THE GOVERNMENT RATIONALIZATIONALIZATION PROGRAM (EO 366): Addressing Implementation and Transition Issues1

Introduction On 06 July 2005, about 90 management representatives of national government agencies and officers of local unions in these agencies, as well as leaders of three major public sector union federations in the country, namely the Confederation of Independent Unions (CIU), the Philippine Government Employees Association (PGEA), and the Public Sector LINK (PSLINK), gathered in the U.P. School of Labor and Industrial Relations to discuss, clarify, debate, share experiences, and dialogue on implementation and transition issues relative to Executive Order 366 and its Implementing Rules and Regulations (IRR). The activity - National Dialogue on Government Rationalization: Addressing Implementation and Transition Issues was convened to: (1) gather representatives from affected government agencies, their unions and heads of agencies to a national dialogue with the officers of the Department of Budget and Management, Civil Service Commission, and related agencies; (2) clarify what the EO 366 and its IRR mean to workers in terms of employment, security of tenure, working conditions, and the options available to those who will be affected as well as retained in the service; (3) surface doubts, apprehensions and confusions on the IRR and EO 366; (4) share impact mitigating strategies or options for affected and how to take advantage of these options; (5) provide a venue where heads of agencies and workers could discuss a process of transition from the present situation to an EO 366 rationalized organization, including the need for a communication plan and concessions between management and workers to soften the impact of rationalization; and (5) clarify the role and participation of workers and their unions in the entire process at different levels within an agency and in various phases of the program. Undersecretaries, Assistant Secretaries, Directors and other officials of about 17 national government agencies attended the Dialogue. Officers of local unions from 19 government agencies likewise participated in the said activity. The Dialogue came in two parts. The morning sessions were devoted to a presentation of the Government Rationalization Program by Atty. Anicia De Lima, Director of the Civil Service Commission, and a presentation of a paper entitled EO 366 and Its IRR: Public Sector Unions Issues and Concerns, prepared by the U.P. SOLAIR Center for Labor Justice (CLJ). The presentation was done by Mary Leian C. Marasigan, University Extension Specialist of U.P. SOLAIR. The dialogue and open discussion came in the afternoon. Undersecretary Laura Pascua and Director Amelita Castillo of the Department of Budget and Management (DBM), Assistant Secretary Tonette Allones and Assistant Secretary Padilla, both of the Department of Labor and Employment (DOLE), and Atty. Anicia De Lima of the CSC, actively engaged in the dialogue and open discussion with the public sector union representatives.

Based on the proceedings of the National Dialogue on Government Rationalization: Addressing Implementation and Transition Issues, convened by the U.P. School of Labor and Industrial Relations (U.P. SOLAIR) and the Friedrich Ebert Stiftung (FES) Philippine Office, 06 July 2005, SOLAIR Auditorium, U.P. Campus, Diliman, Quezon City.

Important points were clarified in the Dialogue. The unions articulated their issues, concerns and apprehensions about the rationalization program. The DBM and the CSC panelists addressed the unions concerns and noted those that they could not readily address in the Dialogue, committing to study and come up with appropriate action on certain concerns, e.g. funding and access to credit for impact mitigating programs such as livelihood loans and entrepreneurial skills development. Many of the participants noted with appreciation the sharing of experiences of some of the union and management representatives relative to the processes they (the latter) adopted in coming up with their respective rationalization plans. ========================================================================== I. Basic Facts about the Government Rationalization Program2 What is the program all about? The overall goal is to make government focus its efforts on vital/core functions and enhance effectiveness and efficiency of public service. ! It is function-based ! It seeks to promote and establish effectiveness, efficiency, accountability and transparency in the bureaucracy ! It aims to improve delivery/support systems ! It seeks to refocus resources to priority areas Why the need to rationalize? ! Technological change ! Shifts in core functions ! Overlapping/duplicating functions ! Changes in work systems ! Structures that have outlived their usefulness What is the coverage of the program? Who are excluded? ! All Departments of the Executive Branch, including all agencies and GOCCs under/attached to them ! Excluded are the police, military, teachers, and health workers What ! ! ! What ! ! ! ! are the wrong perceptions about the program? Sacrificing jobs to cut the budget deficit An early retirement program for all Coercive (It is voluntary for personnel whose functions are affected) mistakes will the program avoid? More employees in government Losing good people and retaining those who have nowhere else to go Threatening environment Further politicization of the bureaucracy

Based on the presentation of Atty. Anicia De Lima, Director, Civil Service Commission.

