Contractualization and the State of Unionism in the Philippines

The prevalent practice of contractualization has been the main culprit in the reduction of union membership on a national scale. Without a union, workers’ rights are easily violated.

Vol. VII, No. 46, December 23, 2007 – January 5, 2008

The Ilaw at Buklod ng Manggagawa (IBM or Workers’ Light and Unity) – the union of workers of the San Miguel Corporation (SMC) conglomerate, the country’s largest food and beverage corporation – used to be a showcase of what being a strong union was all about. As recently as during the early 1990s, majority of San Miguel’s then 39,000-strong workforce were members of IBM, which is affiliated with the Kilusang Mayo Uno (KMU or May 1st Movement).

Today, the composition of SMC’s workforce serves as a showcase of what contractualization can do to a union.

Based on an item on the SMC website (, the company now has 26,000 employees. “May 1,100 na lang sa mga ‘yan ang regular” (Only some 1,100 of them remain as regulars), said Ka Neri, 33, a full-time KMU organizer working with the IBM and himself a former contractual employee at SMC, in an interview with Bulatlat.

Ka Neri said SMC was able to reduce the regular workforce through attacks on the union and department closures.

“Kinasuhan ang mga lider ng unyon at tinanggal, para humina ang unyon” (The union leaders were slapped with charges and dismissed to weaken the union), the union organizer said. “Nagsara rin ng mga departamento at natanggal ang mga dating nagtatrabaho doon” (There were departments that were closed down, and workers were laid off.)

Aside from these, Ka Neri said, the company was also able to ‘encourage’ a number of the older employees to accept “early retirement” packages. To ‘encourage’ old employees to avail of the early retirement option, attractive compensation packages are offered while at the same time managers approach employees and tell them that they should avail of these otherwise they might end up getting less if retrenched.

“Y’ong mga natanggal o naalis d’yan ay pinalitan ng mga mas bata…mga kontraktuwal na mas mababa ang suweldo” (Those who were dismissed, got laid off, or had availed of early retirement packages were replaced with younger ones, contractual employees with lower wages), Ka Neri said. “May iba na pinagkontrata na lang ng bago” (Some were rehired as contractuals.)

The Philippine Long Distance Telephone Company (PLDT) is another showcase of the effects of contractualization on unions. In an interview with Bulatlat’s Karl G. Ombion earlier this year, PLDT Union Council member Ronnie Gedoria said that from a 16,000-strong regular workforce (of which majority were union members) before 1995, the PLDT now has only about 3,000 regular employees.

While before regular employees are divided into departments corresponding to the different processes such as telephone line installation and repair, and maintenance and repair of underground cables, the remaining regular employees are now forced to do all kinds of jobs, under the multi-skill, multi-task scheme for employees, and with higher workloads.

Added to this, certain processes are already contracted out. For example, installations of new telephone lines are now being done by contractuals who are hired by agencies. These contractuals are paid by piecemeal, meaning their pay depends on the number of telephone lines they installed: no installation, no pay.

Contractualization and unionism

Ombion, citing data from both government and labor sources, wrote that between 1995 and 2005, the number of contractual workers in the Philippines soared from 65 percent to as much as 78 percent of the country’s employed labor force.

Companies in the Philippines started going on an orgy of contractualization in the years following Department Order No. 10 of the Department of Labor and Employment (DoLE), which was issued in 1997 by then Labor Secretary Leonardo Quisumbing.

The Labor Code devotes only a small section to provisions on contractual employment, and gives the Secretary of Labor the leeway to restrict or even prohibit the contracting-out of labor “to protect the rights of workers.”

But the apparent shift of government policy from its bias towards regular employment, as reflected in the Labor Code, to “flexible” work arrangements can be seen in the issuance of one whole department order, DO No.10, for the purpose of legalizing and legitimizing contractualization. DO No. 10 reads, “Contracting and subcontracting arrangements are expressly allowed by law…”

DO No. 10 also declares, as part of its guiding principles, that “flexibility for the purpose of increasing efficiency and streamlining operations is essential for every business to grow in an atmosphere of free competition…”

While DO No. 10 professed to protect workers’ rights, including the right to self-organization and social benefits, the experience under a regime of contractualization has been that contractual employees are barred from joining unions and are denied the social benefits that are supposedly due them even under DO No. 10.

