‘We’re saving airline, 5,000 jobs’

Security of tenure must be respected.PAL is losing to better competitor like Cebu Pacific. PAL has Airphil express to counter Cebu Pac promo airfare. PAL should compete, with right promo strategies its going to be on top. PALEA members has the right to strike, marami sa kanila ang mawalan nang pagkain sa mesa. Many of them are already near their retiring age and one was shown in TV teary eyed and at a lost after working with PAL for 23 years. 5000 jobs to be save? how many of this are regulars baka marami pa rin ang contractuals

wow…blame lucio tan?

globalization…out-sourcing…blame lucio tan….and or him being chinese..

this is total “ignorance”.

Lucio Tan, PAL management, PALEA and all the crews, pilots and the rest of the people working in PAL should be blamed for this. PAL is not competitive in cost and service. Just compare PAL vs Singapore Airlines. PAL is more expensive, or at best the same price if giving promotion, than Singapore Airlines. But the latter is one of the best airline in the world if not the best. How about PAL? PAL belongs to the worst airline category, whether it is service, food, or schedule. It is well known to many that PAL means PALaging late or PAL Always Late. Now if you are a business man or a frequent flyer (whether personal or company sponsored travels) you wouldn’t want your schedule to be affected by delayed flights so you will also choose the airline that is reliable in its schedule, and of course the one that gives a better service. Not to mention other major Asian airlines in the competition, i.e. Cathay, Thai Airways, Korean Air, and Malaysia Airlines. They all keep improving their service while staying competitive in cost. No need to mention. No need to mention airlines catering for North America and Europe as PAL is not even comparable to them.

Overall, PAL cannot anymore afford competition because they are no match in service much more they are way expensive than all of the other airlines. Fuel cost can be more or less same for all. Salary maybe higher in Singapore Cathay, Korea, North America, and Europe. But PAL salaries is not a pity, it may be even higher than in many countries in Asia. But has to lower down their cost so they can reduce their fare, and at the same time must improve their service to get more passengers. But with all that are happening now I doubt PAL will go nowhere. Ofcourse unless it is sold and have a totally new management.

So blame Lucio, Palea, management, and all the employees!

Any one who has owned or run a Philippine company knows it is quite hard to legally terminate an employee “without cause”. Specifically,ARTICLE 283 of the Labor Code “Closure of establishment and reduction of personnel” states that:  ”The employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title….”

Nowhere does it say that an employer may terminate an employee and rehire the employee as a contractual. Retrenchment does not mean you can rehire the employee you terminated.  It means you closed part of business and so employees of that part of the business can be terminated. This practice of converting employees to contractuals is a direct circumvention of the labor code.  

The Philippine Labor Code  states in ARTICLE 4 “Construction in favor of labor. – All doubts in the implementation and interpretation of the provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of labor.”  

What can be clearer than that?

The judiciary, and the executive unfortunately conclude wrongly that in the interest of serving the public, the investments of the shareholders must be protected first.  Common understanding of the bankruptcy laws of any country including ours shows that the interests of the investors should be served last – after the employees, creditors and the public.

If a company cannot operate properly because of bad decisions, bad management, bad sales or plain bad luck, the investors may chose to close the company and therefore lay-off workers as our Labor Code clearly points out in ARTICLE 283.  

If the company is so important to the national interests, the government can and should appoint a receiver, renegotiate the unbearable labor contracts and continue the operations of the company.  The owners of a failed business should not be allowed to benefit from their failed company (except for very few reasons, e.g. fraud committed against the company by third parties, etc.). Neither should employees of failed companies benefit from unsustainable and inequitable employment contracts wrangled from the ineffective management. In many cases, these inequitable employment contracts may be a direct cause of the company’s failure.

Over the years, local companies like PLDT have in fact reduced their workforces significantly, but they have done so in a mostly legal manner, unlike this grossly illegal forced conversion to contractuals that PAL is doing now. The only way, PAL should be allowed to terminate employees and rehire them as contractuals is if the employees agree to that arrangement. Other than that, PAL should go the way of General Motors and file for bankruptcy.  I am certain, some other investor (maybe PLDT) will be very willing to take its place or purchase its assets in a liquidation. (If the investor is PLDT, this raises another issue, but that is anti-trust, not violation of labor laws.)

In the case of PAL, the flying public is the only participant that should be entitled to the unmitigated protection by the government.

Closing down a division, terminating employees and contracting out the services of the division is very much allowed in countries like the U.S. and we in the Philippines benefit from the U.S. labor laws through our burgeoning BPO industry. But the Philippine labor code is not the U.S. Labor code. Filipinos do not have access to the U.S. social safety nets like unemployment insurance,  welfare and socialized healthcare. As a business owner and professional manager for over 25 years, I personally am in favor of modifying the labor code to allow Philippine companies to terminate employees as needed since this is needed for efficiency, but because of the potential for abuse, I believe that the law should be changed only if safety nets are in place.  Until then, the current Philippine labor code is reasonable.

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