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What ! ! ! ! ! ! ! What ! ! ! ! ! ! !

are the milestones/activities involved in the rationalization process? Creation of Change Management Team (CMT) Preparation and implementation of Communication Plan internal and external Strategic review of organization Preparation of Rationalization Plan Conduct of activities to assist affected personnel Submission and approval of Rationalization Plan Implementation of Rationalization Plan should the Rationalization Plan contain? Core functions, programs, activities, services Shifts in policy directions, functions, programs, and activities Areas for downsizing/phasing out Areas for strengthening Shifts in organizational structure, staffing and resource allocation Financial projections, to include savings Internal and external communication plan indicating specific methods/strategies

What are the prohibited acts during plan preparation? ! Filling of vacant positions ! Renewal of contracts/appointments of personnel on temporary/contractual/casual basis ! Hiring of contractual and casual employees What ! ! ! ! are the key elements of assistance to affected personnel? Retirement processing and provision of incentives CSC placement scheme Skills/livelihood and investment program Employee counseling

What are the options available for affected personnel? 1. Remain in government service and be placed to other agencies needing additional personnel " Affected personnel submits to agency Personnel Officer three priority agencies for reassignment " Reassignment by CSC to other agencies needing additional personnel within two months " Compensation of placed personnel to be transferred to recipient agency, except those reassigned to local government units (LGUs) " No diminution in salary and benefits, except allowances for functionspecific activities " Position of transferred personnel in recipient agency co-terminus with incumbent " Placed personnel has full rights to all benefits available to other government employees, including CNA incentives; in case of difference between CNA benefits in mother and in recipient agency, to enjoy larger benefits for one year

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" Personnel who later objects to new assignment, deemed retired/separated; to be paid retirement/separation/unemployment benefit applicable, without appropriate incentive 2. Avail of voluntary retirement/separation package with the appropriate incentive " Retirement gratuity under RA 1616 and refund of GSIS retirement premiums, without incentive " Benefit under RA 660 or under RA 8291, plus the following incentives: o month of present basic salary for every year of government service for those with 20 years of service and below o month of present basic salary for every year of government service, computed starting from 1st year, for those with 21-30 years of service o 1 month basic salary for every year of government service, for those over 30 years of government service " Those with less than three years of government service shall avail of separation gratuity under RA 6656, plus incentive " Retired/separated personnel are entitled to commutation of accumulated compensatory overtime credits What are the other conditions relative to the granting of incentives? ! Affected employees years of service beyond age 59 not subject to incentive ! No employee shall receive less than P50,000 as retirement/separation gratuity benefit from both the national government and the GSIS ! Separate guidelines on incentives and related benefits of agencies and GOCCs/GFIs exempted from the Salary Standardization Law will be issued What does EO 366 say on abolition of positions and rehiring of retired/separated personnel? ! A funded position will be abolished for every employee who opts for voluntary retirement/separation ! Retired/separated personnel cannot be appointed or hired in the Executive Branch within five years, except in educational institutions or hospitals What are the other assistance programs available to affected personnel? ! Job generation, alternative livelihood/employment, and credit assistance " Provide alternative skills/livelihood trainings. Agencies involved are the Department of Trade and Industry (DTI), Technical Education and Skills Development Authority (TESDA), and Technology and Livelihood Resource center (TLRC) " Cooperative organization. Agency involved is the Cooperative Development Authority (CDA) " Credit assistance. Agencies involved are the following: Small Business Guarantee and Finance Corporation (SBGFC), Quedan and Rural Credit Guarantee Corporation, Peoples Credit and Finance Corporation, National Livelihood Support Fund, Land Bank of the Philippines

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Job facilitation " Facilitate employment in private sector, local or overseas. Agencies involved are: Bureau of Local Employment-Department of Labor and Employment (BLE-DOLE) and the Philippine Overseas Employment Administration (POEA) Fund management/Investment services " Provide guidance on investment opportunities. Agencies involved are the Land Bank, Development Bank of the Philippines (DBP), and the Bureau of Treasury Employee counseling " Departments/agencies may send Personnel Officers to trainings on employee counseling " Departments/agencies may tap Ateneos Center for Organization Research and Development in the conduct of trainings on employee counseling

