directors on the one hand, and the employees on the other, be marked by appreciation, understanding, a loyal and active cooperation, and devotion to an undertaking common to both, the work is considered and effected by all members of the enterprise, not merely as a source of income, but also as the fulfillment of a duty and the rendering of a service. This also means that the workers may have their say in and make their contribution