Emerging Models for Industrial Relations:

A Challenge to Employers and People Managers1

Prof. Jorge V. Sibal

Dean, U.P. School of Labor and Industrial Relations

Globalization integrates a world market that crosses borders of nation-states. It is

fuelled by technological advancements in communications and transportation (Froebel
and Kruye, 1981) that enhance market competition in terms of higher levels of consumer
standards for quality, efficiency, speed, and cost-effective products and services.

Managerial control and supervision are facilitated by cheaper mode of

communications and transportation. Technologies are becoming easier to operate, thus
workers with lesser skills can be employed. Global enterprises have transferred their
labor intensive operations to the less developed countries where the cost of labor is lower.
Contractualization and the race to the bottom wage rates have been very detrimental to
labor. This has resulted to jobless growth and more poverty as shown by studies of the
ILO, UNDP, ADB and the World Bank.

Governments, business enterprises and labor organizations have utilized various

interventions to address the negative effects of labor flexibilization. These new theories
and interventions in industrial relations have focused on transformational methods in
enhancing competitiveness and productivity side-by-side with decent work through more
participative rather than adversarial employer-labor relationship.

To combat the race to the bottom effects on wages of global contractualization,

many nations have institutionalized labor standards legislations and accords that have
impact on labor rights. High priorities were on policies that focus on meeting “peoples’
needs” that meet the aspirations of men and women for: respect for their rights, cultural
identity and autonomy; decent work; and the empowerment of the communities where
they live and work. Governments are also challenged to practice good political
governance based on the democratic principles of respect for human rights, the rule of
law and social equity (World Commission on the Social Dimension of Globalization,
2004).

At the industry level, Vause (2001) proposed that labor organizations may unify
and forge agreements (such as voluntary codes of conduct) which enjoy the support of
government. He cites the “Sullivan Principles” Code of Conduct that opposes apartheid
and imposed compliance from foreign companies actively doing business in South
Africa.

At the firm level, Kuruvilla and Erickson (2000) spoke of another pathway where
countries may opt to compete– this is on the basis of quality. They referred to a
functional form of flexibility that aims to establish a competitive human resource
1
Plenary paper presented at the PMAP Industrial Relations Conference, August 16, 2007, Hotel
Intercontinental Makati, sponsored by the People Management Association of the Philippines (PMAP).

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development driven industrial relations system, i.e. a higher value added and flexible
human resources practices based on employee participation and skill formation.

In the Philippines, adjustment measures introduced by domestic firms to cope

with structural, social, and economic changes of globalization as reported in the 1999
Industrial Relations at the Workplace Survey of the Department of Labor and
Employment would include investment in HRD (53.3 per cent) and improvement in
quality of products and services (79.8 per cent).2

Social Partnership

In its Social Market Economy Project, members of the Core Group of the Society,
Economy, and Philippine Development Project (Angelo King Institute for Economic and
Business Studies) defined the term ‘social partnership’ as referring to a “relationship
based on trust”3 taking place under “conditions of relative equality”. Key aspects of this
concept may be interpreted from the predominant theme of this industrial interaction– i.e.
the fiduciary and parallel relationship between the employers and labor. It is borne from
the recognition of a shared responsibility and interest by the two (2) social actors of the
production system in the success and development of organizational goals.

As social partners, employers and labor are called towards a more cooperative
stance apart from the confrontational approaches normally attendant of industrial
negotiations and of conflict resolution. Such arrangement suggests constant dialogue,
communication, and consultation on issues affecting employees’ rights and interests. It is
a relationship founded on mutual respect, sincere commitment, and a genuine concern for
the common good – giving light to humane industrial relations.

Principles of Social Partnership and Social Transformation

There is a direct correlation between the country’s economic development and the
development of the IR system in the country. As the economic system is transformed, so
is its work relations. It is said that a true economic development should not only lead to
high growth but also to a better workplace relations and the empowerment of workers.

