The Department of Labor and Employment (DOLE) is encouraging labor unions and management engaged in collective bargaining negotiations to adopt a standard method in coming up with compensation packages to resolve bargaining deadlocks and promote industrial peace.

In a DOLE advisory, Labor and Employment Secretary Patricia Sto. Tomas noted that collective bargaining agreements are results of diverse considerations and factors. “The suggested standardized method incorporates 18 measurable economic factors that reflect the requirements of the workers, the capacity to pay of the company, the state of the industry and the general economy,” Sto. Tomas said.

Sto. Tomas said the Department can provide the technical assistance to those who are interested.

“By adopting a standard formula, the two bargaining parties can forge a compensation package that is fair, reasonable, equitable and transparent,” Sto. Tomas said. “A way out of a bargaining deadlock can be formulated and agreed upon by both parties. The partnership between labor and management can be fostered as both the viability of the enterprise and the decent standard of living for the workers can be protected,” Sto. Tomas added.

“We are promoting the use of this method as this could promote predictability in the decision making by both parties in the collective bargaining process,” she said.

Among the factors used to assess the workers’ standard of living are the purchasing power of the peso, inflation rate and the average monthly compensation in relation to the living wage.

The company’s capacity is measured by its net income, return on investment, profitability, ratio of labor cost to total cost, liquidity ratio and labor productivity.

The formula also considers the competitiveness of the company with respect to the entire industry by incorporating the industry’s gross value added, the average monthly compensation of the union members in relation to the average monthly compensation in similarly situated enterprises, the industry’s employment rate and the company’s market share.

Furthermore, the general economy is assessed based on the gross domestic product, foreign direct investments, and foreign exchange, interest and unemployment rates.

“The model enables both labor and management representatives to measure the combined impact or influence of these 18 economic factors. And it could help those involved in the collective bargaining process predict or project a new compensation package that is responsive to the needs of both the workers and the company,” Sto. Tomas said.

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