Is there a mechanism for appeal available for employees affected by rationalization? YES. The process is as follows: 1. Employee may file complaint with CMT within five working days from receipt of notification that position is affected 2. CMT to resolve issue within five working days 3. Appeal may be filed with the department/Agency Head within 10 working days from submission of Plan to DBM 4. Department/Agency head to render decision within 15 working days from filing 5. Affected personnel may further appeal Department/Agency Head decision to CSC within 10 working days from approval of Plan by the President 6. CSC to render decision within 30 working days from filing of appeal What ! ! ! would be the potential causes of and/or reasons for appeals? No union or rank and file representative in the CMT/sub-CMT Non-notification of affected personnel Deviation from Sections 3 and 4 of RA 6656 (Government Reorganization Law) on order of placement of personnel ! Actions implemented not in approved Plan ! Violations of provisions of IRR

II. What Differentiates EO 366 from Past Reorganization Programs? Will EO 366 Succeed?3 What comprises a good reorganization program? According to a study by Shiavo-Campo et al (1997), a good reorganization program should consist of three important measures, namely: diagnostic, cost containment, and structural reforms. Problems have to be diagnosed first before designing solutions. The cost containment aspect does not only mean reducing the workforce (to address the wage bill) but also determining the size of the bureaucracy that meets the services needed by the people. Structural reforms should aim to correct
From the paper Executive Order 366 and Its IRR: Public Sector Unions Issues and Concerns by Mary Leian C. Marasigan, Cecilia L. Basa and Rene E. Ofreneo, Ph.D. (Adviser). Paper presented in the National Dialogue on Government Rationalization, July 6, 2005, U.P. SOLAIR Auditorium, Diliman, Quezon City.
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overlapping, duplication and obsolete character of some functions, before the right size and proper incentives are determined. Does EO 366 contain these three measures? ! Studies have indicated that all three measures are found in EO 366, except that cost containment is focused on retrenchment and does not mention any adjustment of the compensation package of the remaining civil servants. ! EO 366s Voluntary Retirement Scheme (VRS) differentiates it from past reorganization programs. ! EO 366 also tries to avoid the `revolving door syndrome, which refers to the rehiring of people who earlier availed of the retirement package, by disallowing the placement of retired/separated employees within five years, except in hospitals and schools. What are the perceived limitations of EO 366? ! EO 366 however is silent on how to avoid adverse selection, a situation where retrenchment leads `good, productive and highly-skilled employees to leave. A study (Policy Insights, 2005) cited by the CLJ-U.P. SOLAIR paper recommended that employees whose skills are valuable to the agency should be excluded from the VRS scheme. Those who enjoyed scholarships using public funds and are still under contract with the government should likewise be excluded. ! EO 366 does not mention the need for continuous assessment of the structure of the reorganized bureaucracy, particularly in terms of workload, personnel performance and staff requirements. Will EO 366 succeed where past reorganizations programs floundered? ! While EO 366 contains the three important measures of a good reorganization program, it has to address the limitations mentioned above to ensure its success. III. Why Do Public Sector Unions Frown Upon Rationalization/EO 366? Understanding Unions Anxieties4 Why do unions frown upon rationalization? ! Past reorganization attempts only resulted to displacement of employees. ! Past reorganization programs did not substantially improve the efficiency and effectiveness of the civil service system and the delivery of government services. ! Neither can it be said that savings in the wage bill had been sustained. The bureaucracy remained bloated, i.e. political appointees, job orders, casuals were taken in to fill up vacated positions, and new items were even created. ! The bureaucracy continues to suffer from structural problems, i.e. duplicated functions and overlapped jurisdictions, outdated and slow government procedures, loopholes in administrative procedures, and limited capacity for policy analysis and strategic long-range planning (ADB, 2003; cited in the CLJU.P. SOLAIR paper).
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Marasigan, Basa and Ofreneo (2005).

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Lack of a meaningful participation of all stakeholders, especially unions, in the entire reform process. Public sector unions, for example, lament their exclusion in the preparation and drafting of EO 366. Their participation was however sought in the drafting of the EOs IRR. Unions point the need for an all-inclusive, bottom-up union perspective in the design and implementation of any reorganization/rationalization program.

