Bernardo M. Villegas
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Rebalancing Strategy
published: Mar 31, 2017



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Institution Building in Labor Department

           The Philippines stands out as a labor surplus country in which there is industrial peace.  In contrast with the very agitated labor environment of the 1980s and 1990s in which leftist organizations fomented strikes that ended in violence, the last five to ten years have seen the end of radical labor unionism.  This is especially an advantage in attracting labor-intensive manufacturing investments from Northeast Asia (especially Japan) as China’s wages have skyrocketed over the last five years.  The competing Southeast Asian countries like Vietnam and Indonesia are still going through their stages of violent strikes and other forms of labor activism, some of them ending in the burning of factories.  I am convinced that we will see the renaissance of manufacturing in the coming decade or so as our free trade zones attract factory operations migrating from China, South Korea and Taiwan to countries in Southeast Asia with young and growing populations.

          A not insignificant reason for our labor bonanza has been the institutionalisation of reforms in the labor front introduced by a more enlightened and proactive Department of Labor and Employment (DOLE).  During the last four years alone under the Aquino Administration, DOLE has introduced reforms which have achieved the following outcomes:  (1) enhanced workers’ employability and competitiveness of enterprise; (2) sustained cooperation between labor and management; (3) strengthened social protection for vulnerable workers; and (4) leadership, management innovation, and research and statistics.

          At long last, DOLE was able to convince Congress to come out with an amendment to our antediluvian Labor Code that prohibited women from working at night, seriously handicapping the BPO sector that now employs 1 million workers and earns for the country some $15 billion yearly.  R.A. 10151 was passed, allowing the employment of women at night.  The law removed the “rigidity” of Department Order No. 4 which implements the Labor Code provision requiring companies to seek “exemption” from the DOLE for women to work at night.    Then there were a series of reforms that sought to address the jobs-and-skills mismatch. From 2010 to 2014, the budget for education and manpower development has ballooned by 6.56 percent.  The budget for the Special Program for the Employment of Students (SPES) rose by 201 percent during the same period.  The SPES provides financial assistance to poor but deserving students to enable them to pursue college or tech-voc education.  Jobstart, an employment facilitation program, was started with the assistance of the Asian Development Bank and the Government of Canada.  TESDA’s Training for Works Scholarship was strengthened and its budget increased.  The Expanded and enhanced Philjobnet, the government’s online job search and job and skill matching facility saw an increase of 775 percent in the number of companies using its services.  The Career Guidance Advocacy Program, starting from zero at the beginning of the present Administration, now provides students with correct, specific, and relevant labor market information, such as labor supply and demand, which are contained in 11 industry career guides and 141 career information pamphlets.

          In order to improve enterprise productivity and competitiveness, the Productivity Improvement Program (PIP) for medium and small-scale enterprises was strengthened and expanded, linking minimum wage with productivity increases under the Two-Tier Wage System (TTWS).  There has been an expansion of productivity-based pay schemes in Voluntary Codes of Good Practices between workers and management towards self-regulation including in Collective Bargaining Agreements.  For the first time, the DOLE, Temasek Foundation, and Nanyang Polytechnic of Singapore implemented an agreement for an extensive training of productivity specialists, including workers, employers, and other government agencies.  Last April 2014, the partners launched a capacity building project on innovation and enterprise development, attended by 110 participants consisting of DOLE-NWPC senior officials, program managers, implementers, strategic partners from the  DOST, DTI, DA and DOT, and social partners representing labor, employers and the academe.

          To sustain cooperation between labor and management, the following reforms were implemented:  RA 10396 was passed, strengthening conciliation as a mandatory mode of dispute settlement for all issues arising from labor and employment.  Another law was passed, RA 10395, strengthening tripartism, amending for this purpose Article 275 of the Labor Code of the Philippines. Tripartism has become a law, which recognises the National Tripartite Industrial Peace Council (NTIPC) as an institution, including its sub-committees in the regional and industry levels.  Such an institutionalisation of tripartism has resulted in at least 22 policies and guidelines, such as single entry approach on mandatory conciliation; guidelines on the conduct of police, military, and security guards during strikes and concerted actions; and implementing rules and regulations of Batas Kasambahay. 

          In two of his Labor Day messages, the President emphasized the execution of all labor laws that provide for the rights, welfare, and benefits of all workers, including the inspection of all establishments at least once a year.  Towards this end, the President gave the DOLE 372 new plantilla positions for Labor Laws Compliance Officers, the first in the history of DOLE.  The 372 positions surpass the existing 202 labor inspectors in 2010, and bring to 574 the number of LLCOs, each of whom had  been given electronic gadgets for real time reporting of the results of company assessment visits to avoid the manipulation of findings and incidence of corruption.  Other institutional reforms strengthened the inspectorate system combining regulatory and development approaches; harnessed a tripartite validation system for labor laws compliance; addressed the issue of contracting and sub-contracting and strengthened protection for seafarers.

          The most notable reforms geared towards inclusive growth had to do with the strengthening of social protection of vulnerable workers.  RA 10361 instituted policies for the protection of domestic workers or Batas Kasambahay.  The Integrated Livelihood and Emergency Employment Program, that used to be disparate programs for vendors, fisherfolk, disabled, child labourers and workers displaced by calamities, was subsumed under DOLE to make its implementation simpler and clearer.  The minimum wage fixing system was reformed, making the minimum wage the social floor for the “working poor”, which is higher than the income threshold of an average of five.  Employees’ compensation benefits were increased.  There was an intensified campaign against child labor.  As regards the protection of the rights and welfare of OFWs, high-risk areas were identified in which OFWs need special protection; the program for the reintegration of returning workers was expanded; more OWWA scholarships were awarded to OFW dependents; and the United Nations Committee on Migrant Workers recognized the Philippines for being  at the “forefront of bilateral regional, and multilateral engagements for the better protection of migrants workers,” saying that the country “has made substantial progress in protecting the rights of its migrant workers abroad.”