Labor and employment Secretary Rosalinda Dimapilis-Baldoz yesterday counted the DOLE’s reform on sub-contracting, productivity toolbox, and the two-tier wage system as among the DOLE’s major contributions to the promotion of micro, small, and medium enterprises in the ASEAN/APEC global supply chain.
“The DOLE has instituted—and continues to implement—major policy and program reforms to promote the growth and competitiveness of micro, small, and medium enterprises, or MSMEs. We are committed to see through that these policy and program reforms bear the desired results in terms of enhanced employability for millions of Filipinos and increased competitiveness for the country’s MSMEs which comprise 91 percent of our establishments and account for 64 percent of total employment,” Baldoz said at the sidelines of the Senate plenary debates on the DOLE 2016 budget.
On sub-contracting, Baldoz said the major policy reform is D.O. 18-A, which she issued in 2011 to ensure that small enterprises in subcontracting industry are able to provide decent work to Filipino workers by ensuring their compliance to basic labor standards.
“Majority of small enterprises in the country are in the service sector and primarily engaged in contracting/subcontracting, thus, acting as major suppliers to multinational firms in the global value chain,” Baldoz said.
“Specifically, D.O. 18-A upholds the rights of workers in contracting/subcontracting arrangements. More importantly, it curbs the proliferation of fly-by-night contractors,” added Baldoz, noting that prior to the effectivity of D.O. 18-A, there were 17,000 registered subcontractors, but the number was significantly pared down to 5,581, clearly showing the elimination of fly-by-night contractors/subcontractors.
Baldoz said that to complement the regulatory reform, the DOLE actively engages private sector partners, like the 200 member-strong Philippine Association of Labor Service Contractors, or PALSCON, whose initiatives the DOLE actively supports by helping the organization build capacity of its members on ethical recruitment and contracting policies.
“We have plugged the PALSCON into the regional and international networks contractors/subcontractors and exposed them to the latest trends and best practices. The PALSCON, the only association of registered contractors and subcontractors in the country, is now a member of the International Confederation of Private Employment Services,” Baldoz said.
The labor and employment chief said that to enable MSMEs to move from being enterprises that merely survive to enterprises that can participate in the global value chain, the DOLE, through the National Wages and Productivity Commission, is utilizing the Productivity Toolbox to enhance MSME competitiveness.
Explained Baldoz: “The Productivity Toolbox is a package of training and technical assistance on productivity improvement for MSMEs. Training under the toolbox are customized, depending on the capacity-building needs of MSMEs, and are intended to instill positive work values among the workforce to improve and mainstream a culture of quality and productivity towards enterprise development and competitiveness.”
From the basic module on quality and productivity improvement, the toolbox now includes Service Quality Training Program, Green My Enterprise Program, ISTIV Plus, Gain-sharing Schemes, and Productivity Enhancement Program for DOLE Livelihood Beneficiaries.
“Since 2010, the DOLE has provided 20,222 MSMEs with technical assistance under the Productivity Toolbox,” she said.
Another MSME promotion strategy that the DOLE utilizes is the Two-Tiered Wage System, a major reform designed to protect the poor and vulnerable workers and to enable enterprises to improve productivity and gain-sharing.
The mandatory floor wage (Tier 1) of the TTWS acts as social protection. It is set slightly higher than the poverty threshold, but not too close, or to exceed average wage to provide space for bi-partite approaches in setting better terms and conditions of employment.
On the other hand, the voluntary productivity and performance-based pay scheme (Tier 2) encourages workers and enterprises to engage in productivity improvement and gain-sharing programs that tighten the link between wage and productivity at the shop floor.
The labor and employment chief further explained that the voluntary productivity and performance-based pay scheme is implemented through the issuance of industry-specific advisories containing an assessment of past industry performance and outlook, as well as the range of productivity-based incentives.
“One very positive feature of the TTWS is its emphasis on the need for workers and employers to be involved in the development and implementation of productivity improvement programs,” she said, adding that the NWPC also regularly monitors minimum wages of ASEAN member states to guide MSMEs on the comparability of the country’s minimum wages with other member states.
“Our monitoring shows that some minimum wage rates in investment destination regions, like Regions III, IVA, VII, X and XI, are comparable with those of Thailand, Malaysia, Indonesia, and China, which in turn presents opportunities for MSMEs to link to the supply chains of these businesses,” Baldoz said further.
Other major DOLE initiatives that the DOLE implements to promote MSMEs are the Productivity Olympics which recognizes best MSME productivity practices; TESDA’s industry-responsive TVET programs that seeks to fill the skills gap in high-employment demand industries; employment facilitation through LMI delivery; and entrepreneurship and community enterprise development through the DOLE Integrated Livelihood and Emergency Employment Program, or DILEEP.