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.

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efficiency. including all agencies and GOCCs under/attached to them ! Excluded are the police. military. Civil Service Commission.Important points were clarified in the Dialogue. ========================================================================== I. committing to study and come up with appropriate action on certain concerns. Anicia De Lima. teachers. 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. e. FES-SOLAIR/2005 National Dialogue Proceedings 2 . 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. Director. funding and access to credit for impact mitigating programs such as livelihood loans and entrepreneurial skills development. 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.g. 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 2 Based on the presentation of Atty. The DBM and the CSC panelists addressed the unions’ concerns and noted those that they could not readily address in the Dialogue. concerns and apprehensions about the rationalization program. The unions articulated their issues. ! It is function-based ! It seeks to promote and establish effectiveness.

programs. programs. including CNA incentives. functions.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. 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 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. and activities Areas for downsizing/phasing out Areas for strengthening Shifts in organizational structure. services Shifts in policy directions. 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. in case of difference between CNA benefits in mother and in recipient agency. to enjoy larger benefits for one year FES-SOLAIR/2005 National Dialogue Proceedings 3 . except those reassigned to local government units (LGUs) " No diminution in salary and benefits. staffing and resource allocation Financial projections. activities.

Land Bank of the Philippines FES-SOLAIR/2005 National Dialogue Proceedings 4 . Agency involved is the Cooperative Development Authority (CDA) " Credit assistance. Avail of voluntary retirement/separation package with the appropriate incentive " Retirement gratuity under RA 1616 and refund of GSIS retirement premiums. without appropriate incentive 2. alternative livelihood/employment. and Technology and Livelihood Resource center (TLRC) " Cooperative organization. Agencies involved are the following: Small Business Guarantee and Finance Corporation (SBGFC). Quedan and Rural Credit Guarantee Corporation. deemed retired/separated. and credit assistance " Provide alternative skills/livelihood trainings.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. 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. except in educational institutions or hospitals What are the other assistance programs available to affected personnel? ! Job generation. 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. without incentive " Benefit under RA 660 or under RA 8291. People’s Credit and Finance Corporation. Technical Education and Skills Development Authority (TESDA). for those with 21-30 years of service o 1 month basic salary for every year of government service. plus the following incentives: o ½ month of present basic salary for every year of government service for those with 20 years of service and below o ¾ month of present basic salary for every year of government service. computed starting from 1st year. to be paid retirement/separation/unemployment benefit applicable." Personnel who later objects to new assignment. Agencies involved are the Department of Trade and Industry (DTI). National Livelihood Support Fund.

P. Ph. 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). Employee may file complaint with CMT within five working days from receipt of notification that position is affected 2. 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. Diliman. Appeal may be filed with the department/Agency Head within 10 working days from submission of Plan to DBM 4. Problems have to be diagnosed first before designing solutions. Agencies involved are the Land Bank. Department/Agency head to render decision within 15 working days from filing 5. namely: diagnostic. Ofreneo. local or overseas. 2005. The process is as follows: 1. and the Bureau of Treasury Employee counseling " Departments/agencies may send Personnel Officers to trainings on employee counseling " Departments/agencies may tap Ateneo’s 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.! ! ! Job facilitation " Facilitate employment in private sector. Affected personnel may further appeal Department/Agency Head decision to CSC within 10 working days from approval of Plan by the President 6. 3 FES-SOLAIR/2005 National Dialogue Proceedings 5 . a good reorganization program should consist of three important measures. July 6. CMT to resolve issue within five working days 3. 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.D. Paper presented in the National Dialogue on Government Rationalization. SOLAIR Auditorium. Cecilia L. (Adviser). 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. Quezon City. Development Bank of the Philippines (DBP). Basa and Rene E. and structural reforms. Marasigan. U. 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. cost containment.