According to Bamber and Leggett (2000), industrial relations (also referred to as

employment relations) is linked with industrialization, transformation and
democratization (economic and industrial democracy and employee participation in union
and management decisions through works councils, collective bargaining, etc.).

The guiding principles in employer-labor social partnership are industrial

democracy and industry productivity. Industrial democracy means social, political and
economic equity in the workplace. It means workers, though subordinates of management
2
Bureau of Labor and Employment Statistics, 1999 Industrial Relations at the Workplace Survey
3
The Society, Economy and Philippine Development Core Group, 2004, “Society, Economy and Philippine
Development: Towards a Social Market Economy Framework for Philippine Development”, Makati City:
VYC Printing Corp., p. 58

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in the pursuit of organization’s goals, should be treated socially as co-equals. While
management performs leadership in the enterprise, workers should be treated as working
partners, much in the same manner that the managerial personnel themselves are after all,
also a higher level of workers or partners in the enterprise.

Economic equity means equitable sharing of incomes and political equity means
more participative processes in decision making. A more participative rulemaking
process would usually lead to more equitable income sharing. This is of course not
always true since there are situations where the opposite condition would result.

Forms of Social Partnership

Arranged in a fulcrum (Chart 1), the least participative rulemaking process is the
unilateral decision making, followed by the consultative method. The most participative
of course is the committee system or workers’ self-management and co-determination
and work council method. The least participative IR process is usually classified by
Douglas Mc Gregor as Theory X and the most participative as Theory Y.

Chart 1: Leadership Styles, IR/HRM Practices, Types of Leaders & Philosophies

Leadership Styles- Theory X Theory Y
Mcgregor
J. Gordon Autocratic Participative Laissez-Faire
Democratic
IR/HRM Unilateral Consultative, Work’s Committee
Practices Decision Bi/Tripartite Councils, Co- System
Making/Unitary (QCs, TFs, determination,
LMCs, CNs, ESOPs
CBAs)
PLACES OF SMEs, Japan, USA Europe, Socialist
PRACTICES developing Germany, USA countries, state
countries enterprises
TYPES OF Dynastic, Middle class Middle class Socialists
LEADERS aristocrats capitalist capitalists &
socialists
PHILOSOPHIES Mercantilism, Classical Neo-classical Socialist
Protectionist liberal Mixed econ.

Industrial democracy should always go hand-in-hand with industry productivity.

This is the ideal situation. But there are also situations, especially in the past, when the
two did not go hand-in-hand.

At the start of the industrial revolution in Europe (scientific management school

of Frederick Taylor), management was focused more in productivity and less in industrial
democracy. Management was more Theory X and exploitative to the workers in the name
of capital accumulation and industrial expansion. Hence, trade unions were massively

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organized resulting into work slowdowns and stoppages which ultimately brought down
industrial productivity.

On the other hand, committee systems run by communist parties in socialist

countries featured maximum political and economic democracy but this resulted to lower
productivity and lack of competitiveness. In the long run, it is the workers themselves
who suffered because of low productivity and their enterprises lost out in global
competition.

Likewise, the vibrant bipartite system in the United States of America has led to
high wages and ideal working conditions for the American workers but to the detriment
of their competitive edge in the global market. This has led the Americans to do serious
rethinking and alterations in their present IR systems.

The traditional goal of the labor movement is industrial democracy while that of
management is industry productivity. While industrial democracy and industry
productivity may be contradictory especially in the past when behavioral sciences were
not yet as developed as they are today, the two are actually very complementary. This
means that with modern IR/HR technologies, a more participative management decision
making process would most likely lead to higher productivity mainly due to minimum
work slowdowns and stoppages and greater competitiveness and growth in the global
economy.

The very adversarial employer-labor relations characterized by a win-loss type of

bargaining is already being replaced by the IR system under the new paradigm of social
partnership that is less conflictual and allows more worker participation in decision
making. Social partnership in decision making prevents antagonistic conflicts between
employers and their employees. This prevents outside parties in interfering in their
conflict resolution process.

