Problem of contractualization

PRESIDENT Rodrigo Duterte’s pronouncement to put an end to the contractualization of labor is a welcome development in the labor front. For many years, the workers have been oppressed and exploited by unscrupulous employers who deprived the workers of security of tenure, just wages and benefits and social security protection in times of contingency. Previous administrations sanctioned this practice to the detriment of the toiling masses of workers.

Contractualization of labor is the employer’s method of replacing regular workers with temporary employees who receive lower wages with no or inadequate benefits. It has evolved and assumed in different names such as: contractuals, trainees, apprentices, helpers, casuals, piece-rates, agency-hired, projects employees, among others.

This type of work arrangement is expressly allowed under Dole Order No. 10 of 1997 or the Herrera Bill for the purpose of giving the business sector a breather from severe economic crisis that beset the country at the time. But this privilege had been abused over time and made a convenient scapegoat to hire contractual employees than to maintain a regular workforce where employers can save on labor cost and gain more profits.

According to estimate, seven out of ten companies are engaged in contractualization. This move is resorted to in order to save labor cost of production and prevent the regularization of workers. If this trend continues, workers will wake up one day to find that there are no more regulars in their ranks.

What is more alarming is that big players are into this game.

The Philippine government, the biggest single employer, hires contractual employees through service bureaus to evade the law of attrition in hiring of employees. Under the cloak of legal niceties in order to evade the Civil Service law, it hires personnel under such categories as co-terminus, casuals, temporary appointments or job order employees.

In the 1990’s, the largest food and beverage company, San Miguel Corporation (SMC), employed about 39,000 workers but today is has only about 20,000 workforce and out of this figure, there only about 1,000 regular employees left. The rest, of course, are hired as contractual workers.

The country’s flag carrier, Philippine Airline s (PAL), used to employ about 12,700 employees including 450 pilots and 1,300 cabin crews in January 2005. With the termination of about 7,700 ground crew even if the labor dispute has yet to be settled, the company has only about 5,000 regular workforce left.

SM, the country’s biggest chain of shopping malls, nine out of ten workers, majority of whom are salesladies who stand to attend customers the whole day’s shift, are hired as contractual employees through an agency or by a concessionaire. And worse, these contractual employees are not paid the minimum wage as mandated by law.

Contractualization deprived the workers of their constitutional right to form a union, bargain collectively and conduct strikes as a weapon of last resort. As a result, the workers cannot organize what with limited contractual period of employment. Also workers have no social security coverage, health care and other social benefits.

Thus, President Duterte’s bold resolve to end labor contractualization and punish employers who continue to practice it will break the chain that shackled the workers for many years.