The Psychology of Labor and Employer Viewpoints

I wrote this for Manila Times' Managing for Society column last July 11

The Psychology of Labor and Employer Viewpoints
Ben Teehankee

From June 29 to July 2, De La Salle Professional Schools hosted the Annual Meeting of the Pacific Asian Consortium for International Business Education and Research (PACIBER) in Cebu. The consortium is composed of business schools from different countries who come together to network and to share research findings and teaching strategies This year’s theme was a look at emerging global practices in outsourcing and related work arrangements.

During the meeting, I moderated a panel session on Investment Decisions and Labor Concerns where Mr. Cedric Bagtas, Deputy Secretary-General of the Trade Union Congress of the Philippines (TUCP), gave an interesting picture of the local labor situation.

I always find it worthwhile having forums where employers and representatives of labor can share perspectives. Mr. Bagtas’ discussion on a number of issues on which labor and employers don’t see eye to eye was particularly informative and gave me insight on the challenges facing industrial relations in the country. By reflecting on how each side looks at these issues, I got clues on the psychology underlying the labor and employer positions, respectively.

The first issue is on the matter of hiring and firing. Mr. Bagtas explained that while labor prefers quick regularization, employers would prefer liberal hiring and firing rights -- employment-at-will, in other words. Employees need to plan their lives in order to meet their basic needs and to achieve certain life aspirations. For this reason, they need to be able to count on regular, sufficient and predictable income. Thus, they seek the legal protection that regular status is supposed to provide.

Employers, for their side, deal with various types of risks such as those that involve their markets, suppliers or even the political environment. Their concern for achieving acceptable returns given such risks lead them to manage labor as a risk. Employers lose expected returns when people they hire become uncooperative, fail to produce needed results, or simply become too expensive to maintain compared to the competition. They, therefore, want the safety valve of being able to let people go as needed.

On the matter of strikes, labor prefers the removal of restraints on the right to strike while, expectedly, employers would prefer to have a moratorium on strikes. Mr. Bagtas reported that actual strikes conducted in the country had steadily gone down from 581 in 1986 to 22 in 2005. It would appear that the country has become a haven of industrial peace. The underlying tension remains, however. Labor perceives a systematic weakening of their ability to legitimately strike because of anti-union tactics of companies. Employers worry about the ever looming threat of militancy in unions.

By examining these two issues, one sees that the underlying thinking of each side is not so different. Each side is simply managing risk. Interestingly, though, each side sees each other as a source of insecurity and strategizes accordingly. This thinking is reminiscent of the doctrine of MAD or mutually assured destruction which held between the US and the Soviets during the Cold War.

What will it take to move out of this low-trust thinking between labor and employers? What will be the symbolic equivalent of the fall of the Berlin Wall for these two sides? I don’t think it lies in better tactics for neutralizing each other as threats. I think that the mind-shift will come when labor and employers finally realize that their fates are intertwined. When this happens, both sides will know that a true social partnership between labor and employers is the only way to unleash the productivity that the country needs to achieve the development it deserves.