David Cagahastian

December 8, 2016

There appears to be a growing support from several sectors, including former

government officials, labor practitioners and academe, on the proposal of the
government for a “middle ground” on the issue of whether to completely abolish
contractualization as promised by President Duterte in his election campaign.

At a public forum on emerging trends in the labor industry both here and abroad,
former Labor Secretary Marianito Roque said the government cannot just completely
stop the practice of some corporations to resort to contractualization, especially
for some processes in their businesses which are not part of their core operations.

“The issue is not only about the security of tenure of the workers, but the
preservation of employment,” Roque said at the sidelines of a public forum on
global labor trends organized by the Lilac Center for Public Interest, Inc. at the
De La Salle University earlier this week.

Roque said the complete abolition of contractualization entails extra expenses for
companies who make use of contractual workers for their non-core operations, and
would thus pose a threat to the profitability of their businesses.

He said what the government should do is to empower even the contractual workers by
giving them better benefits by law, such as the mandatory 13th month pay and
separation pay upon the expiration of their contracts.

Roque said there are several bills pending in Congress for these benefits to be
granted even to contractual workers, such as the bill filed by Bohol Rep. Arthur
Yap.

Campaign promise

The compromise “win-win” solution on the issue of contractualization was earlier

advocated by the Department of Trade and Industry (DTI). The “win-win” solution
involved the strict implementation of the labor laws so that contractors will be
forced to regularize their worker whom they deploy to their various clients where
those workers are actually rendering the service.

Labor groups have rejected this “win-win” solution as a repudiation of Mr.

Duterte’s campaign promise to scrap contractualization and his pro-labor
pronouncements during the early days of his administration. They want him to abide
by his promise and effect a total ban on contractualization, thus forcing companies
to regularize those working for them although are employees of another contractor.

The Department of Labor and Employment (DOLE) earlier went along the strong
rhetoric of Mr. Duterte to scrap contractualization, but has since supported the
“win-win” solution proposed by the DTI. DOLE is expected to come up with amendments
to Department Order No. 18-A, or the implementing rule of the Labor Code which
allows for the accreditation of contractors. Labor Secretary Silvestre Bello said
the amendments to the said department order will put into effect a “middle ground”
solution which is the same as the solution proposed by the DTI.

Labor sentiments

Militant labor group Anakbayan said the toned down position of the Duterte
administration indicate that labor groups would again be disappointed with “empty
promises” of the government to give all workers their constitutionally protected
right to security of tenure.

Anakbayan national chairman Vencer Crisostomo said that DO 18-A should be repealed,
instead of being amended, and that Mr. Duterte should instruct his allies in
Congress to comply with the promise to criminalize the practice of
contractualization to deter employers from resorting to it to cut costs.

“Enough of the excuses on the issue about contractualization. When the President
directed to junk contractualization, the priority should be to criminalize it and
repeal DO 18-A, Executive Order No. 366, and other laws which allow
contractualization,” Crisostomo said in a statement.

Crisostomo said the government’s toned down position on the issue of

contractualization, especially the “middle ground” being peddled by Bello is a mere
pretext to allow big capitalists to continue subjecting workers to substandard
benefits and wages.

“There is no genuine change under the Duterte regime. It’s business as usual for
big oligarchs, while Filipino workers continue to suffer from contractualization,
low wages, high prices, and inaccessible services,” he said.

Accredited contractors agree

A contractor registered by DOLE said contractors are amenable to complying with the
“win-win” solution which involves regularizing workers with respect to those with
whom they have an employer-employee relationship. But he said contractors are not
supportive of the demand by labor groups that the workers be regularized by the
companies which are the clients of the contractors and wherein the workers are
actually rendering the service.

The contractor, who refused to be named to protect his business interests, said the
regularization of the employees of the contractor is already mandated by law,
although there are many contractors who do not comply with such requirements. He
said DOLE may have been lax in inspecting how accredited contractors have been
operating.

Currently, Bello has imposed a moratorium in the licensing of contractors which

will supply workers to companies which outsource certain services to cut on costs.

“The global trend now to increase efficiency is to specialize, and it is in the

very nature of specialization that demands that certain services be allowed to be
contracted by another entity such as a contractor so that the principal can focus
on his main business,” the source said.

He added that with the bigger profits which companies can derive from the cost-
cutting measure of outsourcing certain processes in their businesses, workers will
be more secure that they will keep their jobs.

Academe’s position

A professor of the University of the Philippines’ School of Labor and Industrial

Relations (UP SOLAIR) said what should be abolished is labor-only contracting,
which is illegal under the labor laws, not contractualization itself which could
benefit both labor and capital if used for non-core processes of a particular
business.
“What must be abolished is labor-only contracting because it is illegal. The
principal company has core and non-core activities. Employees rendering core
functions should be regularized if they possess the qualifications. Outsourcing
many services is a means for companies to save on labor cost, focus on the core and
expand their business,” said Prof. Ma. Catalina M. Tolentino, director of the
Center for Labor and Grassroots Initiatives (CLGI) under UP SOLAIR.

“Services such as janitorial, building maintenance and repair are non-core. I hope
large companies should have more compassion, be pro-labor and regularize those who
are qualified and perform core functions, especially those who have stayed long,”
she added. (David Cagahastian)