Stop the farce

Philippine Airlines is crying harassment by its employees and their union (Palea) and asking for support from business groups like the Makati Business Club. Sort of like a “we’re all in this together and if it can happen to us it can happen to you” structural message.

Unbelievable. In the past decade the public has been witness to how badly PAL has treated its pilots (terminating, then rehiring them at entry-level wages, asking for legislation to prevent pilots from working for foreign airlines) and its flight attendants (firing, then rehiring at entry-level wages, onerous working and retirement conditions, long-drawn-out, never-ending CBA negotiations). And now, it wants to give its ground crew the same fire-and-rehire-at-entry-level wages treatment, slightly modified. Chutzpah.

From where I sit, PAL is not the victim of labor unions (leftist/Red-leaning, is the sub-message) but the exploiter of labor. It has been doing it for a long time, but this is beyond the pale. It should not be allowed to get away with it. Only consider:

First, the background: In 1998, PAL was in financial trouble as a result of a pilot strike, and as part of its rehabilitation plan, downsized its labor force—but almost immediately rehired most of them at entry-level salaries (i.e., loss of seniority—the start of a pattern). The Palea went on strike to protest the downsizing, and then President Joseph Estrada, a great friend of PAL owner Lucio Tan, created an interagency task force to broker an agreement between PAL and Palea.

The agreement included Palea consenting to a 10-year suspension of the PAL-Palea Collective Bargaining Agreement (CBA), in an effort to assure creditors and potential investors of industrial peace. In effect, Palea not only agreed that in the next 10 years, any wage increases would be decided solely by management, but that there would also be a 10-year moratorium on strikes. Does that sound like PAL was a victim and Palea the predator?

After the 10-year period, during which the employees were given yearly wage increases that were less than what they had been receiving with previous CBAs, PAL announced to Palea (August 2009) that it intended to spin off/outsource the airport services department (every activity of PAL performed in the airport) as well as the catering department. Does that sound like PAL was a victim and Palea the aggressor?

Just like that. Having gone without bargaining for 10 years, in order to help PAL turn its finances around, that is how Palea’s patience gets rewarded. And up to this time, PAL has refused to sit down with Palea for CBA negotiations. Which means, as a result, that for the past three years, the PAL employees have not received any salary increase. Does that sound like PAL is a victim and Palea the aggressor?

Now let us focus on outsourcing. While it is different from off-shoring (sending your laundry to the cleaners is outsourcing), most outsourcing is also off-shoring or offshore outsourcing, and our BPOs are examples. And the basic reason is to cut costs (e.g., in the BPO situation, Philippine or Indian labor being cheaper than American or European labor), and/or, as it is so delicately phrased, “to allow a company to concentrate on its core competencies.”

That sounds good, doesn’t it? Who can possibly be against such objectives? Which is why our labor department and the Office of the President so sanctimoniously talk about “management prerogative” being a valid reason for retrenchment.

But hold on a moment. A closer examination of how this cost-savings will take place shows how PAL’s version has made a farce, a travesty of this principle.

Consider: who is PAL going to contract these services out to? Well, from reports, it wants to contract the airport services (passenger, baggage, cargo, handling, equipment maintenance) to a company called Sky Logistics, and thus will no longer need the services of about 2,000 current employees. It intends to contract its in-flight catering activities to a company called Sky Kitchen, thus no longer requiring the services of 400 current PAL employees. And finally, the reservations and bookings will be contracted out to a call center called SPI Global, thus making another 300 of its current employees redundant.

The problem, dear reader, is that with the exception of SPI Global (which is PLDT’s BPO arm, and which probably started the rumor that Manny Pangilinan was about to buy PAL),  the other two companies have absolutely no experience in the services they are supposed to provide, and were in fact reportedly incorporated only in 2009 (when PAL announced it was outsourcing). It seems that their only claim to airline services activities is that they are both named Sky.

Sky Logistics and Sky Kitchen are reportedly owned by a Chinese-Filipino named Manny Osmeña from Cebu—no relationship at all with the Cebu Osmeñas. I promise to look up their financials and their other owners, if any.

So, if these two corporations are new and untested, why did PAL choose them? One will not speculate. But what PAL intended to do (in the guise of doing its employees a favor) is to have these firms hire the 2,400 employees it wants to retrench—but at entry-level salaries. Again. The nth time PAL uses this technique, that’s where the cost-savings will come from.

In other words, PAL’s outsourcing consists of firing its employees, and then hiring them at entry-level wages through what looks like a couple of dummy corporations.

Stop the farce. Stop the exploitation.