DO No. 10 opened the floodgates to the mass lay-offs of regular workers, which included the dismantling of unions, and their replacement with contractual workers.

DoLE DO No. 3, issued in 2001 by then Labor Secretary Patricia St. Tomas, revoked DO No. 10 but honored all contracts entered into during its effectivity. The Department’s DO No 18-02, issued the next year also by Sto. Tomas, practically restored DO No. 10.

The prevalent practice of contractualization has been the main culprit in the reduction of union membership on a national scale.

Based on data from the Bureau of Labor Relations (BLR), there was a sharp slide in union membership from 2001 – when President Gloria Macapagal-Arroyo was catapulted to power through a popular uprising – to 2002. Union membership decreased in the said period from 3.85 million to only 1.47 million. The number of union members decreased by almost half from 2001 to 2002.

From 2002 to 2005, there seems to be an encouraging picture of union membership, as there was an increase from 1.47 million to 1.91 million. What appears to be an upward trend would be broken again in 2006, with union membership decreasing to 1.86 million. From 2006 to June 2007, union membership would rise to 1.89 million.

As of June 2007, union membership in the Philippines has yet to reach even the 2-million mark since 2001.

The sorry state of unionism in the Philippines is further emphasized when looked upon in proportion to the 33.33 million-strong labor force as of June 2007. The total union membership of 1.89 million as of June 2007 means that only 5.68 percent of the country’s employed labor force is organized.

Unions and workers’ rights

This does not bode well for the defense of workers’ rights. Without a union, workers’ rights are easily violated.

All these notwithstanding, those in the unions still suffer the atrocities of violence and harassment. The vulnerability of unions to these atrocities has no doubt been exacerbated by their weakening owing to the bane of contractualization.

Data from the non-government organization Center for Trade Union and Human Rights (CTUHR) show that from January to August 2007 alone, there were 59 cases of union and human rights violations involving a total of 829 victims. These included the killings of two labor leaders, violent dispersals of picketlines, illegal arrest and detention, torture, grave threats, and enforced disappearances.

CTUHR’s data further show that from 2001 to August 2007, there have been a total of 1,167 union and human rights violations, all in all involving 14,623 victims. The killings of union leaders Renato Pacaide and Charlie Solayao this year have brought the total number of workers extrajudicially killed under the Arroyo administration to 85.

Meanwhile, the economic rights of workers are also not faring well.

Recent data from the National Wages and Productivity Commission (NWPC) show that the national average family living wage for a family of six, the average Filipino family, now stands at P664.87 ($15.91 at an exchange rate of $1:P41.80 as of Dec. 21).

Conversely, the highest regional minimum wage – which is “enjoyed” in the National Capital Region (NCR) – stands at only P325-362 ($7.78-8.66) daily. The biggest gap between the family living wage and the minimum wage is to be found in the Autonomous Region of Muslim Mindanao (ARMM), with a family living wage of P1,087 ($26) as against a minimum wage of only P200 ($4.78) daily.

Resisting the bane

The onslaught of contractuazation since the 1990s has done a lot to weaken unions in the Philippines – which at various points in history were major forces in fighting authoritarianism.

Last year broke what seemed to be an upward trend in Philippine union membership since 2002. While union membership has risen since last year, an increase of about 30,000 from last year’s 1.86 million as of June 2007 is by no means a drastic leap.

With the present weakness of unions compared to their strength a decade ago, the defense of workers’ rights has become more and more difficult. For this year, there has been no improvement in workers’ economic rights, while union and human rights continue to be violated with impunity.

But not only workers are affected by the trend of contractualization. The trainings contractuals undergo are many times less than what regular employees underwent in years passed. This lack of training plus the pressures being exerted on contractual workers who have no rights and are paid less, sometimes on a piecemeal basis, is already taking its toll on the quality of services of companies such as PLDT and Meralco.

Thus, contractualization is a bane not only to workers and their unions but to consumers as well.(

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