Contractualization trumps workers’ rights

By Satur C. Ocampo
At Ground Level | The Philippine Star

Winding up two-thirds of its six-year term, the P-Noy government came under the severest criticisms on International Labor Day for its basically anti-labor policies and failure to address a broad range of national problems.

The condemnation and other verbal attacks came not only from the militant workers led by the Kilusang Mayo Uno but also from the moderate labor groups, clustered under the Nagkaisa (formed in 2012, led by the Trade Union Congress of the Philippines), that have been accorded a dialogue with the President in Malacañang.

On May 1 the two major workers’ formations held separate march-rallies in front of Malacanang.

Besides pressing for a legislated P125-minimum wage increase and condemning the state’s cheap-labor policy, including contractualization, the KMU and allied progressive organizations vigorously opposed the newly signed US-Philippine Enhanced Defense Cooperation Agreement and the proposed Charter-change bill pending in Congress. Both are seen as betraying national sovereignty and the people’s interest and welfare.

On the other hand, Nagkaisa described P-Noy’s four years in office as “extremely disappointing” because the President hadn’t addressed any of the concerns (including contractualization) it had raised in two years of dialogue. “It cannot be all talk,” the group remonstrated, adding wryly that the workers might be seeing the dead-end of P-Noy’s mantra about treading the “tuwid na daan (straight path)” in the remaining two years of his term.

The group said it was “upset” because the government had failed to produce a “clear and workable plan to lower the price of electricity.” It also decried that P-Noy’s economic policies on privatization, deregulation, and liberalization do not differ from those of his predecessor, Gloria Arroyo (a critique long carried on by the KMU and allied organizations).

For the rest of this piece, let’s focus on the widespread practice of labor contractualization in the country.

Under this scheme, a company signs a contract with a labor contractor who provides the workers needed by the company for a specified period, usually five months (to avoid making the contracted workers regular employees after six months, as required by law). The workers are paid the minimum wage or even less.

Their status is unclear: neither the company nor the labor contractor regards them as its employees. They are variously denoted as trainees, apprentices, helpers, casuals, piece raters, agency-hired, or project employees. Yet most of them perform the jobs of regular workers/employees.

Contractualization has become the bane for workers as it has gravely subverted the workers’ guaranteed rights to organize, maintain and expand their unions and to enjoy economic and other benefits accruing to them through collective bargaining and other forms of union struggles.

This anti-labor policy/practice has spread worldwide — in rich and poor countries alike — through neoliberal globalization policies of liberalization, deregulation and privatization beginning in the mid-1980s.

In the United States, the leading proponent of neoliberal globalization, such policies have caused, over the past three decades, the diminution of unionized workers (according to one source) from constituting about 33% of the labor force to a mere 7% today.

In its inchoate form, labor contractualization in the Philippines may be traced back to the export processing zones established in the 1970s under the Marcos martial law dictatorship, when the “no union” policy was the norm. Nonetheless, under those severe conditions the workers courageously succeeded in forming unions in several factories in the EPZs, such as those in Mariveles, Bataan.

Basically deemed illegal, contractualization acquired legal cover in 1989 via the enactment of RA 6713, or the revised Labor Code (also known as the Herrera law, after its main author, former Sen. Ernesto Herrera, a longstanding TUCP leader).

Articles 106-109 of the law allow contracting and subcontracting arrangements and authorize the secretary of labor to issue rules that will buttress or promote contractualization.

Thus in 1997 the labor secretary issued Department Order 10, which relaxed the established rules on contractualization. Probably responding to strong protests from workers, in 2000 it was repealed, only to be restored in 2011, so that DO 10 remains effective today.

Whereas DO 18-A identifies illegal forms of contractualization, observed the Ecumenical Institute for Labor Education and Research, it does not ban its practice altogether.

“DO 18-A deodorizes the rampant implementation of contractual arrangements in many companies, as it tries to promote contractual workers’ rights while encouraging businesses to adopt ‘ethical’ contractualization,” noted EILER executive director Anna Leah Escresa in a newspaper interview.

KMU chair Elmer Labog likewise observed (in the same interview) that while the Labor Code allows even contractual workers to organize and protest, that right hasn’t been effectively exercised because the companies can easily fire the workers. Moreover, he adds, contractualization has rendered it difficult for regular employees to demand better pay and benefits.

“The expanding pool of contractual workers, often outnumbering the regular workers, also has a huge impact on our organizing effort as management can use them against the regular workers who launch mass actions to push for higher wages and more benefits,” Labog lamented.

Obviously, much needs to be done to alleviate the deleterious impacts of contractualization.

Banning it appears remote, given the government policy of depressing wages and making it easier for foreign and local companies to hire and fire workers/employees.

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May 3, 2014

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