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Contractualization Rodrigo on the issue Contractualization One of the major campaign platform of then Mayor of Davao Rodrigo Roa Duterte in the 2016 Presidential Election is to improve the “improve labor conditions for Filipino workers”1 which prioritizes the total ban on contractualization 2 in the country. Today as the President of the country, Rodrigo Duterte was able to offer some measures against contractualization, but surprisingly in his 2017 State of the Nation Address (SONA) there was no mention of such issue. This resulted in the dismay of various Labor Groups, expressing that the lack of action or mention of the President on the issue of contractualization in his SONA makes it less of a priority. 3 Actions speaks louder than words The president in his first year appointed Silvestre Bello III as the Secretary of the Department of Labor and Employment (DOLE) and ordered him to have a total ban on the labor practice of contractualization. After consultations with the concerned parties, the President have reconsidered his order on the total ban on contractualization and instead ordered a manageable eighty percent (80%) of the total employees of a company should be composed of regular employees.

1 Caduaya, E. (2015, November 28). Duterte on contractualization: Not for a country like PH. Retrieved September 15, 2018, from https://www.rappler.com/nation/politics/elections/2016/114276-duterte-contractualization-notgood 2 “Contractualization or endo (end of contract) is the labor practice of hiring fixed-term employees and continuously renewing their contracts to avoid giving benefits a regular worker is entitled to”. (Tomacruz, 2018) 3 Pasion, P. (2017, July 25). Dutertes silence on workers issues in SONA 2017 disappointing – labor unions. Retrieved September 15, 2018, from https://www.rappler.com/nation/176650-duterte-silence-labor-issues-sona2017-philippines

A number of measures were passed to ensure that the companies will follow the government directive that by the end 2016 DOLE reported that around 36,000 employees have been regularized by more than 200 companies. 4 In his 2017 SONA there was a deafening silencing on the issue of contractualization, that laborers and various groups have expressed fears that there was inaction on the part of the government to deliver their promise. But does the President’s silence on contractualization in his 2017 SONA means that he has not acted on his promise. The data shows that it is the contrary, that despite there was no mention of it in the 2017 SONA, some measures were enacted to ensure that companies will follow the order that at least 80% of its employees should be comprised of regular employees. Advantages and Disadvantages The full delivery on the promise of total ban on contractualization has both beneficial effects and severe repercussion on the different aspect of development in the country. The issue of Contractualization is a double edge sword that can either alleviate or worsen the workers condition in our country. A total ban on contractualization is catastrophic to a number of companies in the country that will severely affect our economy. One that will bear the brunt of total ban is the Business Process Outsourcing (BPO) Industry. It is one of the key driver of the country’s economic growth and employs more than half a million Filipinos with a significant number of other industries relying on BPO industry. 5 In anticipation of the total ban a number of employees have conducted pre emptive action to ensure sustainable existence of their companies. The most evident reaction on the order is the report of the labor group Kilusang Mayo Uno (KMU) that from the time the order of President Duterte on the total ban on all forms of contractualization has been handed down around 200,000 employees has been fired by various employers.6 4 Tomacruz, S. (2018, May 1). TIMELINE: Duterte's promise to abolish endo. Retrieved September 15, 2018, from https://www.rappler.com/newsbreak/iq/201468-duterte-endo-contractualization-promise-2016-to-2018 5 Gloria, M. (2018, August 07). Philippines' BPO industry: By the numbers. Retrieved September 15, 2018, from http://www.bworldonline.com/philippines-bpo-industry-by-the-numbers/ 6 Panti, L. (2018, July 04). Lawmaker: 200,000 contractual workers fired after 'endo' ban. Retrieved September 15, 2018, from https://www.manilatimes.net/lawmaker-200000-contractual-workers-fired-after-endo-ban/416158/

There is a growing fear among the business community that the order is unsustainable to their business model that will eventually result in the collapse or bankruptcy of the company. That is why in anticipation of the said order various employers have already dismissed a number of employees in order to avoid closure and sustain the orders of the government. The positive effect of the total ban might outweigh the problems it would create. The main problem of contractualization in our country is the lack of security of tenure of workers. It is best summed up by one phrase every contractual workers have uttered “Buti pa ang patay minsan lang mamamatay, eh kami kada limang buwan eh pinapatay” (The dead is fortunate to die once, we contractual works die every five months.) 7. A phrase often uttered in exasperation as their source of income comes to an end. The phrase “dying every five months” has become a part of our vocabulary. A total ban is not the solution even if it is good for our countrymen, because if we force it we might lose the very jobs we want to maintain. The government in realizing that a total ban would be unlawful (as the law allows certain forms of it) and it would be an unwise action that would severely impact key areas of our economy have changed its policy to a more favorable 80% regular employee. What the Government should do. The most healthy approach of the government with regards to the contractualization dilemma is to balance the interest of the employers and the employees. A gradual regularization of contractual employees should be implemented by gauging the capacity of the businesses to absorb them as regular employees 8. A total ban would not be healthy to the business atmosphere in the country and the law does allow certain forms of contractualization9. If the government will order an immediate regularization of all its contractual employee, the sudden move will result in the disruption of the business model of companies causing them to terminate employees (regular and contractual) or worse declare bankruptcy due to insufficiency of funds to regularize contractual workers. A 7 The expression means that contractual employees have to find another job after their contract ends which lasts only for 5 months. The law provides that a contractual employee that has been on the payroll for six months or more must be regularized (permanent empoloyee). Thus contractual employees maximum contract with a company is only for five years. 8 Ibid 9

lax implementation of the law in the other hand will result in the exploitation of our human resources. What the government must first address the loopholes in the system often abused by large companies. One of the sectors that need attention is in the area of seasonal contractual employee. The seasonal contractual scheme allows company to hire workers without regularizing them as they deemed support of the existing workforce. They are hired for a specific timeframe, when the regular workforce of a company is not enough to handle the sudden increase in workload brought about by holidays or other events. This is the loophole often abused by large companies. Best example are large retailers often use this loophole by stating that cashiers, merchandisers and other entry level jobs that re needed all throughout the year and yet they are contractuals. The retail companies should regularize workers that are needed for the company to efficiently function and be allowed to hire additional employees for times or seasons that will entail additional workloads that regular employees cannot handle. Unfortunately the law does not distinguish what entails seasonal worker thereby allowing an illegal form of contractualization. The government should address the issue by clearly defining the rule on “seasonal worker”. There is a rampant circumvention of our laws and the government’s inaction is tantamount to turning their backs on the people. The sad truth in here is that a number of former labor leaders have joined the ranks of administrations and they no longer represent the worker but rather acts as consultants to the companies on how to avoid labor problems. The government should always bear in mind that it should always balance the interest of the people and the private sector. Enforcing the rights of the laborers should not entail the end of company nor the action of the state shall fall short in helping the workers attain better labor rights (in this case security of tenure). The government showed an excellent response in allowing leeway for companies to work with, instead of a total ban it allowed companies to maintain at least 20% of its work force contractual and making 80% of its work force permanent. Workers’ rights have been fought for thousands of years, and despite these victories, we still have a long way to go. We must remember, the eternal words of human rights advocate Eleanor Roosevelt that: Workplace rights are human rights”10 10 O'FARRELL, B. (2010, May 23). Eleanor Roosevelt said it well: Workplace rights are human rights. Retrieved September 26, 2018, from http://www.post-gazette.com/opinion/Op-Ed/2010/05/23/Eleanor-Roosevelt-said-it-

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