Gov’t stops PAL layoff, outsourcing for now

By Paolo Montecillo
Philippine Daily Inquirer
First Posted 19:35:00 04/27/2010

MANILA, Philippines -- The government has stepped in to resolve the labor dispute at Philippine Airlines (PAL), ordering the airline to postpone a plan to lay off 3,000 of the company’s 7,500 employees to cut costs.

The Department of Labor and Employment (DoLE) also ordered labor union PAL Employees Association (PALEA) to hold off a potential strike that could paralyze the flag carrier and harm the local aviation sector.

In an order issued Tuesday, DoLE said it decided to assume jurisdiction over the dispute by moderating discussions between the union and the airline’s management.

“What this means is that PAL is enjoined from pushing through with their spin-off,” PALEA president Gerardo Rivero said.

This was done to stop a “strike or lockout in an industry indispensible to the national interest such as the airline industry to which PAL belongs,” the labor department said.

The order was issued amid possibility of PALEA holding a paralyzing strike in protest of the Lucio Tan-led airlines’ plan to outsource its non-core operations to non-core service providers.

PAL announced the planned outsourcing earlier this month as part of efforts to return the airline to profitability after suffering massive losses in the last three years.

Hiring outside entities to handle non-core operations, including in-flight catering and reservations, is also seen as vital to allow PAL to attract investors for the airline.

The spinning off of services is scheduled to take effect on June 1.

DoLE said the order was also issued to deflect any negative impact on the economy brought about by the disturbance in the airline industry and other allied industries such as travel and tourism, trade and foreign currency exchange.

“It must be emphasized that this is not the first time that PAL has been embroiled in a labor dispute that eventually progressed into a strike among its employees, which resulted in the loss of employment status of not a few union officers as well as its members,” the DoLE order said.

“Both parties are ordered to refrain from committing any act that might exacerbate the situation,” DoLE said. The department said it would meet with both the union and the company’s management on April 30 to settle the issue.

PAL president and chief operating officer Jaime Bautista in an interview said the company would have no choice but to comply with the order.

“We haven’t received a copy of the order yet, but if Dole is assuming jurisdiction, then we’ll have to comply,” Bautista said, but added that this would have dire consequences for the airline.

“If we are not able to implement this spin-off, it will be more difficult for us to invite possible investors into PAL,” he said. “There are several interested investors, but they want to see changes in the structure of PAL to become like other airlines in Asia and concentrate only on its core services.”