Social partnership in decision making is classified as follows:

1. In the unilateral (or unitary) decision making process, management deals with
the workers individually and also decides on their wages and benefits
unilaterally. This is the most Theory X type of decision making process based
on Douglas McGregor’s leadership styles. This process is also called the
paternalistic style of management which usually is applicable in smaller
enterprises and in Asian setting. Labor is usually unorganized.

2. In the consultative decision making process, management consults with some

representatives of the workers before deciding unilaterally. The IR process is
applicable in bigger enterprises which are usually Asian in setting. This IR
process is also typically associated with the Japanese style decision making
process. Labor here may be organized into trade unions.

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 3. In the bipartite or tripartite decision making process, workers are organized
into trade unions. Bipartism is basically a two-party collective bargaining
system usually conducted in an enterprise or industry level. Tripartism, or
three-party collective bargaining process, involves usually the government (or
another private actor) as the third party. The government representatives come
in as third parties either as arbitrators (or judges) who will decide on the labor
management disagreement, conciliators or mediators who try to encourage
voluntary settlement among the parties in conflict, or legislators who will
enact laws in accordance with the agreement of labor and management. The
bipartite and tripartite systems are typical in the American and British IR
systems.

4. In a co-determination type of decision making process, labor and management

are equally represented, with full veto powers, in the governing board of a
large enterprise which lays down policy decisions in all matters affecting the
enterprise. The workers, both unorganized and unionized, elect their
representatives in a works’ council which will in turn nominate their
representatives in the enterprise governing board and other management
structures. The union is usually allocated automatic representation in the
governing board. Unlike the bipartite or tripartite process, the scope of powers
of the works’ councils goes beyond issues on wages and conditions of work.
This IR process is typical in big enterprises in Western Germany. In the US,
the adaptations of this IR process resulted into the Employees’ Stock Option
Programs (ESOPs).

5. In a committee system or self management, workers in an enterprise elect

their representatives and leaders to management committees and other
operating committees which will manage the enterprise. In the socialist
countries where big enterprises are usually state enterprises, the ruling party
(usually the communist or socialist party) plays a determining factor in the
election of the members of the management committees. This system is also
practiced in cooperative enterprises where member-employees can be elected
to the governing bodies of the enterprise.

Social partnerships in industrial relations are manifested through the various forms and
approaches of employee participation, employee involvement, and ownership schemes
adopted by firms. Most common of these forms are work councils, labor-management
cooperation (LMC), CBA-initiated programs on productivity, joint-consultation,
employee stock-ownership, quality circles, work teams, social compliance committees,
and such other joint programs or projects between employer and labor on productivity
and decent work (Ponce-Pura, 2002). The underlying philosophy threading through these
cooperative approaches is to create a work environment in which employees are involved
or are participative in the decision making process on matters that would contribute to
continuous improvement and attainment of organizational goals.4

4
Heathfield, Susan M, “Employee Involvement”
http://humanresources.about.com/od/glossarye/a/employee_inv.htm) (opened 7/21/2007)

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 Cummings and Worley (2001) presents an overview of the key elements of some
employee involvement approaches practiced as a company-wide initiative. For instance,
Total Quality Management (TQM) is a set of long-term initiatives geared towards
continuous quality improvement of products and services. Work groups normally identify
and establish quality standards that aid in analyzing cause for deviations from the
standards, help the group find ways of minimizing standard deviations, and provide the
impetus for continuous monitoring of the quality improvement process. The constancy of
the quality improvement cycle solicits high commitment from employees towards the
adoption of a new work philosophy that is strategic in focus. Employees are empowered
to make decisions for themselves and the organization with regards to process-oriented
quality improvements, decentralizing power to individual decision-makers down the
organizational ladder.

