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Policy Brief

This brief puts forward the highlights of the working paper entitled, “Is the Regulation on Security of Tenure More Labor Market Restrictive than Employment Protective?”: Cost-benefit and costeffectiveness 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, as indicated by the ratio of total benefits gained as a measure for protection on the one hand to total costs incurred as a measure for restriction on the other hand.

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 calculated at P756,820,206.88 with a benefit-cost ratio of 0.823, indicating inefficient implementation of the said regulation. The cost-effectiveness ratio or cost per illegally dismissed employee is about P200,000.00. Among others, it was 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: Cost-Benefit and Cost-Effectiveness Analyses of the Regulatory Areas in Book VI of the Labor Code
: Patrick P. Patriwirawan Jr.