CLEARING CONTRACTUAL WHAT KIND OF CONTRACTUALIZATION IS PROBLEMATIC?

With President Rodrigo Duterte assuming office this week, I am interested to see how he will implement his campaign promise that “the moment I assume the presidency, contractualization will stop!”

Some respected analysts and business leaders insist that ending contractualization is neither feasible nor desirable. These commentaries, unfortunately, often muddle the issue because they use different definitions and refer to different aspects of the contract work situation. They also mix up questions on the employment status of workers with questions on how to competently manage them to be productive. Let’s try to clear up the most important questions about the contractualization issue. Contract work for specific and short- term periods includes apprenticeships, project work, seasonal work, and consulting engagements. These arrangements are legal and ethical when used for the purposes they were intended.

The problem is when work that is essential to the conduct of a business and which, therefore, should be done by regular employees is converted into short- term contractual work, either directly by the company or indirectly through an agency. This notorious business practice, commonly referred to as “end-ofcontract” or “endo” for short, is what needs to stop.

For example, incoming Dole Secretary Silvestre Bello III explained pointedly that since their main business is selling goods, large retailers definitely need the services of sales personnel. “Contracting out such work is not right,” Bello stressed.

WHY IS CONTRACTUALIZATION WRONG?

First, this structure perpetuates income inequality. It prevents the growth of the middle class since the employed poor are trapped in a perpetual end-of-contract cycle with minimal skills, wages, and benefits earned. Those lucky enough to have marketable skills understandably choose to work abroad or migrate in frustration.

Second, contractualization reduces workers to mere pairs of hands in the business instead of being partners of employers in producing business value. These workers effectively have no voice in how the business is run — enabling management to lord over them. Such a situation violates the ideals of our republican democracy and common good economy, especially because our institutional social protections for workers are very weak.

IS CONTRACTUALIZATION NECESSARY SO THAT BUSINESSES CAN BE COMPETITIVE?

Business leaders often claim they need the flexibility of contractualization to compete effectively. They assume that the best way to compete is for businesses to price their products and services low. Thus, if a business can avoid paying workers’ salaries and benefits they deserve under the law, then the savings go to the business bottom line. What this argument misses is that businesses can also compete by providing better quality products and services with more desirable benefits and features for customers. A business can implement this superior strategy better if it has more experienced, welltrained, and engaged employees — an unlikely situation under contractualization.

Donnie Tantoco of Rustan’s and founder of Shopwise was

If managers do not know how to engage employees to contribute good work and instead can only extract performance through the fear of imminent job loss, how can Filipino businesses be truly competitive?