Quality Circle (QC) is usually composed of small, permanent groups of

employees who voluntarily meet to identify and handle organizational problems such as
productivity, absenteeism, or quality control. Unlike TQM, quality circle is more
restrictive in purpose, often limiting members’ participation as consultative or advisory in
nature.5

Self-managed work teams are also referred to as high-performance work teams

composed of “multiskilled employees performing interrelated tasks” responsible for the
complete processing or functioning of a product or service (Cummings and Worley,
2001). They are portrayed as a one-stop-shop with each team member expected to learn
most if not all of the tasks or jobs under the team’s area of operation.

Labor-Management Council (LMC) has been defined as a “voluntary body

composed jointly of representatives from workers and management who meet to identify
and resolve issues of common interests and concerns” (Gatchalian, 1999). While earlier
geared as a vehicle for collective negotiation to address the work-related problems and
difficulties of non-unionized workers (including government employees), LMC has
evolved into a “high-road” strategy geared towards enhancing quality, increasing
productivity, and improving competitiveness (Gatchalian, 2004).

In contrast to the foregoing management-led or human resource management

techniques on high performance work practices, works councils deal with representative
participation involving employee representatives either voted in by employees, selected
by their union, or those set down by law (as in the case of Germany’s codetermination).
They are accorded information, consultation, and participative rights on matters affecting
employee interest, such as regulation of work hours, fixing of performance related pay
rates, or the monitoring of employee productivity, among other work concerns. While
coexisting with a union in some cases, work councils formally operate independently of
the union and cannot engage in a strike (Addison, 2005).
5
Cummings and Worley classify Quality Circles as a form of Parallel Structure or problem-solving groups
formed to handle predetermined organizational problems. Another form of Parallel Structure is the Quality
of Work Life or cooperative labor-management projects designed to improve employee’s quality of
working life and contribute to organizational effectiveness. Ibid, p. 317.

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 For unionized firms, collective bargaining and joint consultation has become the
institutional response for adopting employee participation schemes. Worker cooperation
in the introduction of efficiency-enhancing work practices is often generated through the
agency of a union or a collective bargaining agreement.

Reward systems, such as Employee Stock Option Plan (ESOP), Profit-sharing,

and Gain Sharing, when combined with employee involvement initiatives, serves as a
powerful tool for motivating employees towards higher levels of productivity (Cummings
and Worley, 2001). In the case of ESOP, companies promote a sense of ownership by
issuing shares of stock to their employees as a form of incentive or positive stimulus to
achieve strategic organizational goals (Aganon, 1997). All three reward systems
encourages employees to think more like owners and supports a culture of cooperation
and commitment to corporate policies (Noe, Hollenbeck, Gerhart and Wright, 2000).

Other forms of employee involvement practices range from suggestion schemes,

which provide opportunities for employees to propose innovative ideas to their managers
in improving organizational effectiveness, to information-sharing schemes such as
company journal and corporate videos (Parasuraman, 2001). In the case of consultation
exercises and meetings, multi-channel communication within the organization
encourages employees to share their ideas for continuous work improvement.

Social Partnership in the Philippines

After a long period of political unionism and arbitration in the Philippines,

collective bargaining and economic unionism (or the bipartite IR process) was introduced
to the Philippines by the Americans through the enactment of the Industrial Peace Act
(RA 895) in 1953. This labor legislation was patterned after the US labor relations law
(the Wagner Act) and it was drafted with the aid of US labor advisers under the
Economic Survey Mission.

1950s also signified the area of mercantilism and economic protectionism in the
Philippines. It was said that the Philippines grew at an average annual growth rate of 7-8
per cent, regarded as the second fastest growing nation in Asia, next to Japan.

The idea of encouraging tertiary manufacturing industries through import

substitution and protectionism and the institutionalization of a bipartite IR system was to
hopefully make the Philippines an industrialized country and in the process empowering
the labor force through collective bargaining.