What are the areas of anxiety of unions relative to EO 366 and its IRR? 1. Additional Union Representation in the CMT and sub-CMT " The Confederation of Independent Unions (CIU) recommends that at least two union representatives one regular and one alternate be allowed to join the CMT and sub-CMTs to ensure that in all meetings, there shall be at least one union or worker representative present.
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2. Availability of Funds The unions are worried that the fate of those affected by the rationalization will be similar to the many who availed of voluntary retirement schemes in the past who had to wait several years before receiving their retirement pay. Unions would like to secure assurance from the DBM that funds are available and ready to be disbursed on the day of an employees retirement. 3. Personnel Actions Presidential and political appointees must be the first to go. In the past reorganization efforts, though positions were dissolved, others were created by political actions, especially at the top management level. The unions are demanding that management positions should not be exempted from review. In this regard, the CMT Chair should be a career personnel with a rank of not lower than an undersecretary in order to avoid any undue influence on his/her decision.

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Swapping of positions should be an option for employees. There may be cases where a position is declared redundant, but the jobholder chooses to remain in the service. On the other hand, another jobholder may wish to retire but his/her position is not declared redundant. The CMT should be allowed to design strategies that would provide more options to employees to preserve their jobs. Before any position is abolished, the CMT should first phase out unfilled positions, some of which have been vacant for years. Unused positions may really be unnecessary in the first place. At no time should there be forced resignation, re-deployment or retirement. Any form of personnel movement in relation to EO 366 should be entirely voluntary on the part of the worker concerned.

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4. Quota of employees to be separated " There should be no quota or target on the number of employees to be separated for any unit, agency or department. The number of rationalized positions should be a product of a careful, transparent, deliberative and inclusive process in each agency or unit. III. Clarifying Some Issues and Concerns on EO 3665 1. How to enable full participation of public sector unions and associations in the CMTs and sub-CMTs to ensure that the issues and concerns spawned by the Rationalization Program (RP) would be properly addressed. a. Some employees in the lower levels or attached agencies were complaining of lack of participation and/or or representation in the CMT at the department level. Likewise, CMTs in the department level may not guarantee that the voices at the agency would be heard and taken up for consideration. b. There is strong call for full representation of agencies or lower levels at the CMT and sub-CMTs. Process must not be sacrificed. People must not be rushed in making decisions. Panel response: CSC proposed that attached agencies should field a common representative to enjoy full and equal representation either in the CMT or subCMT level. The DOST union shared their experience, that they have four union representatives in the CMT. DOLE shared its experience in ensuring that their Rationalization Program (RP) will be successfully implemented. There was full union participation in the CMT Central and the processes and decisions were communicated with complete transparency down the rank-and-file. The CMTs maxim was combat disinformation with information. It was made clear that RP involved review of functions and not people to allay fears and anxieties. DOLE conducted the following: Strengthened the field offices and operations because job seekers were in the localities. Decentralization was effected with creation of provincial agencies. CMT conducted workshops to surface all issues and concerns on proposed staffing patterns. Plans were validated in all the offices down the line. Conducted on-the-job enrichment programs so that personnel affected would be assigned where they want.

2. Many questions were raised on the morality, efficacy, as well as timeliness of the Rationalization Program (RP). The main contention was RP would
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Highlights of the Dialogue in the afternoon.

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exacerbate unemployment and poverty and cause more problems than solutions for government. The comments raised were as follows: a. EO 366 is a World Bank dictate hence does not serve national interest. b. Those in high government positions such as Asecs and Usecs should bear the brunt of RP, hence they should be the first to go and not low wage salaried workers. c. Too many will be displaced especially the vast number of casuals and contractuals who will just add up to the vast army of unemployed. d. There arent enough safety nets to cushion the impact of RP. The government is suffering from a fiscal crisis, the national treasure is bankrupt and there is not enough or sufficient money to cover payments of separations and terminations and incentives. e. The implementation of the RP should be deferred because it will create anxiety and stress among rank-and-file. Most affected are employees at salary grade 16 and below. f. Population is increasing and there is even greater need to hire than lay off employees. g. DBM may not have the constitutional mandate to push through with RP. h. Uncertainty in the number of number of employees who would be affected by the RP. If the government could not come up with a reliable estimate of those who will be affected by the RP, then the program may not be successful and should be abandoned. Panel Response: The panelists were more or less one in saying that rationalization is not synonymous with termination as erroneously perceived. It is mainly voluntary and enough leverage is given to employees who will be displaced to choose from variety of options. DBM has sufficient funds allotted for the RP. Safety nets were being put in place to mitigate the impact of the RP program. It is the functions that are being reviewed and not intended to discriminate employees. 3. Clarifying questions and comments were raised by participants who argued that their existing programs should be exempted from RP. Among them are the following: a. DOST has a continuing training and scholarship program which could not be stalled by RP. The department wants clear-cut policies or guidelines on this. For instance, some applicants for scholarship could not be endorsed because the agency they are attached to may be abolished or affected by RP. Panel Response: One solution forwarded to solve the above is for the agency concerned to create a Personnel Development Committee to handle cases of

