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



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Solving the Problem of Contractualization (Part 2)

           Unfortunately, however, conventional ways of thinking and acting die hard.  Most government agencies that have regulatory functions over workers have found it difficult to understand the true nature of worker cooperatives.  Most of these agencies could not, and would not reconcile with the idea of worker ownership in which the workers own the enterprise and are, therefore, employers to themselves.  The Department of Labor and Employment (DOLE), the Social Security System (SSS), the Bureau of Internal Revenue (BIR) and even to a certain extent the Cooperative Development Authority (CDA) continued to insist on the traditional employer-employee relationships wherein the cooperative enterprise, which the workers own, act as the employer and the worker-owners would continue to be treated as employees.  This, despite several international instruments and agreements to which the Philippines is a signatory, such as the ILO Recommendation 193/2002 on the promotion of cooperatives as “a major mechanism for job creation and income generation and, as a consequence, for the struggle against poverty”; and the CICOPA “World Declaration on Worker Cooperatives” which provides, among others, that “Members of a cooperative have a different working relationship with the cooperative than either workers in a conventionally managed business or the self-employed contractor.”

          There are enough examples in other parts of the world in which worker cooperatives have succeeded in generating employment and reducing poverty.  In the Basque country, one of the autonomous regions of Spain, the Mondragon worker cooperatives form the seventh largest business conglomerate.  They own banks, factories, retailing outlets and other businesses.   In Emilia Romanga in Italy, networking by the thousands of small producer cooperatives has produced a regional economy which the tenth richest in the European Union.  Our government officials should study closely these models.  The Duterte Administration will be especially positioned to understand the importance of the promotion and development of worker cooperatives as effective actors of job creation and the inclusion to the working world numerous unemployed social groups.

          Since President Duterte can have a closer working relationship with the Philippine Congress, his Administration will be in a better position to promote worker cooperatives through the following measures:

          --Recognize through legislation that cooperative worker ownership is conditioned by labor and industrial relations that are distinct from wage-based labor and self-employment or independent work and accept the fact that worker cooperatives should be subject to different norms and regulations.

          --Ensure the application of the general labor legislation to non-member workers of the worker cooperatives, with whom conventional wage-based relations are established.

          --Apply to worker cooperatives the ILO concept of Decent Work and clear, precise, and coherent provisions regulating social protection in the fields of health, pensions, unemployment insurance, occupational health and labor safety, taking in consideration their specific labor relations.

          --Define specific legal provisions regulating the fiscal regime and the self-managed organization of worker cooperatives that can enable and promote their development.  Needless to say, in order to receive an appropriate treatment from the State, worker cooperatives should be duly registered and audited.

          The Duterte Administration should ensure access to appropriate financing for entrepreneurial projects launched by worker cooperatives by creating specific public funds, or loan guarantees or covenants for the access to financial resources and of promoting alliances with the cooperative movement.  To prepare for the move towards a federal form of Government, there should be initiatives involving regional and inter-governmental organizations promoting projects based on exchanges of successful experiences in the establishment of worker cooperatives in the Philippines and other parts of the world, more specifically in Spain, France, the Netherlands, Germany, Australia and New Zealand.  The Government can play an active role in fostering cooperative worker ownership in the privatization of government-owned enterprises, conversion of enterprises in crisis, the transmission of businesses without heirs, as well as in the concession of public services and public procurement, in which the Government may define conditioning clauses that can stimulate local development through worker cooperative enterprises.

          In his paper delivered in the RTD held at the University of Asia and the Pacific, Alejandro Lukban rode on the slogan “change is coming” by quoting from the Spanish priest, Fr. Jose Maria Arizmendiarrieta (whose beatification process is ongoing), Founder of the Mondragon Cooperatives (one of the most successful in the whole world) who wrote:  “Those who opt to make history and change the course of events themselves have the advantage over those who decide to wait passively for the results of the change.”  Under the new Administration, we can change the crisis of the contractualization of labor to the opportunity of expanding significantly the worker cooperative movement that is just beginning. It is providential that its most successful application by the pioneer AsiaPro has been in the island of Mindanao, the home of President Rodrigo Duterte.  For comments, my email address is bernardo.villegas@uap.asia.