After a couple of decades however, both the protectionist-inspired

industrialization strategies and the bi-partite system failed in their respective objectives.
The country’s economy lagged behind as Asia was transformed as the fastest growing
region in the world. Because industries failed to grow, trade unionism covered only a
mere 12 per cent of the total labor force. As globalization deepened, trade unions further

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declined to 3 per cent. Legalism and the experiences of antagonistic relations with the
employers might have contributed to this fast decline.

When the Philippines adopted a protectionist economic policy which Japan also
did, the Americans were given parity rights and according to Dr. Cesar Virata, 3 out of 4
processing enterprises set-up during the protectionist period in the 1950s were American
and other foreign subsidiaries and joint ventures. In contrast to Japan where western
technologies were copied, adopted and later innovated, western technologies were merely
transferred by US subsidiaries and joint ventures in the Philippines in order to avail of
state protection and to achieve a market monopoly or oligopoly status. There were no
innovations and competition, no drive to compete in the export or global market.

Today, we are experiencing another turn of economic growth, this time through a
more liberalized, open and competitive economic policies. Foreign investments are
coming in not because of parity rights, state protection or a captive local market. Through
globalization, the Philippines can develop its competitive edge in HRD, industry
productivity and labor empowerment.

New IR processes like the Japanese-inspired consultative management, U.S. TQM

and ESOPs, and Europe’s works councils and co-determination system are being adapted
in the country. This is in addition to the continuation of the collective bargaining system
and tripartism in the Philippines.

LMC as a Form of Social Partnership in the Philippines

Joint labor management initiatives, according to Ziga (2002) were introduced

during the early years of Martial Law under Policy Instruction No. 17 of May 31, 1976,
LOI No. 688 of May 1, 1978 and the Batas Pambansa Blg. 130 (Labor Code of the
Philippines) in August 21, 1981. Despite government pronouncements, only 28
companies were able to organize operating LMCs as of 1988. Ziga attributed this
lackluster response among IR actors to lack of state support and initiative.

LMCs were initiated more seriously in 1986 during the crisis period after the fall
of the Marcos regime. Industrial strife became widespread as the workers right to strike
was restored by President Corazon C. Aquino. In order to bring back industrial peace,
LMCs were incorporated in the Labor Code as “one of the identified vehicles to
operationalize the new concept of collective negotiations introduced in the 1987
Constitution” (Gatchalian, 1999).

LMCs may have contributed to the industrial peace in the country despite the
continuing crisis. The National Conciliation and Mediation Board of DOLE reported a
consistent decline of strikes in the past 2 decades from 1986 to 2003. Labor strikes went
below a hundred for the first time in 1994. In 2003, it was down to 38.

In 1991, 53 per cent of all CBAs have no strike/lock-out clauses. In addition to

this, there are other mechanisms such as grievance machinery (81 per cent of all CBAs),

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arbitration machinery (65 per cent) and labor-management cooperation scheme (LMC)
(29 per cent).

In 2003, there were 227 LMCs which covered 6,193 workers in 256
establishments monitored by DOLE. Because of the non-adversarial character of the
LMCs and considering that majority of the labor force are still unorganized, LMCs are
being promoted as an addition and/or enhancement to the collective bargaining and the
paternalistic unilateral decision-making IR processes in the country.

Table 1- Labor Management Councils/Committees (LMCs) Organized, Philippines, 1998,

2000 and 2003
Year 1998 2000 2003
130 204 175
Newly Organized
Establishment Covered 64 23 187
Workers Covered 3,961 3,835 5,057
43 47 52
Councils/Committees Reactivated
Establishment Covered 68 47 69
Workers Covered 1,254 1,202 1,136
Sources of Data: Bureau of Labor Relations, 2004 Yearbook of Labor Statistics

Gatchalian assessed that the LMCs in the country were still in the primitive state,
more focused on the three S’s- sports, socials and safety. “Workers’ representations do
not as yet have substantial influence in managerial decision making on the more
meaningful issues and concerns”. What Gatchalian has in mind was that LMCs should
have contributed to productivity as a result of substantial employee participation in
management decision making and a share in the resulting gains.