III. What are the perceived limitations of EO 366? ! EO 366 however is silent on how to avoid adverse selection. SOLAIR paper recommended that employees whose skills are valuable to the agency should be excluded from the VRS scheme. ! Past reorganization programs did not substantially improve the efficiency and effectiveness of the civil service system and the delivery of government services. and limited capacity for policy analysis and strategic long-range planning (ADB. productive and highly-skilled’ employees to leave. by disallowing the placement of retired/separated employees within five years. Does EO 366 contain these three measures? ! Studies have indicated that all three measures are found in EO 366. Basa and Ofreneo (2005). personnel performance and staff requirements. 2005) cited by the CLJ-U.overlapping. Those who enjoyed scholarships using public funds and are still under contract with the government should likewise be excluded. SOLAIR paper). duplication and obsolete character of some functions. A study (Policy Insights. political appointees. except that cost containment is focused on retrenchment and does not mention any adjustment of the compensation package of the remaining civil servants. 2003. 4 Marasigan.e. ! EO 366’s Voluntary Retirement Scheme (VRS) differentiates it from past reorganization programs. and new items were even created. Will EO 366 succeed where past reorganizations programs floundered? ! While EO 366 contains the three important measures of a good reorganization program. which refers to the rehiring of people who earlier availed of the retirement package.P. The bureaucracy remained bloated. job orders. a situation where retrenchment leads `good. loopholes in administrative procedures. casuals were taken in to fill up vacated positions. except in hospitals and schools. 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.P. it has to address the limitations mentioned above to ensure its success. before the right size and proper incentives are determined. duplicated functions and overlapped jurisdictions. particularly in terms of workload.e. ! Neither can it be said that savings in the wage bill had been sustained. i. outdated and slow government procedures. ! EO 366 also tries to avoid the `revolving door syndrome’. FES-SOLAIR/2005 National Dialogue Proceedings 6 . ! EO 366 does not mention the need for continuous assessment of the structure of the reorganized bureaucracy. cited in the CLJU. ! The bureaucracy continues to suffer from structural problems. i.

re-deployment or retirement. In this regard. 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. On the other hand.! ! Lack of a meaningful participation of all stakeholders. Public sector unions. some of which have been vacant for years. " 2. Personnel Actions Presidential and political appointees must be the first to go. though positions were dissolved. but the jobholder chooses to remain in the service. The CMT should be allowed to design strategies that would provide more options to employees to preserve their jobs. lament their exclusion in the preparation and drafting of EO 366. 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. especially unions. There may be cases where a position is declared redundant. 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. " " FES-SOLAIR/2005 National Dialogue Proceedings 7 . Unused positions may really be unnecessary in the first place. Before any position is abolished. Any form of personnel movement in relation to EO 366 should be entirely voluntary on the part of the worker concerned. there shall be at least one union or worker representative present. for example. others were created by political actions. bottom-up union perspective in the design and implementation of any reorganization/rationalization program. Unions point the need for an all-inclusive. " " Swapping of positions should be an option for employees. especially at the top management level. in the entire reform process. The unions are demanding that management positions should not be exempted from review. In the past reorganization efforts. Their participation was however sought in the drafting of the EO’s IRR. Unions would like to secure assurance from the DBM that funds are available and ready to be disbursed on the day of an employee’s retirement. another jobholder may wish to retire but his/her position is not declared redundant. At no time should there be forced resignation. 3. the CMT should first phase out unfilled positions.

a. Quota of employees to be separated " There should be no quota or target on the number of employees to be separated for any unit. as well as timeliness of the Rationalization Program (RP). CMT conducted workshops to surface all issues and concerns on proposed staffing patterns. There is strong call for full representation of agencies or lower levels at the CMT and sub-CMTs. Decentralization was effected with creation of provincial agencies. The CMT’s maxim was “combat disinformation with information”. agency or department. DOLE shared its experience in ensuring that their Rationalization Program (RP) will be successfully implemented. 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. The number of rationalized positions should be a product of a careful. transparent. Conducted on-the-job enrichment programs so that personnel affected would be assigned where they want. FES-SOLAIR/2005 National Dialogue Proceedings 8 .4. 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 main contention was RP would 5 Highlights of the Dialogue in the afternoon. 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. People must not be rushed in making decisions. The DOST union shared their experience. that they have four union representatives in the CMT. CMTs in the department level may not guarantee that the voices at the agency would be heard and taken up for consideration. b. Many questions were raised on the morality. III. Likewise. There was full union participation in the CMT Central and the processes and decisions were communicated with complete transparency down the rank-and-file. It was made clear that RP involved review of functions and not people to allay fears and anxieties. Clarifying Some Issues and Concerns on EO 3665 1. DOLE conducted the following: Strengthened the field offices and operations because job seekers were in the localities. efficacy. Process must not be sacrificed. 2. deliberative and inclusive process in each agency or unit. Plans were validated in all the offices down the line.

