Republic of the Philippines HOUSE OF REPRESENTATIVES Quezon City FIFTEENTH CONGRESS First Regular Session HOUSE RESOLUTION No.

275

INTRODUCED by Reps. TEDDY A. CASIO and NERI JAVIER COLMENARES

RESOLUTION DIRECTING THE COMMITTEE ON LABOR AND EMPLOYMENT TO CONDUCT AN INVESTIGATION, IN AID OF LEGISLATION, ON THE OUTSOURCING AND CONTRACTUALIZATION SCHEME BEING IMPLEMENTED BY PHILIPPINE AIRLINES WITH THE END IN VIEW OF PROTECTING AND STRENGTHENING THE EMPLOYEES RIGHT TO ORGANIZATION AND SECURITY OF TENURE WHEREAS, on August 2009, the Philippine Airlines (PAL) management informed the 3,900-strong PAL Employees Association (PALEA) of its spin-off or outsourcing plans citing losses incurred by the company; WHEREAS, it was reported that of the 7,400 regular ground employees, 2,600 will initially be retrenched. The departments initially set for outsourcing are airport services (1,930 employees), catering (399) and ticket reservation (240). The remaining departments such as the medical, human resource and accounting departments are also said to be set for spin-off; WHEREAS, PALEA wants the planned spin-off to be discussed as part of the renewal of their collective bargaining agreement (CBA) which has been on a moratorium for more than 10 years. However, no CBA negotiation was held. Even with the mediation of the National Conciliation and Mediation Board, the spin-off issue was not resolved; WHEREAS, based on the managements plans, 13 out of 21 union officers would be laid-off. With the retrenchment of an overwhelming majority of union members and officers, it is feared the union will completely be dissolved after the spin-off of the remaining departments. On January 28, 2010, PALEA withdrew its Notice of Preventive Mediation and filed a Notice of Strike on grounds of union busting and illegal outsourcing of regular employees; WHEREAS, while PAL has promised separation pay and re-employment through its new service providers, all of those retrenched will become contractual workers. Even regular employees of PAL who have been with the company for decades will need to undergo application and probationary status. There is no assurance that they will be hired or will be retained after their contract expires. Instead of being rewarded for their loyalty and seniority, they are in essence retrenched to perform the same work for lesser pay and benefits and without security of tenure;

WHEREAS, Section 3, Article XIII of the 1987 Philippine Constitution states that workers are entitled to security of tenure, humane conditions of work, and a living wage. In fact, Section 4, Article XXIV of the existing CBA of PALEA clearly stipulates that the company cannot contract out existing positions, jobs, divisions, and departments presently occupied by present or future regular employees within the collective bargaining unit. However, the said provision was not upheld by PAL and the Department of Labor and Employment; WHEREAS, in policy, the State leans towards regularization and not contractualization of employees. Article 280, Book Six of the Labor Code of the Philippines stipulates that employees who perform necessary activities in the company are considered regular employees and casuals who have rendered at least one year of service will be considered regular as long as such activity exists; WHEREAS, Article 283 of the same book allows the retrenchment of employees but only to prevent losses or the closing or cessation of operation of the establishment or undertaking. According to PALEA, PAL failed to prove existence of substantial, serious, actual and real, or reasonably imminent, business losses, and, further, that retrenchment is reasonably necessary and likely to prevent such losses. In fact, PALEA said PAL projects a significantly improved future for its operations; WHEREAS, according to PAL itself, they are still the countrys top airline based on Official Airline Guide (OAG), the global aviation industrys main data keeper. According to OAG, PAL has a market-leading share of 35% of flights and 38% of seats per week, showing an increase from the previous years; WHEREAS, PAL claims it cannot afford to pay its workers but can give away 70,000 seats as promotion of its 70th anniversary in 2011. PAL also reportedly acquired two new Boeing 777-300ER jets recently. Lucio Tan, PAL chairman and chief executive officer, also consistently improved his net worth from $1.5 billion in 2008, $1.7 billion in 2009 and to $2.1 billion in 2010, maintaining his position as the 2nd richest Filipino in the country; WHEREAS, contractualization is adversely affecting thousands of Filipino workers. A study by the International Labor Organization (ILO) cited the Philippines lack of data (based on the Labor Force Survey) on contractual workers which would have given a clearer picture on employment security trends. However, the study mentioned the general effect of flexible work arrangements and termination. According to the study, all displaced workers risk hunger, loss of home and assets, and pulling their children out from school. It cited the First Quarter Social Weather Survey of 2009 which found high incidence of hunger (i.e. hungry but nothing to eat at least once in the past three months) among the unemployed: 25 per cent among families of those whose contracts were not renewed, 23 per cent among families of those who were laid off, 21 per cent among families of those who voluntarily left their job, 19 per cent among families of those whose employers closed operation. It was especially severe (i.e. hunger occurred often or always in the past three months) among families of those who were laid off from their jobs (17 per cent), which happens at least twice a year for contractual workers;

WHEREAS, considering PALs position as market leader and major player in the Philippine economy, its adverse labor practices will eventually become a well-emulated precedent for companies aiming to achieve the same scale and profitability. Thus, Congress should conduct an inquiry to ensure that any re-organization scheme by PAL will not compromise the rights of its workers and those in other companies as well; NOW, THEREFORE, BE IT RESOLVED, AS IT IS HEREBY RESOLVED, that the Committee on Labor and Employment conduct an investigation, in aid of legislation, on the outsourcing and contractualization scheme being implemented by Philippine Airlines with the end in view of protecting and strengthening the employees right to organization and security of tenure.

Adopted,

TEDDY A. CASIO BAYAN MUNA Party-List

NERI JAVIER COLMENARES BAYAN MUNA Party-List