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endorsement of potential grantees for studying abroad, or if need be, grievance procedure must be used and charges filed as necessary. b. EO366 may be in conflict with Foreign Service Laws re foreign assignments. The DFA needs additional staff for foreign posting. Is this allowed under the RP. Panel response: Exemptions to the rule of prohibitions are allowed if there are strong and convincing justifications and if the exigencies of the service require. c. There is need to clarify if RP can take precedence over the Magna Carta for Teachers. Some teachers were transferred to other schools where there is a high ratio of student population to number of teachers or placed in administrative positions where they do not fit. Panel Response: Teachers are not covered by RP and the Magna Carta for Teachers must be upheld above EO 366. CSC is trying to relieve teachers in administrative functions and assigned in schools near their homes. 4. There are still a lot of gray areas in the implementation of the RP that need to be clarified and put under scrutiny. Some of the relevant questions refer to: a. Need to clarify if generic titles that superseded previous job titles would affect the work patterns and work load of affected employees. b. Use of savings as a result of the rationalization program and if these can be used to provide seed funds for livelihood projects of terminated-separated casuals working for more than 20 years. Panel Response: This is not allowed. There are other funding institutions that could be tapped to take care of livelihood, loan grants or entrepreneurship trainings. 5. Finally DBM was asked if there is any salary increase for next year. The DBM officials were not able to give a categorical answer. Instead, they pointed out that the granting of salary increase may depend on whether the new VAT law will be implemented and enough savings will be generated from the Rationalization Program. IV. Addressing Implementation and Transition Issues of EO 366: Some Recommendations6 What strategies should agencies consider in mitigating the possible adverse impact of rationalization? Agencies may consider the following: ! Give workers in the public sector appropriate financial incentives as well as develop a comprehensive Human Resource Development package.
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Marasigan, Basa and Ofreneo (2005).

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! ! ! ! ! ! ! !

Failure of payment of incentives (retirement/separation) shall mean an imposition of penalty interest on the government agency concerned for every month of delay in the rate of 5% per month. Funds for the incentives must be guaranteed by the government. Housing loan obligations should not be attached to the retirement benefits; there is a foreclosure provision on the loan anyway. Only redundant positions should be abolished; the position should not be attached to the person. Livelihood training, investment skills/options must be provided. Unions and employee representatives must be involved in the policy formulation and decision-making process of the CMTs and the sub-CMTs at the regional level. There should be continuing education on the Rationalization Plan. There has to be a continuing retooling or training of employees to equip themselves the skills needed if they are to be assigned in other positions.

What strategies should the union explore and pursue in pushing for a union perspective in the rationalization program? ! Union leaders, at different levels of the department, including those in its bureaus, units, agencies, etc. must become knowledgeable of EO 366 and its IRR. Information must be disseminated by the national union as soon as possible and questions must be sufficiently and properly answered.
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Aside from knowledge of EO 366 and its IRR, unions must also assert their right to participate in the Change Management Team and not be left out of the process. As part of the CMT, unions should also study their own organizations, especially their functions, mandates and profiles of their personnel. Knowing these, the union representative in the CMT will be in a better position to participate in the discussion and if need be, persuade the team to adopt proposals from the perspective of employees or the unions. Unions must coordinate among themselves to share information and draw lessons on ongoing rationalization activities in their respective agencies. In this way, unions may be able to come up with effective strategies to enhance their participation in the rationalization process. As part of the CMT, union representatives should likewise ensure that impactmitigating interventions such as livelihood skills development training, fund management and job facilitation assistance will be provided to those affected employees. Transition issues from a pre- to a post-rationalized organization such as workload and performance should be discussed in the CMT.

Prepared by: Melisa R. Serrano Rosalinda C. Mercado

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