The Labor-Business Balance

Friday, June 05, 2009
Opinion
Friday, June 05, 2009


By JACINTA M. KAIPAT
Special to the Saipan Tribune

I write to all our citizens who are concerned about finding jobs in the Commonwealth. This is my No. 1 priority in the Labor Department. We need to open available jobs to our citizens in a fast and effective manner, but we have to be careful about how we do this.

In our situation of serious economic decline, the labor-business balance in the Commonwealth is more important than ever. Citizens want a preference for all jobs; they don't want businesses using foreign workers when unemployment among citizens continues to occur. Businesses want a preference for business-friendly policies; they don't want to be burdened with extra costs at a time when the minimum wage is rising dramatically and the market in the Commonwealth, especially for tourist services, is declining.

Each side has a point. First, it is important that our citizens be employed. That is the only way we can keep our talented people from migrating to the States or falling into poverty here at home. Second, it is important that every business survive this economic downturn because businesses create jobs. If businesses fail, then jobs disappear altogether, and there are no jobs to take their place. When that happens, the entire community loses.

As a community, we must do the best we can for each side of the labor-business balance. Our current labor law, P.L. 15-108, which was enacted in 2007, does that.

On the Labor side, to push for citizen employment, the law provides five basic tools:

1. We have a workforce participation requirement of 20 percent. Citizens must hold 20 percent of the full-time positions in every business in the Commonwealth. That percentage will increase to 30 percent by 2012. In addition, in the proposed regulations, we have increased the requirement for small businesses (fewer than five employees) to employ at least one citizen employee.

2. We have a job vacancy announcement requirement. Every job available in the Commonwealth must be advertised so that citizens know what jobs are available.

3. We have a citizen-preference requirement, so that a citizen who is qualified for a particular job must be given preference in hiring over a foreign worker.

4. We have an approved process for jobs that go to foreign workers-new, renewal, or transfer-so that before giving a job to a foreign worker, the first three requirements must be met. Under the Labor Department's new automation system, we are able to give these requests for approval much more rigorous scrutiny.

5. We have a citizen claims provision that, in the event a foreign worker was hired for a job for which a citizen applicant was qualified, the citizen may make a complaint to the Labor Department and, if he or she wins, collects up to six months in wages from the employer who made the hiring decision.

In addition, there are fees attached to the use of foreign labor (application fees, processing fees, and bonding fees), medical, and repatriation expenses that make the use of foreign labor more expensive. These fees are increased from time to time to cover Labor Department costs and contribute to the Commonwealth revenues.

On the business side, the Labor law recognizes that there are costs involved to businesses from limitations on the free-market for labor. When we impose hiring requirements, there are record-keeping costs in connection with compliance. When we require a citizen preference, there are substantial costs involved in losing the experience of the worker who has previously held the job. Training new workers, even if only for a few months, incurs costs. Any regulatory system imposes delays on businesses, and every delay also involves costs. Additional costs are very difficult for any business to absorb during an economic downturn without cutting jobs. To ease the transition to citizen labor over a three-year period, the Labor law provides four benefits to businesses:

1. We are phasing out the moratorium and we have suspended the periodic exit that imposed recording-keeping costs.

2. We have allowed an exemption from the citizen preference (but not the 20 percent requirement) for lower-paying jobs when a business achieves 35 percent citizen employment in high-paying jobs. We have just increased this to 50 percent in the proposed regulations so the exemption will be harder to get. This exemption will continue to get smaller next year.

3. We have allowed more part-time work and two-year contracts temporarily during the economic depression.

4. We have paid for and installed an interactive website so businesses do not have to pay to advertise jobs, and we have paid for and installed a new automation system so delays are now a matter of only a few days rather than weeks or months.

I believe that this balance is a fair one to both sides: citizens who want jobs, and businesses who want to avoid having to close down. The statistics indicate that most of the permanent loss of jobs during the economic depression has fallen on foreign workers. Their numbers have declined from more than 30,000 in 2005 to fewer than 16,000 today. Even after the garment manufacturers closed down, foreign workers continue to be displaced. More than 2,000 departed the Commonwealth just in the last 12 months. We do not have good statistics on citizen employment because the U.S. Census Bureau does not give the Commonwealth and other territories the same kind of data services it routinely provides to States and counties in the U.S. We are hopeful that our Delegate in Congress can do something about this.

The system is not perfect. Not every citizen will find the kind of job he or she wants. But on the whole, by maintaining a labor-business balance, we will have more citizens employed and keep more businesses open and operating-providing more jobs are available in this economy. I understand the pain and frustration of those individuals who cannot find the jobs they need. The Labor Department is working hard to make available as many job opportunities as possible. I believe we can work our way through this economic depression more successfully with labor-business harmony and this will benefit everyone in our community.

Jacinta M. Kaipat is the Deputy Secretary of Labor and a former House of Representatives lawmaker.