As of yesterday, a second draft of the executive order on job contractualization awaited the signature of President Duterte. This is a good indication that the measure is being subjected to careful deliberation.
As labor groups have stressed, the contractualization scheme has been abused by certain employers to avoid giving their workers the wages and benefits provided by law and to prevent the formation of unions. Also called “endo” or end of contract, employers hire workers for several months and then lay them off before they become eligible for regular status. Workers can be rehired over and over, but always under such a contractual setup.
There are some business enterprises, however, wherein contractual employment is unavoidable or practical, with job or production orders peaking only during certain seasons. Even large companies also find it more efficient to outsource the hiring of workers with specialized skills such as security guards and janitors who need special training. There are companies that provide such workers.
The government must balance these economic realities with the promotion of the welfare of workers. Satisfied employees tend to be more productive, but employers also need a reasonable return on investment to sustain their enterprise and keep the workers happy.
Any order regulating contractualization must be nuanced and reasonable for both employer and employee. Recent pronouncements of labor officials on the issue, however, are reportedly spooking investors, who are considering relocating to more business-friendly countries such as Vietnam, Cambodia and Myanmar. This is according to the secretary of trade himself.
The country is competing with its neighbors in attracting job-generating foreign direct investment, and so far the Philippines has been trailing most of the others in the region. Over the past three decades, the country lost a lot of business to China, a hybrid communist state whose phenomenal growth was powered partly by cheap labor.
Investors and workers have a symbiotic relationship; one can’t live without the other. In rationalizing contractualization, both sides must be prepared for a reasonable if not entirely happy compromise.