Bello’s travail: Cracking a nut called ‘contractualization’ – Business Mirror

After nine months of unresolved tripartite debates, Secretary Silvestre Bello issued Department Order 174. The Order has pleased no one.

The trade unions, which have been batting for the total prohibition of contractualization, were the most unhappy. The Order looks like a renumbered DO 18-A (issued by the Aquino Administration in 2011), which the unions want fully replaced. DO 174, like DO 18-A and the earlier DO-18-02 (2002) and DO 10 (1997), more or less reaffirm the legality of job and service contracting. However, DO 174 tries to tighten the rules governing the operations of manpower agencies and imposes higher renewal/registration fee (from P25,000 to P100,000) and proof of higher capitalization (P5,000,000). Rene Magtubo, the spokesperson of a labor coalition opposing the Order, claims that DO 174 does not cure the epidemic of contractualization. The unions wonder why the good Secretary has failed to exercise his power under Article 106 to strictly prohibit the following: labor-only contracting, contracting out jobs performed by union members and regular employees, fixed-term employment, contracting out regular jobs or functions as defined by the Labor Code, and agency hiring.

The employers, represented by the Employers Confederation of the Philippines (ECOP), have accepted DO 174 with some reservations, specifically on the additional rules on contracting and the proposed stricter enforcement and monitoring of labor compliance by employers and manpower agencies. ECOP explained that any measure that makes contracting difficult for business discourages investment and weakens job creation.

As to the leadership in the Department of Labor and Employment (DOLE), none is exultant over the release of DO 174. The Presidential pledge to end contractualization in three months, made in the heat of the electoral campaign in early 2016, was clearly mission impossible. Now the executive branch is telling the trade unions: go to the legislature and push for the enabling laws abolishing contractualization. Indeed, contractualization is a difficult nut to crack.

It is also difficult to define. The word contractualization does not appear in the Labor Code. However, it has become a union slang for any effort of employers to avoid the regularization of employees, especially the regularization of those doing tasks that are regular and necessary in the conduct of business. The avoidance measures take different forms: casualization of work or making regular work classified as casual, resort to five-month hiring (to avoid the regularization of probationaries within the six-month period as provided by law) or what is popularly called as endo system for the end-of-contract, the availment of the services of outside manpower agencies who deploy project workers who are declared to be agency employees (not workers of the contracting principals), and the excessive utilization of traineeship, apprenticeship and internship programs (meaning undertaking the programs only to avail of cheaper labor).

It is abundantly clear that the debate on the rules governing job/service contracting and the abolition of contractualization will continue even beyond the term of the Duterte Administration. Labor economists call the phenomenon of contractualization as labor flexibilization, which proliferates under a regime of flexible rules on the hiring and firing of workers. This flexibilization is justified by many employers and economic technocrats as necessary to enable business to survive in an increasingly competitive world under globalization. This argument raises the hackles of trade unions and workers not only in the Philippines but also all over the world, for contractualization is also a global phenomenon.

So what can the tripartite social partners labor, employers and government do? Can a tripartite consensus be forged on a truly win-win approach to the issue of contractualization?

The answer of the Philippine Employer-Labor Social Partnership, Inc. (PELSPI) is yes. As a backgrounder, PELSPI is a unique organization of employer-industrialists, trade union leaders and academics who are bound together by their joint commitment to the promotion of decent work for the workers, productivity for industry and competitive growth for our country. It is headed by former Senator Wigberto Tanada, Meneleo Carlos of the Bishops-Businessmen Conference and Jose Umali of the National Union of Bank Employees. In a series of workshops organized by PELSPI to clarify issues on contractualization, PELSPI came up with guiding principles that are worth restating here, namely:

1. As the Constitution states, all workers, regardless of tenure and status, have basic human and labor rights. These rights, such as those enunciated in the Labor Code as labor standards and workers basic freedoms, should be respected by all at all times. Any abuse of the rights of any worker, regardless of tenure and status, should not be tolerated. In short, all workers regular, probationary, casual, seasonal, project, apprentice/learner and term-based should enjoy the protection of the law and all the benefits accorded by law. A strengthened Labor Law Compliance System should be institutionalized and fully propagated, accompanied by awareness-raising and capacity building for all enterprises and workers.

2. The endo or 555 hiring system, whether done directly by the employers or undertaken by a third-party contractor or agency, should not be tolerated. There should be penal sanctions against the willful pre-termination of probationary status, including on-the-job training (OJT) and apprenticeship arrangements, which are done in order to avoid regularization.

3. The rules against prohibited labor-only contracting should be tightened and enforcement of the said rules strengthened. Any manpower or recruitment agency masquerading as a cooperative should be considered a labor-only contractor and should be blacklisted and prosecuted. The Department of Labor and Employment should also blacklist and prosecute all fly-by-night manpower and recruitment agencies, including those legitimately registered and yet are found to have violated labor laws.

4. Legitimate contractors or agencies should comply with all the pertinent labor laws (not only those listed in Articles 106-109 of the Labor Code) such as those listed in all the Books (1-7) of the Labor Code as well as the SSS, Philhealth and Pag-Ibig laws. They should treat all workers with dignity and respect the rights of all workers, including the right to organize and form unions, the right to consultation on personnel policies, the right to equal treatment/non-discrimination and the right to health and safety standards. No contractor or agency should be allowed to operate without any operational grievance machinery put in place to process workers grievances or complaints.

5. The right of all workers, regardless of tenure and status, to form unions or associations, including mutual aid associations and professional organizations, should be respected.

6. The countrys social partners should unite and work together in building a more progressive economy in line with the above-cited development framework of PELSPI so that the economy can provide more and decent jobs for all. Part and parcel of this economic upgrading is cooperation by all in the continuous upgrading of the skills, abilities and knowledge of all workers. An integrated human resource development is the key in building a competitive Philippine economy able to create decent jobs for all. Additionally and ideally, all workers should be able to move upward in the social and jobs ladder as they are able to acquire more experience and better skills and higher abilities and knowledge.

7. The tripartite industry peace councils in various regions and key industries should be strengthened and, in many places, reactivated or established. This is crucial since each industry has some unique structure that requires unique labor hiring and deployment arrangements such as the seasonal hiring of agricultural workers in some commercial farms during harvest or planting seasons. On the other hand, certain industries, which have developed tripartite agreements on how the outsourcing of work and the use of third-party contractor or agency can be regulated without impairing the job and union security of the regular workers, can serve as models for others in the conduct of social dialogue on outsourcing, job contracting and other related industrial relations issues.

The last point raised by PELSPI is the need for all sectors of society to unite in support of a stronger economy based on an integrated industrial and agricultural development program. Contractualization can only be tamed or minimized in a progressive, equitable and sustainable economy.

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Bello's travail: Cracking a nut called 'contractualization' - Business Mirror