GALANG,JOHN RENZO O.

April
7,2018
Pcbet-17602p Saturday 6:00-
9:00pm

LABOR LAW
“Endo, wages, poverty and employment-labor
market issues”

Upon his election to the presidency, President Rodrigo Duterte promised to get rid of
“contractualization,” the practice of short term employment contracts and labor outsourcing
that has become a tool for supplying labor services to enterprises within the country.

“Endo, or contractualization.” Contractualization as we know it today evolved as a means of

simplifying hiring arrangements for enterprises. To some extent, the complex rules and
regulations governing labor market policies created incentives for some enterprises to resort
to the contractualization of labor.

A peculiar context in which the labor contractualization has come under criticism, the
contracts of employment for the worker would end before six months are reached, hence the
name, “endo” or end of contract.
The immediate culprit for this peculiarity is a provision in the Labor Code: employees who
have worked for six months within an enterprise are required to be regularized. As a reform,
the six months provision could be replaced by a longer period of transition toward
“regularization.” (But this requires amendment of the law).

“To end ‘endo’.” The marching order to end the contractualization is not an easy task to
undertake. The problem of endo involves three parties in general: the enterprise that uses the
labor; the labor service supplier who hires and supplies the the labor; and the laborers who
are hired.

Under the current setup, as contractualization has developed, the company using the labor is
not the direct hirer of the worker. The enterprise in need of labor services uses the labor
service provider to hire workers.

In short, the productive enterprise deals only with the labor provider in terms of the hiring.
By using the labor service provider, the productive enterprise develops no direct employer-
employee relationship with the worker.

In the course of years, high labor standards have been adopted: labor protection provisions
include regulated working hours and overtime pay, holiday benefits, protection from firing,
13th month pay, sometimes, cost-of-living allowances. There are also benefits related to
pension (social security); housing finance (Pag-Ibig); and health care (PhilHealth).

To top this, there is the highest component of labor cost, the wage. In reality, this is partly
determined by the minimum wage. Since the late 1980s, the minimum wage has been
determined on the basis of regional minimum wages applicable in the respective regions of
the country. Despite this, the Manila minimum wage sets the anchor for all the regional
wages.

Philippine labor costs have become relatively high. Thus, Philippine labor has become less
competitive compared to some developing countries in the ASEAN region.
Many labor intensive operations that used to be located in the country have moved to other
countries out of the volition of wrong labor policies: in the 1980-90s, to China, before; to
Vietnam, and now to Cambodia. In the early 1980s, the movement of labor-intensive
operations from investment operations went to Thailand and Indonesia.

Such labor costs have encouraged the practice of contractualization. Contractualization

helped to reduce the cost of labor because temporary workers are not entitled to all the
privileges associated with the benefits accorded to regular employees. But this has unsettled
the skill growth and steady employment of the Filipino worker. Also, there are cost savings
associated with recruitment.

However, such high cost is not commensurate with the fact that there is an enormous supply
of labor seeking jobs at low wages. Poverty and lack of skills of many such workers also
implies that their productivity often cannot match the high cost of mandated minimum
wages. Factor in the various forms of benefits that employers are required for regular
employees, then the gap in wage and productivity got even wider.

This applied to companies that are in export industry which require a high degree of labor.
Contractualization is also commonly used by enterprises operating and selling their products
in the domestic market.

A termination of endo will raise the cost of labor per unit since many of those affected are
likely to be non-regular employees. These workers will benefit from an increase in income.
The hiring enterprise will assume more of the mobilization costs in hiring labor that was once
provided by the labor service contractor.

Definitely, a fall in employment arising from the termination of endo will come about. Some
companies will reduce their operations due to higher costs. Also, some workers will no longer
be hired. The negative impact will be severe for those losing their jobs.
“Need to reform labor market policies.” But the government wants to create employment,
not unemployment!

In order to avoid the consequences just enumerated, it is essential to tilt the outcome toward
employment creation. Some correction of policies would be needed to neutralize the impact
of ending endo.

It is a paradox, but it is true. Measures that appear to be modest in terms of labor policy will
allow us the greatest flexibility in achieving more development and improve the welfare of
labor. This is borne out by the experience of many countries in our neighborhood.

The proposal of labor groups to raise the minimum wage and to make it national in scope will
defeat the program, and even worsen the impact of endo termination. Their proposal to
increase the minimum wage by P125 and to make it into a national minimum wage will defeat
the economic reforms of the government.

The current regional minimum wage rate system is better than returning to the national
minimum wage. The regional wage-setting process adds the element of competition in wages
among different regions of the country and will facilitate growth of poorer regions.

The logic of minimum wage setting should be based not on “living wage” but on “reasonable
wage” that workers seek for their first employment. The minimum wage should be seen as a
fair minimum wage for people in need of jobs. This strategy will permit family income to rise
since more mem.

RECOMMENDATION:

Recommendation:

The Endo, or contractualization.” Contractualization as we know it today evolved as a means of simplifying hiring
arrangements for enterprises. To some extent, the complex rules and regulations governing labor market policies
created incentives for some enterprises to resort to the contractualization of labor. Therefore l conclude,
Nowadays many filipinos believed that the newly elected president Rodrigo Roa Duterte was the start of the
truthful changed or a so called " Tunay na Pagbabago"as well as the start to cure their diffuculties in job by
means of totally ending the contract agreement or Contractualization for the employees that long lasted for only
6 months as he promised, and turn it into "Regularization"

For me, this case wasn't so easy to solve because it has to side the positive results and the negative results, in
favor of positive ofcourse it helps the employees to rid their difficulties in job, to earn money as well but it has a
negative impact like in general, many filipinos are undergraduated and lack of knowledge that will turn into the
low rate of the employees lack of communication and credentials to compete with other countries. Thats why
I'm in neutral to both sides whic is to end or to continue the contractualization and turn it into Regularization in
the Philippines.