LMCs should be transformed into “employee participation committees (EPCs)”,

continued Gatchalian. The mechanisms of EPCs range from joint consultation as
practiced in Japan, employees stock option programs (ESOPs) and self directed work
teams (SDWTs) in the USA, to the works councils and co-determination in European
Union and Germany.

TQM and Philippine Quality Award

In promoting international competitiveness and continuous improvement among

Philippine enterprises following the TQM principles, the Philippine Quality Award
(PQA) Act (RA No. 9013) was enacted in February 28, 2001 under President Fidel V.
Ramos. Local entities and enterprises are encouraged to aspire for the PQA on a
voluntary basis.

The PQA represents the highest quality award in Philippine workplaces that is
based on global standards. It was patterned after the Malcolm Baldridge National Quality
Award (MBNQA) of the USA. It has counterpart quality awards in Australia, Japan,
Singapore, Malaysia and Europe. The PQA has 7 criteria as follows: (1) leadership; (2)

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strategic management; (3) customer focus (4) measurement, analysis and knowledge
management; (5) HRD Focus; (6) process management and improvement; and (7)
organizational results.

Table 2 shows that worker participation in decision making is popular in health

and safety concerns that range from 44 per cent to 69 per cent. Aside from safety and
health committees, other mechanisms used are suggestion schemes, quality circles,
productivity improvement committees, grievance machineries and labor-management
committees (LMCs). Grievance machineries are notably higher among unionized firms
since this is mandatory in those unions with collective bargaining agreements. It is also
noted that LMCs are practiced in more than 54 per cent of unionized establishments and
only 15 per cent in non-unionized firms.

Table 2. Mechanisms for Worker Participation in Decision & Policy Making

Processes in Non-agricultural Establishments Employing 20 or More (percentage
covered by practice), 2003

Practices Filipino Foreign w/ Union- Non-

-owned -owned Foreign ized unioni
equity zed

Number surveyed 26.774 1,200 2,180 3,291 20,863

1. Safety & health committee 44.5% 69.1% 58.1% 61.1% 44.7%

2. Suggestion schemes 38.0 47.6 50.0 41.9 38.8

3. Quality & productivity circles 29.4 36.6 32.3 40.2 28.4

4. Productivity improvement committee 28.4 35.7 37.0 40.1 27.9

5. Grievance machinery 24.6 36.2 36.7 40.1 27.9

6. Labor management council/committee 18.4 24.2 35.9 54.4 14.9

7. Joint committee & task force 16.9 32.2 25.5 26.0 17.2

8. Others 1.5 -- -- -- --

Source of Data: BLES Integrated Survey 2004, Labstat Update, Dec. 2005

Effects and Outcomes of Social Partnership

There are many studies on employer and labor partnership (see Addison, 2005
and Tuazon, 2007) that have analyzed the positive affects and outcomes of employee
involvement practices (e.g. quality circles, TQM, joint-consultation meetings, etc.),
employee participation (e.g. work councils and union), and employee ownership (e.g.

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employee stock option plans). The three themes are actually various forms of employer-
labor social partnership. Social partnerships also refer to ‘employee participation’ or
‘participative management’ practices, ‘industrial democracy’, ‘quality of life’, and
‘empowerment’ movements.

Foreign Studies

As Tuazon (2007) and Ponce-Pura (2002) noted, empirical studies and theoretical
literature on employee involvement/employee participation and its impact on
organizational effectiveness abound. Tuazon (citing foreign case studies on employee
involvement in Chapparral Steel, Chrysler, AT&T, Motorola, Rhino Foods, Inc.)
provides a summary review on the positive impact of innovative work practices on
various measures of firm performance.

In the case of Chapparal Steel, decentralization of decision-making authority,

elimination of traditional job barriers, redesign of work functions and processes, and
introduction of pay for performance schemes enabled Chapparal to cut cost and achieve
the fastest production cycle time.

