Bill on job security could ruin MSMEs, says export leader

The umbrella group of Philippine exporters raised grave concerns regarding the Substitute Bill (SB) on Security of Tenure and Contractualization, saying its provisions support “business-unfriendly labor policies” that threaten to wipe out micro, small, and medium enterprises (MSMEs).

The House of Representatives approved on second reading House Bill 6908 seeking to strengthen the security of tenure of employees in the private sector as its response to address the problems of labor-only contracting and “endo” (end of contract).

Sergio R. Ortiz-Luis Jr., president of the Philippine Exporters Confederation, Inc. (PHILEXPORT), said in a position paper that the organization fears that HB 6908 “will run contrary to government’s objective of inclusive and sustainable growth.”

The PHILEXPORT statement noted that, like the Employers’ Confederation of the Philippines (ECOP), PHILEXPORT objects to the “many restrictive provisions” of the bill, particularly as MSMEs “are threatened to be wiped out should the current version of this bill pass.”

That ‘endo’ discussion

“The scenario gets worse considering the millions of direct and indirect workers mostly in the countryside who are dependents of our members,” warned Ortiz-Luis Jr.

According to a statement from the Press and Public Affairs Bureau of the House of Representatives, there is labor-only contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment and work premises, among others, or has no control over the workers’ methods accomplishing their work.

Labor-only contracting also exists when the workers recruited perform activities directly related to the principal business of an employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer, who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him or her.

The bill includes a new Article 106-A in the Labor Code, which requires all job contractors to obtain a license from the Department of Labor and Employment through its regional offices. The term job contractor shall refer to a sole proprietorship, corporation, partnership, association, cooperative or any other organization that performs a specific work, job or service for a specific employer.

The bill also seeks to amend Article 295 on regular employment so that a regular employee is one who has been hired for an indefinite period. Relievers, project and seasonal employees shall enjoy the rights of regular employees for the duration of the engagement, project or season, respectively.

Ortiz-Luis Jr. pointed out that no market economies in Asia, including China and Vietnam, impose “such arbitrary measures that would suppress job contracting and outsourcing as well as coerce enterprises on pain of penal sanctions, to provide permanent and regular employment for all types of workers, unskilled or unskilled, regardless of the need for their services.”

While a guaranteed right of the employees, security of tenure “does not, however, mean perpetual employment for the employee,” he said.