The country’s trade chief warned firms not to use the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Act, which raised excise taxes on sugar- sweetened drinks, as reason to strip workers of their jobs .
Trade Secretary Ramon M. Lopez said workers should not worry about losing their jobs due to the recently enacted TRAIN, which was reportedly cited by Coca-Cola Femsa Philippines Inc. (CCFPI) as reason for downsizing its work force.
The beverage bottler removed more than 600 workers this month, as the management decided to restructure after recent developments in the industry, as well as in the country’s business landscape.
To this, Lopez said firms should not raise the TRAIN as a basis for removing its workers.
“It is too early to cite [the] TRAIN as the reason [for the layoff],” he told the BusinessMirror.
The TRAIN has a direct impact on sugar-sweetened beverages, but Lopez said its effect on supply and demand for SSBs has yet to be assessed. “It will depend now if demand [for SSBs] and their sales and income will be affected.”
The Department of Labor and Employment (DOLE) agreed with Lopez, saying that the displacement of CCFPI’s 600 workers is not directly related to the implementation of the TRAIN.
The DOLE said the incident is “essentially” a measure by the CCFPI management to outsource its sales department to a third-party service provider as part of its attempt to change its business model.
“The Coca-Cola management did not specify it is related to TRAIN,” Labor Undersecretary Joel B. Maglunsod said in a statement.
Maglunsod added he met with representatives from the labor unions and management of CCFPI last month to discuss the layoff. He said the outsourced 600 workers will be added to the 4,000 contractual workers in the beverage giant.
“Out of the 16,000 regular workers in Coca-Cola, 12,000 are regular workers, while the remaining 4,000 are contractuals,” Maglunsod said.
The Employers Confederation of the Philippines said it does not see other beverage makers following suit.
“If they are worried there might be other beverage firms that will downsize their workforce, we don’t see that coming,” Ecop President Donald G. Dee told the BusinessMirror.
Dee also said no firm has informed them of an impending en masse removal of workers due to the TRAIN. However, he noted it is reasonable for firms to downsize if they need to.
“Everything is but a market thing. If the demand for a certain product goes down, leading to loss of sales and profits, then it is justified for firms to downsize. They just adjust to what the markets demand,” Dee added.
IBON Foundation Executive Director Jose Enrique A. Africa, however, disagrees with the statement of the government and the Ecop.
“It’s extremely difficult, if not impossible, to attribute and much less predict specific job losses to specific macroeconomic policies. Having said that, the Coca-Cola layoffs may be illustrative if it is established that TRAIN is among its proximate causes,” Africa told the BusinessMirror. Africa said “the economy is already vulnerable as it is,” citing the increase in the number of unemployed Filipinos in the recent labor-force survey. The jobless rate last October was at 5 percent.
“The higher taxes, especially on oil products, and the resulting inflationary impulse cannot but exert a dampening effect on the economy, which the higher take-home pay for a few cannot compensate for. It is very possible as the Coca-Cola case might be showing, for the constriction in demand to pinch businesses and result in job losses,” Africa said.
‘Union-busting’
Coca-Cola’s decision to trim its work force came shortly after President Duterte enacted into law the TRAIN last December. It slaps a tax of P12 per liter on beverages with high-fructose corn syrup and P6 per liter on drinks with caloric and noncaloric sweetener.
In a statement last Friday Coca-Cola’s labor unions took a swipe at the firm for allegedly “hiding under the skirt of the TRAIN law.”
“The [Coca-Cola] management uses the implementation of the TRAIN as a façade for their union-busting, despite having no evidence yet of the decline in sales due to the excise tax on sugary and sweet beverages,” the statement read.
The labor unions claimed they were not involved in the decision-making of the firm regarding the retrenchment of workers, and proof to that was the management’s reported nondisclosure of the plan during the meetings last November and December.
“The [management] only informed us of its plans on January 29 and 30 as it was issuing termination papers to the affected workers,” the statement read.
In a media briefing on Tuesday Danny Fuentes, a member of the Nagkaisa labor coalition, said at least 15 labor-union officers were among those who were dismissed without prior notice.
Fuentes said they are concerned Coca-Cola will continue to use TRAIN to dismiss more workers.
Maglunsod assured that the DOLE is monitoring the impact of the TRAIN, amid the concerns aired by labor groups that it will be used for retrenching workers illegally. He said, however, that the agency has yet to record any incident of displacement attributed to TRAIN.
The DOLE also assured that erring employers, who will be proven to have abused TRAIN, will face sanctions.