For Chrysler, improvement in non-financial performance (more particularly in the

quality of human resources) was attributed to the introduction of an innovative reward
system that links the CEO’s compensation to customer satisfaction ratings.

In the same light, American giant AT &T tied its lower-level executives’ pay to
both financial (economic value added) and non-financial measures (such as customer
satisfaction and employee satisfaction) and achieved a high-involvement workplace
utilizing the quality standards of the Malcolm Baldrige National Quality Awards.

Internationally recognized world leader in quality, Motorola achieved the

ambitious Six Sigma level quality (which translates to 3.4 defects per million possibilities
of occurrence) through teamwork, benchmarking of production practices against a wide
band of manufacturers, and investing in cutting-edge training on statistical techniques for
its employee.

Finally, in the case of Rhino Foods, Inc., its president and founder Ted Castle
consulted all his employees with regards to the company’s shrinking sales performance
and asked for a team of volunteers to find a solution. With ten solutions in hand, the top
suggestion being an employee exchange program between Rhino and other neighboring
companies (such as Ben and Jerry’s and Gardener’s Supply), Rhino successfully averted
an impending threat of layoff.

Ponce-Pura (2002, pp. 14-15), in her masteral thesis on ISO 9000 and
Employment Involvement, made reference to a research study of Eastman and
Vandenberg (1999) seeking to explore the relationship between employee involvement
(EI) and four indicators of organizational effectiveness, namely: employee morale,
leadership, turnover rates and financial performance. After conducting two surveys in

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1991 and 1994 involving over 9,000 employees in insurance companies, the study
showed that high EI culture improved employee morale, lowered voluntary turnover
rates, produced effective leadership, and yielded higher return of investment.

Other related literature on the positive link of employee involvement practices

and enhanced business performance as cited by Ponce-Pura are those of Lawler III,
Mohrman and Ledford (1985), Yu Chun-Sheng (1999), and McKinley (1998). Empirical
data reveals that high employee involvement companies reported higher returns on sales,
assets, investments and equity.

Philippine Studies

Gatchalian (2004, pp. 67-74) in his written article The LMC: Prospects and
Retrospect documented two success stories of Philippine firms that have recovered from
a deteriorating business performance through the application of an innovative LMC
chiefly focused towards quality enhancement and improved productivity. The first case is
that of Ebara Benguet, Inc. (EBI) which introduced a labor-management cooperation
program, fostering principles of social partnership and strategic management (dubbed as
“Partnership for Quality, Productivity and Profitability” or PQP2).

The program was designed to be implemented in four stages, as follows: “Phase I

– Series of dialogues between the consultants, management and labor representatives;
Phase II – Strategic Planning for Quality which resulted in organizing the Quality
Steering Committee; Phase III – Promotion of PQP2 company-wide, with group training
on problem-solving techniques, teamwork, principled CBA negotiations, etc. and the
activation of the Quality Improvement Teams; and Phase IV – evaluation of the company
situation utilizing previously agreed upon parameters” (Gatchalian, 2004, p. 68).

To measure impact of the intervention program, the study utilized the three
parameters of production volume, rejection rate by weight, and profit and loss statement
at period intervals. Quantitative results of the study would show that production volume
significantly increased, rejection rates by weight drastically reduced, bottom line profit
reflected positive yield, while actual loss were reduced substantially.

The second case study was that of Enchanted Kingdom. Adopting the same
strategy employed at Ebara Benguet, Enchanted Kingdom showed patterns of positive
business performance since the period when the “new LMC” approach was introduced.
Noticeably, volume in park attendance increased by 5 per cent from the reckoning period,
translating to improved income generation.

Aganon (1997) documented the impact of employee ownership programs (EOPs)

on organizational commitment and productivity levels of employees in four domestic
firms. Results of her study revealed that EOPs can be instrumental in forging higher
organizational commitment and greater productivity levels. It was noted however that
worker participation in decision making within respondents’ firm was quite low.

