Labor and business reform code protects local workers

Local workers are adequately protected under the labor and business reform legislation introduced by House Speaker Ben Fitial, dismissing concerns raised by some sectors the proposed measure would displace local labor.

Mr. Fitial said House Bill 12-039, which has the backing of the islands’ business community, was drafted and introduced to primarily allow economic growth in the CNMI.

Sufficient safety nets have been properly incorporated in the proposed measure to protect indigenous workers while eventually eliminating their reliance on government jobs.

HB 12-039 requires garment manufacturing companies to provide the necessary training to a U.S. citizen in the position for which he or she is employed.

While the Omnibus Labor and Business Reform Act of 2000 proposes to lift the cap on the number of garment manufacturing companies that may be allowed to operate in the CNMI, only firms that employ a determined number of local workers will be permitted to operate.

The bill guarantees that the business licensing agency shall not issue any business license for the purpose of garment manufacturing unless the company’s operations employs at least 20 percent U.S. citizens.

In order to encourage increased participation from among the available local labor force, HB 12-039 classified citizens of the Freely Associated States — Federated States of Micronesia, Palau, and Marshall Islands — as U.S. citizens who should also be trained by private companies.

Failure to comply with requirements relating to training and retention of a minimum number of local workers may be grounds for the business licensing agency to suspend or revoke the garment manufacturer’s license.

Mr. Fitial’s move to lift the cap on the number of garment companies in the CNMI is backed by a report prepared by the Bank of Hawaii last year which recommended that garment makers maximize their operational capacities and production within legal framework while they still can.

CNMI is likely to lose its unique advantages when changes in tariffs, import duties and subsidies take place as a result of trade liberalization in six years. It will eventually force garment makers to seek other low-cost markets.

“Any changes in CNMI’s comparative economic advantages may drive garment makers away, possibly without notice. It that happens, the economic and financial consequences for CNMI will be incalculable, as the existing infrastructure may not be of immediate use to other industries of the tropics,” the bank report said.

According to the House Speaker, his bill will ease restrictions that curtail economic growth in the islands. The legislation has the support of business organizations like the Saipan Chamber of Commerce, the Hotel Association and the Garment Manufacturers Association.

Mr. Fitial said drafting of the bill has been coordinated with the Senate and business leaders from major private sector organizations in the Northern Marianas.

The legislation has been referred to the House committee on commerce and tourism for review.