A Dark Side of Business Process Outsourcing (BPO)

Before I retired and relocated to the Philippines, I worked for or knew of employers in the U.S. who were unscrupulous in dealing with their workers. Some of their unethical and / or illegal practices included requiring employees to work off the clock or designating ordinary sales clerks as "assistant managers" and placing them on straight salary in order to avoid paying them overtime. As a result, I'm sensitive to attempts by businesses to short-change and exploit rank and file employees either directly or through their political lobbies, one of which is the U.S. Chamber of Commerce in the States, and their local branch, the American Chamber of Commerce, also known as Amcham. And while the the theme of "Your Guide to Living in the Philippines" is helping expats adjust to the Philippines, I feel that it reflects badly on the rest of us non-Filipinos living here when foreign companies indulge in questionable business strategies locally. So I'm taking this opportunity to digress from my usual advice material in order to address this issue.

Unfair though it may be to the working people of the Philippines, it should come as no surprise that Amcham is calling for and end to holiday overtime pay for local employees (see Foreign firms seek flexible holiday pay) . Although the spokesperson in the article claims that such elimination is not the intent, it should be obvious that by using the term "flexibility" that this is Amcham's slippery slope towards that end.

The ostensible excuse for this organization's proposal is the impact of the global economic situation on business and the resulting need for cost cutting. In turn, a reduction in labor expenses (read wages) would supposdly enable companies avoid layoffs and to hire more people for less money and thus reduce unemployment as well. In other words, these BPO companies who have already saved money by off-shoring these jobs to begin with want to also exploit their overseas workers by balancing their books on the backs of these employees—who are much more vulnerable to the downturn in the world and local economy than their employers. In effect the workers, by taking a salary cut, would be paying out of their own pockets for their employers' holding the line against staff reductions or even for absorbing new employees.

But are employers really that hard up? We've read of the incredible bonuses and salaries that executives of many corporations in the U.S. receive, and yet these businesses were still given bail-out money. Some of these companies such as Citibank have branches and BPO operations in the Philippines where they receive considerable tax breaks. Yet upper management still considers it more expedient to cut labor expenses than their own bloated salaries and bonuses instead.

But the biggest joke in Amcham's proposal is that employers and employees "work together" in setting holiday flex-pay schedules, as if rank and file employees have equal power and voice in the matter as management (with the possible exception of workers in unionized industries). Otherwise, its obvious that all businesses follow the golden rule: The one who has the gold makes the rule. A business is not a democracy. If a company decides to eliminate a benefit, it doesn't matter how the workers feel about it. BPO companies always have the option of taking their operations to another country where labor is cheaper, and they don't mind using this leverage as a threat to get their way in the host country.

And if anyone is under the illusion that the Chamber of Commerce can be be trusted to safeguard workers' rights and interests, please see "The Anti Union Network" which discusses the campaign by the U.S. branch of this organization against pro-worker legislation, among other practices. Then there is the opposition by Amcham China against that country's proposed legislation attempt to improve workers' rights (Steelworkers, Global Labor Strategies Counter Corporate Opposition to Worker Rights in China).

Finally, consider that if these foreign corporations get away with this "flexibility" scheme, isn't it just a matter of time before local businesses also jump on the bandwagon and try to impose similar or even more wage and /or benefit reductions?