Business groups oppose abolition of service contracting

Several businesses recently gathered to make known its stand against the perils of abolishing service contracting or contractualization.

At the 16th Labor Executive Updates organized by the Employers’ Confederation of the Philippines (ECOP) entitled “Should Contract Work Be Abolished?”, the businesses were all in saying that abolishing contract work would mean dire consequences not only to employers and their businesses but also to the national economy, the country’s competitiveness and to Filipino workers who search for decent and quality jobs.

ECOP President Donald Dee lamented that our laws and other government policies should be flexible enough or else potential investors will look for another country. Dee said ECOP is also partnering with the De La Salle University-College of St. Benilde (DLSUCSB) to put up ECOP academy to help establish a Bachelor of Science in Human Resources.

“ECOP is doing all it can to help improve the skills of our human resources and labor practices in the country and invested so much to help change the mindset. We are an organization that will protect workers and we will work with our workers’ welfare in mind because they are our assets,” Dee explained.

Atty. Ranulfo “Noli” Payos, ECOP Vice President, meanwhile, said contractualization had been a long-standing issue and suggests that all employers should meet and perhaps come up with a common stand on the matter.

Atty. Rene Soriano, ECOP Honorary President, on the other hand, said that the issue has sparked much debate the past year so ECOP hopes to finally find the answer to the question of whether contract work should be abolished through this forum.

“ECOP is vehemently against this deplorable labor practice. That is why we applaud the current administration for making a successful termination of ‘endo’ in fulfilment of the President’s campaign promise. We also fully support the government’s various labor issuances that spelled doom for endo,” Soriano said.

George Barcelon, Chairman of the Philippine Chamber of Commerce and Industry (PCCI), said that the service contracting industry is very crucial in the development of any country, particularly for the exporters and the Micro, Small and Medium-scale Enterprises (MSMEs).

The 2016 List of Establishments of the Philippine Statistics Authority (PSA) showed that out of a total of 915,726 business establishments in the country, 99.57 percent belong to the MSME sector, which also helped provide 4,879,179 jobs that same year. MSMEs accounted for almost 63.3 percent of the total jobs for all types of businesses and contributed 25 percent of the country’s total exports revenue.

Barcelon fears that abolishing service contracting would make the Philippines lose its global competitiveness. “We’ve been talking about globalization for the past decade. It’s not just about the ASEAN economic community anymore. It’s about being competitive globally,” added Barcelon, who is also a member of the ASEAN Business Advisory Council.

He cited the government’s efforts in building infrastructure because a lot of Foreign Direct Investments (FDIs) are more attracted to countries with good infrastructure like highways, etc. “That’s where we lag against other countries and I hope to see double-digit FDI for the Philippines in the next few years. The more FDIs there are, the more job opportunities.”

For his part, former Department of Labor and Employment (DOLE) Secretary Marianito Roque said that it is not really the issue of removing service contracting anymore. He said as long as service contractors prepare all necessary documents they will definitely pass inspection. “The guidelines just need to be interpreted very well, and with your good relationships with your principals, you have nothing to fear. Just follow the rules and everybody will be happy and you can continue with your business of legitimate service contracting as long as it is within the bounds of the law,” Roque told the crowd.

Representing the legitimate service contractors, Rhoda Caliwara, President of the Philippine Association of Legitimate Service Contractors (PALSCON), laments the fact that there is still widespread misconception about the true nature and importance of service contracting. “The very purpose of farming out work is to hasten and facilitate exigency in the principal’s business.There is no job, necessary or not, that is absolutely not related to the business of the principal who farms out such jobs.”

She emphasized that contrary to what many people believe, legitimate service contractors are staunch supporters of the government’s drive to protect the rights of workers and promote their welfare. This is why PALSCON remains serious in policing its ranks.

“Our mandate to members is strict compliance to existing labor laws and regulations to continue their membership because we share in the public sentiment that detests malpractices and abuses to labor. Through this, we were able to weed out illegitimate and non-compliant service contractors,” said Caliwara.

Abolishing service contracting, she said, will affect the national economy since it contributes to its growth by providing decent jobs to Filipino workers, particularly those unqualified to formal jobs that require higher education. The industry, she said, also contributes to the country’s global competitiveness because companies need to constantly assess where they can achieve operational efficiency to be able to perform well in a cutthroat marketplace. “If service contracting is abolished, we lose our competitive advantage against other countries that also allow subcontracting in their areas. We still believe that strict enforcement of laws and regulations is the answer, and abolishing service contracting will definitely contribute to more unemployment.”