This policy paper puts forward a cost-benefit and cost-effectiveness analyses of the regulation on security of tenure with the aim to assess whether or not the regulation is more labor market restrictive than employment protective which is indicated by the ratio of total benefits gained as measure for protection on one hand over total costs incurred as measure for restriction on the other hand. Cost-benefit and costeffectiveness analyses intend to identify and estimate the value of the costs and benefits that have the most significant implications to the policy by means of cost-benefit, costeffectiveness and sensitivity analysis.
The cost items include litigation costs and monetary awards, while benefit items include the salary and mandatory allowances of an assumed employee and income tax revenues for the government. The net present value is P756, 820,206.88 with a benefit-cost ratio of 0.823, indicating that implementing the regulation on security of tenure is inefficient. The cost-effectiveness ratio or cost per illegally dismissed employee is about P200, 000.00. Among others, it is recommended that a regulatory impact assessment be conducted to provide in-depth and comprehensive evaluation of the existing regulation on security of tenure.
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Title: Is the Regulation on Security of Tenure More Labor Market Restrictive than Employment Protective? A Cost-Benefit and Cost-Effectiveness Analyses of the Regulatory Areas in Book VI of the Labor Code, as amended
Researcher: Patrick P. Patriwirawan Jr.