Labor and business reform proposal endorsed in House

The House Commerce and Tourism has endorsed a comprehensive labor and business reform measure it said will rebuild the local economy, ease regulations on hiring of nonresident workers and provide opportunities for locals in the private sector.

Offered by House Speaker Benigno R. Fitial, the bill was taken up during a session Saturday, but the 18-member chamber agreed to defer action until after it has reviewed amendments made by the committee.

In a report adopted at the brief House session, the committee chaired by Rep. Florencio T. DeLeon Guerrero described the legislation as one of “most important” introduced in the CNMI Legislature in many years.

“We feel that this measure is a necessary first step towards revitalizing our economy, and rebuilding our private sector,” said the report.

“For too long, we have been more concerned with what politicians in Washington said, rather than the practical realities of our local business community. We feel that it is now time to change that focus,” it added.

Called the Omnibus Labor and Business Reform Act of 2000, the measure has drawn the support of large business organizations in the CNMI and is expected to pass both the House of Representatives and the Senate.

According to the committee report, the Legislature must concentrate its efforts towards revitalizing the economy after more than two years of hardships, while keeping in mind the role of the government.

“We do not intend to remove those necessary laws that safeguard the lives and interests of our workers,” it explained. “Rather, we feel that it is appropriate to repeal those laws which serve no useful purpose other than to pay lip service to politicians, at the expense of our own interests.”

Repealer

If it becomes law, the proposal will repeal two earlier laws passed by the previous Legislature, such as the three-year stay limit imposed by the Tenorio administration in 1998 under PL 11-69 and the fair compensation act or PL 11-74 for resident workers — both of which the committee described as “unworkable.”

Two other previous laws will also be modified, including reducing to five days the 45-day reprieve given under PL 11-6 to a guest worker with an expired contract to look for another job or else leave the island.

In addition, PL 11-76 which sets an absolute cap on the number of foreign workers employed in the garment sector will be amended to provide leeway to factories on matters affecting their operations.

“As such, garment manufacturers are now free to both bring in new workers, and transfer workers within their industry, so long as the overall cap [of 15,727 nonresidents] is observed,” said the Commerce and Tourism Committee.

One of the key highlights of the measure, as proposed by the six-man panel, is to require all garment factories to employ, on a full-time basis, 30 percent local residents in key management and supervisory positions.

This is up from the 20 percent ratio currently mandated by law, and an improvement in that garment companies will be obligated to provide training to U.S. citizens, residents and FAS nationals on the island to accomplish this goal.

“There is no waiver mechanism for this provision, and there are harsh penalties for those who do not comply,” said the report.

Any violation of the proposed regulation will be grounds for suspension or revocation of the garment manufacturer’s business license and a fine of up to $5,000 per day of noncompliance, according to a draft of the bill.

Moratorium

Backing down to recommendation by the Saipan Garment Manufacturers Association, the committee agreed to retain the moratorium on the issuance of new license for factories in the CNMI.

It will, however, ensure that existing factories can sell or transfer their business licenses. “We see no reason to force existing factories to close, if they the option of keeping the operation going with new ownership,” said the committee.

Other provisions of the pending legislation will seek the reduction of the minimum investment in aquaculture and hydrophonic farming from $2 million to $200,000 to entice new investors who have shied away due to the stringent requirement.

Likewise, it will open up certain protected job areas to nonresident workers in response to clamor for businesses which complain of difficulties in hiring people from the local labor pool.

“This measure recognizes the many contributions that nonresident workers make to our business community, while at the same time, will open up many opportunities to our residents,” said the committee.

“We believe that this comprehensive measure will benefit our people, and provide reasonable regulation over the use on nonresident labor,” it added.

The Commonwealth has been battered by the recession in Asia since late 1997 when it pulled down tourist arrivals from Japan and Korea, leaving garment manufacturing as the constant source of revenues for the island.

Despite the economic difficulties and pleas from the business sector for relief, the island government has implemented several labor and immigration reforms like the hiring moratorium and the three-year residency limit that were intended to stave off federal takeover of the CNMI.