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Nonetheless, a significant number (more than 40 per cent) of respondents manifested
higher work motivation and efficiency level under an EOP participation scheme.

Statistical data gathered from related social research on employee involvement

and productivity likewise registers a direct relationship between the two variables. Case
studies on Philippine productivity conducted by the National Productivity Commission
reveals a positive correlation between employee participation and enhanced productivity.
In the National Science Foundation survey of 75 field studies on worker participation,
results showed that four out of five respondent firms engaged in employee involvement
practices reported increase in productivity (Tuazon, 2007, pp. 46- 47.)

Salas-Zsal (2006) documented the transformation of industrial relations at the

Philippine Airlines (PAL), the country’s national flag carrier during its crisis period from
1998 to 2005. PAL’s adversarial relations with its 3 unions led by the PAL Employees
Association (PALEA) resulted to a crippling strike in 1998. This eventually caused
PAL’s closure.

PAL’s reopening in September 1998 under State receivership was conditioned on

the transformation of the company’s IR system to an employer-union partnership which
featured the following interventions: union-management cooperation; employee stock
option program and union representation in the Board in exchange of a 10-year
suspension of the collective bargaining process.

Today, after less than 9 years of employer-union partnership, PAL is in the pink
of health and has recently been freed from receivership status.

Manila Electric Company (MERALCO) represented another good practice in

transforming hostile and legalistic union-management relations to an HRD-focused
employer-union partnership. MERALCO’s best practice, as reported by Salazar (2000)
was the establishment of a Manuel M. Lopez Development Center (MMLDC) which
symbolized the company’s high regard for the employees’ primary role in boosting the
company’s productivity. Partnership with the academe, notably the University of the
Philippines and the AIM has been another feature of this program.

Aside from HRD-focused IR process, MERALCO has reinforced employer-union

cooperation in other HR productivity interventions such as the LMC, pension fund,
voluntary separation program, employees’ savings and loan association, multi-purpose
cooperative, health maintenance plan, mutual benefit association, livelihood training for
employees’ dependents, etc. (Sibal 2007).

Guanzon (2006) assessed the readiness of a top Philippine telecommunications

company and 3 of its suppliers to the global standards of Social Accountability 8000.
This management –initiated intervention was intended not only to prepare the company
for global competition but also to “guarantee the basic rights of workers and to improve
their working conditions”. The focus of the study was on compliance with international
standards of child labor, forced labor, health and safety, freedom of association and

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collective bargaining, discrimination, disciplinary practices, working hours,
remuneration, and management systems.

Guanzon concluded that the Philippine telecommunications company obtained a

high level readiness to SA 8000 which was equal to the compliance level of its two
multinational suppliers. It has higher readiness achievement compared to its 3rd supplier.

Challenges to Unions and Employers

The country has numerous successful practices and experiences on employer-

labor social partnership. Only a few have been documented. There is no theoretical
guidance on which combination of interventions in social partnership may prove effective
in achieving organizational productivity. Philippine studies tend to focus on specific
interventions such as LMC for Gatchalian, EOP for Aganon, ISO 9000 for Ponce-Pura,
SA 8000 for Guanzon, etc. Furthermore, empirical data gathered through surveys neglect
to elicit sufficient qualitative information that would provide a rich source of narrative
needed to “operationalize” corporate best practices on employee participation or
involvement.

There is still a need for more researches that will assess the effectiveness of these
interventions. In the meantime, the problems of enterprises and labor in preserving and
expanding workplaces and jobs in the country need daringness in planning and
implementing employer-labor partnership interventions. This remains to be the
continuing challenge to the Filipino employer.

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Note: The author acknowledges the assistance of the research team composed of Sally Protacio,
Jasmin Sibal, Vicky Calizo, Wilson Tiu, Rene Ofreneo, Hipotita Recalde and Fina Lumpas.

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