DTI warns abolition of contract labor could hurt investment

TRADE Secretary Ramon M. Lopez has reiterated his stance on the legitimacy of some contractual work arrangements, noting that a full ban on the practice will hurt investment, thereby posing bigger problems for the labor sector.

Mr. Lopez issued the statement while attending meetings for the Association of Southeast Asian Nations in Singapore during which he said the future of the country’s contractualization rules have raised concerns.

“We won’t have any permanent jobs or security of tenure if investments drop and we lose many jobs,” Mr. Lopez told reporters in a mobile message on Thursday. “The labor sector could suffer.”

“Heard that a draft EO (executive order) banning contracting is being pushed again by labor sector. We wish to pursue position that legitimate contractualization is allowed by Labor Code. That it is legal, and that an EO cannot change that,” he added.

Department of Labor and Employment estimated in 2016 that 5,150 registered contractors and subcontractors deployed more than 416,000 workers to 26,000 principals.

The rules on subcontracting and contractualization are covered by Department Order 18-A which was issued by the previous administration. Labor groups have been for the cancellation of these arrangements.

Mr. Lopez said many contract arangements are not the same as end-of-contract schemes, also known as “endo”, which has been identified by the government as an abusive practice which it intends to abolish.

“Endo” arrangements fail to provide workers a pathway to permanent employment and benefits because work is terminated short of the six- month probationary period, after which workers are entitled to be permanent employees.

The Department of Trade and Industry, has proposed instead that private firms using contractual arrangements offer those that hurdle probation many of the benefits enjoyed by regular workers and possible permanent status provided by the contractor.

Mr. Lopez said the government should focus on improving human resource development and the boosting productivity of its labor force.

“We should continue to allow legitimate contractualization and permanent status and benefits can be given either directly by employers or by the contractors.” —