The government is suffering from a fiscal crisis. Those in high government positions such as Asecs and Usecs should bear the brunt of 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 FES-SOLAIR/2005 National Dialogue Proceedings 9 . Panel Response: The panelists were more or less one in saying that rationalization is not synonymous with termination as erroneously perceived. EO 366 is a World Bank dictate hence does not serve national interest. DBM may not have the constitutional mandate to push through with RP. The comments raised were as follows: a. Safety nets were being put in place to mitigate the impact of the RP program. Too many will be displaced especially the vast number of casuals and contractuals who will just add up to the vast army of unemployed. b. Clarifying questions and comments were raised by participants who argued that their existing programs should be exempted from RP. Population is increasing and there is even greater need to hire than lay off employees. Among them are the following: a. then the program may not be successful and should be abandoned. Uncertainty in the number of number of employees who would be affected by the RP. 3. There aren’t enough safety nets to cushion the impact of RP. h. hence they should be the first to go and not low wage salaried workers. g. e. It is mainly voluntary and enough leverage is given to employees who will be displaced to choose from variety of options. Most affected are employees at salary grade 16 and below. DOST has a continuing training and scholarship program which could not be stalled by RP. c. d. f. DBM has sufficient funds allotted for the RP. the national treasure is bankrupt and there is not enough or sufficient money to cover payments of separations and terminations and incentives.exacerbate unemployment and poverty and cause more problems than solutions for government. The implementation of the RP should be deferred because it will create anxiety and stress among rank-and-file. For instance. It is the functions that are being reviewed and not intended to discriminate employees. If the government could not come up with a reliable estimate of those who will be affected by the RP. The department wants clear-cut policies or guidelines on this. some applicants for scholarship could not be endorsed because the agency they are attached to may be abolished or affected by RP.

endorsement of potential grantees for studying abroad. b. 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. The DFA needs additional staff for foreign posting. IV. Panel Response: This is not allowed. Is this allowed under the RP. c. loan grants or entrepreneurship trainings. Some of the relevant questions refer to: a. 4. Instead. grievance procedure must be used and charges filed as necessary. There is need to clarify if RP can take precedence over the Magna Carta for Teachers. FES-SOLAIR/2005 National Dialogue Proceedings 10 . 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. Need to clarify if generic titles that superseded previous job titles would affect the work patterns and work load of affected employees. 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. 6 Marasigan. 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. Panel Response: Teachers are not covered by RP and the Magna Carta for Teachers must be upheld above EO 366. 5. The DBM officials were not able to give a categorical answer. 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. Basa and Ofreneo (2005). b. There are other funding institutions that could be tapped to take care of livelihood. There are still a lot of gray areas in the implementation of the RP that need to be clarified and put under scrutiny. CSC is trying to relieve teachers in administrative functions and assigned in schools near their homes. Finally DBM was asked if there is any salary increase for next year. EO366 may be in conflict with Foreign Service Laws re foreign assignments. or if need be.

As part of the CMT. Housing loan obligations should not be attached to the retirement benefits. unions should also study their own organizations. ! ! ! Prepared by: Melisa R. union representatives should likewise ensure that impactmitigating interventions such as livelihood skills development training. etc. must become knowledgeable of EO 366 and its IRR. Livelihood training. Funds for the incentives must be guaranteed by the government. There should be continuing education on the Rationalization Plan. Knowing these. fund management and job facilitation assistance will be provided to those affected employees. persuade the team to adopt proposals from the perspective of employees or the unions. agencies. What strategies should the union explore and pursue in pushing for a union perspective in the rationalization program? ! Union leaders. mandates and profiles of their personnel. Serrano Rosalinda C. unions may be able to come up with effective strategies to enhance their participation in the rationalization process. at different levels of the department. the position should not be attached to the person. Transition issues from a pre. unions must also assert their right to participate in the Change Management Team and not be left out of the process. ! Aside from knowledge of EO 366 and its IRR. 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.to a post-rationalized organization such as workload and performance should be discussed in the CMT. including those in its bureaus. 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. especially their functions. In this way. Only redundant positions should be abolished. investment skills/options must be provided. Unions must coordinate among themselves to share information and draw lessons on ongoing rationalization activities in their respective agencies.! ! ! ! ! ! ! ! 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. the union representative in the CMT will be in a better position to participate in the discussion and if need be. As part of the CMT. Mercado FES-SOLAIR/2005 National Dialogue Proceedings 11 . there is a foreclosure provision on the loan anyway. Information must be disseminated by the national union as soon as possible and questions must be sufficiently and properly answered. units.

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