inSights

Policy Briefing
ISSUE 9, JULY 2009 Manila, Philippines

A Rapid Appraisal of Flexible Work Arrangements as a Global Financial Crisis Adjustment Measure
In response to the global financial crisis, the Department of Labor and Employment issued DA 02-09 in 29 January 2009 providing for the guidelines on the adoption of flexible work arrangement (FWA) as a coping mechanism in mitigating the impact on employment. DA 02-09 listed six FWAs, namely: compressed workweek, reduction of workdays, rotation of workers, forced leave, broken time schedule, and flexi-holidays. FWAs are defined as alternative arrangements or schedules other than the traditional or standard work hours, workdays, and workweek.
A total of 320 firms from across all industries in the country availed of allowable flexible work arrangements covering the period October 2008 May 2009. Of these firms, some 86,458 workers were reported to have undergone flexible work arrangements (FWAs), combining those who were still undergoing the scheme and those recalled to work or whose work schedules have returned to normal. Across industries, the manufacturing sector appeared to have led in availing of FWAs in terms of the magnitude of workers affected. DA 02-09 touches on important provisions of the Labor Code, particularly on minimum wage and on the security of tenure, retrenchment, and work suspension. As such, FWA if improperly implemented may result in negative tensions at the workplace. It is in this context that this study was undertaken. It documented various experiences of selected firms in the four regions with the highest FWA incidence. Findings On effectiveness, timeliness and relevance. The study finds DA 02-09 as effective, timely, and relevant for the policy has reached its objectives: businesses were sustained and jobs were saved amidst the crisis in the 12 cases documented. Savings on overhead and operating expenses brought about by the imple-

POLICY PRESCRIPTIONS
1. The issue is not on whether to have an FWA policy or not. The issue is on how to reconcile worker protection and overcome the employment and income insecurities of workers affected amidst the crisis vis--vis the FWA objectives. 2. There is an imperative to revisit the details of DA 02-09 and clarify in specific terms the parameters, extent, and duration of each form of FWA, including their monitoring. In particular, there appears a need to relate the FWA policy with the following: a) Labor Standard Enforcement Framework to rationalize the procedure on the monitoring of FWA practice and ensure that Labor Standards are not unduly compromised; b) Quick Response Team to handle FWA-related disputes and provide income augmentation and other livelihood to affected workers; c) Rules on retrenchment and work suspension to prevent FWA use as an excuse to delay concomitant obligations. There is a need to mark the boundary with regard to the rules, rights and obligations between FWA and retrenchment and work suspension. 3. The elements that facilitated the FWA implementation, namely, transparency in the financial condition of the firm, objectivity in selecting the workers to be affected by the FWA scheme, open and continuous dialogue with workers, and the assurance of reverting to ordinary work schedules when business condition normalizes, are revealing guideposts that may be considered in the review of DA 02-09. 4. Industry and worker-based FWA guidelines are suggested to be explored. Each industry or type of worker

This paper was written by Ryan Herman H. Molina, research associate at the Institute for Labor Studies. ISSUE 9 A Rapid Appraisal of Flexible Work Arrangements as a Global Financial Crisis Adjustment Measure

INSTITUTE FOR LABOR STUDIES is differently situated. Volatility of the mining sector and the peculiar situation of agency-hired workers are typical examples that this study generated. Relatively, consultations with the different industries and other stakholders are imperative. 5. Central Office-Regional Office (CO-RO) consultations should be explored to have a coherent understanding and implementation of the policy. Predictability and coherence in the policy implementation has a cascading effect on stakeholders and social partners. Coherence ensures lesser tension and potential disputes. 6. Progression of the FWA policy as an HRD modality on productivity, work-life balance, and gender sensitivity may also be explored especially when it is employee driven. As practiced in other countries, FWA are not confined in cases of emergencies on saving jobs and businesses. It may also be viewed as an employee-welfare mechanism.

Information. Ideas. Insights. mentation of the FWA scheme with two firms tying-up with the DOLE, DTI, and TESDA and another firm getting the help of the LGU in their area. Of these, the workers gained additional skills for possible income augmentation or employment transfer. Of the firms that undertook rotation of workers, the concerned workers were trained to the new positions that resulted to additional skills gained. Three firms cited no change in their HRD activities during the implementation of the FWA scheme. On productivity. Most firms cited no effect between FWA implementation and work productivity. On business sustainability. The impact of the FWA scheme on business sustainability precedes the impact of FWA scheme on employment and is, therefore, also positive. The firms cited actual savings on manpower costs and operational costs which allowed them to negate the slump in production demand caused by the crisis. On labor relations. The impact of the FWA scheme on labor relations is variably positive. On the security of tenure aspect, workers affected felt threats to their continued employment although most of the worker-respondents view FWA scheme as a necessary measure to preserve their employment. On the aspect of social dialogue, the firms and workers cite frequent meetings and consultations upon the application of the FWA scheme. On gender equity. There was no indication of discrimination based on sex in the application of the FWA scheme. On regional implementation. Common Regional Office structures and personnel were observed to respond to FWA during the global financial crisis. These are the Quick Response Team (QRT) in cases of FWA-related complaints and assistance to affected workers and the Industrial Tripartite Council (ITC) in monitoring firms affected by the crisis. There is an exception in one region where a new Task force was established to respond to the crisis. On hindering factors. Factors that hinder the implementation of the FWA scheme across the four regions point to initial resistance from the workers that caused concerns on job and income security, and fear that the advisory may be abused by the firm. In one region, the tediousness of requiring firms to attach individual consent/waiver forms signed by workers affected by the FWA by the thousands in its report to DOLE was cited as hindrance. General effectiveness notwithstanding, the implementation of DA2-09 had variably resulted to some issues and intricacies because of the peculiarities of each implementing region and the different firms, industries, and the workers that undertook the FWA scheme.

mentation of the FWA schemes enabled the firms to keep their workers or limit the number of retrenchments. Among the forms of FWA, reduced workweek was utilized by nine firms, forced leave was used by seven firms, rotation of workers was used by six firms, compressed workweek was used by four firms, and flexi-holidays was used by two firms. No firm utilized the broken time schedule form of FWA. On unionization. The presence or absence of unions in firms neither hindered nor facilitated the implementation of FWA. With regard, however, to FWA scheme duration, those firms with unions averaged three months of FWA schemes while those firms without unions averaged more than double or seven months of FWA schemes. On working conditions. The FWA scheme has both positive and negative effects on working conditions depending on the form of FWA used. For those under comprehensive workweek scheme, the additional work hours were off set by the extra day off. The extra day off meant workers had more time to spend at home with their families and a day less spending for transportation in commuting to and from the workplace. Opportunity for relaxation and engagement in other livelihood activities were also cited. However, for those workers under the reduced workweek, rotation of workers, and forced leave schemes, it resulted to less take home income of the workers. In some cases, wages were reduced to as much as 50% that significantly affected the sustenance of their families. In another case, non-wage benefits were also affected because of lower entitlements brought about by lower Social Security System (SSS) premiums. Still in general, the FWA scheme has no significant effect on other work-related benefits and on occupational safety and health. On human resource development. The impact of the FWA scheme on Human Resource Development (HRD) varies. Nine firms conducted different livelihood programs and skills and training courses for the employees affected upon imple-

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ISSUE 9 A Rapid Appraisal of Flexible Work Arrangements as a Global Financial Crisis Adjustment Measures