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Vol. VI, No. 9      April 2 - 8, 2006      Quezon City, Philippines











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Odd Jobs under the Arroyo administration

While the unemployed have very limited options under the employment generation plan of the Macapagal-Arroyo administration, employed workers are being battered by labor contractualization and other flexible work arrangements. 


The Macapagal-Arroyo administration boasts that it is handling the economy well claiming a 6.1 percent growth in the Gross Domestic Product (GDP) for the 4th quarter of 2005.  It also said that it was able to generate 750,000 jobs in 2005 and achieved a slight improvement in the unemployment rate in January of 2006 down to 7.4 percent from 7.7 percent.   

But a survey conducted by the World Bank revealed that almost a fifth of the Filipino people reported experiencing hunger while about half considered themselves impoverished. If only 7.4 percent of the population is unemployed, how come 17 percent of the population experienced hunger?

Economists have pointed to the unproductive quality of jobs being generated.  In 2005 most jobs generated were in unpaid family work in agriculture and in own-account jobs. This is consistent with the employment generation plan of the Macapagal-Arroyo administration. A January article of the Business World revealed that Malacanang hinged its job generation plan on developing agribusiness lands (more of agriculture) and propping up micro businesses to become small and medium enterprises (SMEs). Agriculture and small to medium enterprises historically employ the bulk of the country’s labor force.   

Added to this, the Arroyo administration aims to attract foreign investors by providing tax incentives and offering cheap labor in the form of labor flexibilisation.  

Legalizing contractualization

Analysts have described labor flexibilisation as the preferred labor setup in today’s globalizing economy. This set-up was first implemented in export processing zones and industrial parks.

Macapagal-Arroyo rescinded Department of Labor (DOLE) Order No. 10-97, only to replace it with Order No. 18-02.  DOLE Order No. 10-97 provided a list of jobs that cannot be contracted.  In doing so, it allowed the contractualization of jobs outside of the list.  DOLE Order No.18-02 declared the practice of contractualization as legal for as long as it does not fall within the category of “labor only contracting”, which is measured by the amount of capital and control of the supposed employer.  It also equated security of tenure to having a definite contract instead of the regular and permanent status previously enjoyed by workers who have worked for more than six months. Lately, the Arroyo government initiated moves to revise the Labor Code to reinforce and legalize the various practices of labor contractualization.

Contractualization means replacing regular workers with temporary workers who receive lower wages with no or less benefits. These temporary workers are sometimes called contractuals, trainees, apprentices, helpers, casuals, piece raters, agency-hired, project employees, etc. They do the work of regular workers for a specified and limited period of time, usually less then six months. The work they do is “desirable and necessary” for the company’s survival, but they never become regular employees even if they get rehired repeatedly under new contracts.

Citing government data from 1990-94, a research by the Asia-Pacific Research Network (APRN) in 2000 revealed that the combined share of casual, contractual and part-time workers in total enterprise-based employment was between 14-15 percent. It went up to 18.1 percent from 1994 to 1995. By 1997, the figure has reached 21.1 percent, meaning that for every five workers one is a casual, contractual or part-timer worker. 

The data excluded other forms of contractual labor arrangements such as subcontracting, agency-hiring, job-out, home work and other schemes that deny workers their security of tenure.

In the more than 20 branches of Shoe Mart (SM), one of the biggest chain of shopping malls in the country, in 2002, nine out of ten workers are contractuals, hired either through an agency or by a concessionaire, said Maristel Garcia, spokesperson of the Sandigan ng mga Manggagawa sa Shoemart, the union of SM employees.

Contractuals abound in export zones and industrial parks around the country, such as those in Baguio City, Cavite, and Laguna. A survey of APRN covering 14 unions under the Kilusang Mayo Uno (KMU or May 1st Movement) in the National Capital Region revealed that contractual workers comprise 67 percent of the workforce at the time.  This is despite KMU’s efforts at protecting job security and benefits. 

“It is true that contractual labor is now really extensive. Easily seven in every 10 companies practice contractualization,” Donald Dee, president of the Employers Confederation of the Philippines, told Manila Times in 2003. “We know for a fact that contractualization is meant to avoid regularization,” admitted Dee.

Today the share of contractuals in the total workforce may even be bigger. For example, after SM management practically crushed the union by terminating all striking union workers in 2003, Garcia said, it stopped regularizing workers and was able to employ more contractuals.

In other large firms, threats of retrenchment complemented by early retirement schemes resulted in a stripped-to-the-core number of regular workers. The Philippine Long Distance Company (PLDT), the country’s largest telecom company, was able to reduce its workforce from 14,000 to 10,000. Its rank and file union membership has dwindled from 7,000 to 4,100.  It was also able to reduce the 3,000-member supervisory union to just about 2,000.  The rest of PLDT’s  required manpower comes from contractual workers who are paid piece meal, per phone installation or telecom services sold.

In Japanese-owned Asahi Glass Corporation, the ranks of regular workers have been decimated after a wave of forcible retirements. Retired workers were subsequently rehired as contractuals.  At present, there are five contractual employees for every regular worker. 

Intensified exploitation

Contractualization further depresses the already low wages of Filipino workers. APRN’s research revealed that at least 4 out of 10 contractuals are paid below the mandated minimum wage. Contractuals spend as much as PhP500 to PhP1,000 in application requirements and cost of uniforms and other work paraphernalia such as sewing kits for garments workers.

While performing the work of regular workers who earn a bit more than the minimum wage on account of their previous collective bargaining agreements, SM contractuals for instance don’t get to enjoy the same benefits.

Contractuals cannot refuse overtime work, which during the peak season means working for more than 16 hours continuously. In some Bulacan industrial parks, children help their parents fulfill their quota working well into the next morning to rush products for shipment during peak seasons.

APRN also found that contractualization further brings down the workers’ self-esteem. As a whole, management looks down on workers but their biggest contempt is reserved for contractuals. Bosses tend to heap more verbal abuses and workload on their contractual workers. 

Two opposing camps in Congress

Representatives from Anakpawis (Toiling Masses), Bayan Muna (People First) and Gabriela Women’s Party, as well as other concerned senators and congressmen, have filed House Bill 5996 providing for the regularization of contractual workers and the prohibition of labor contractualization. In 2004, they worked for a P50 ($0.97 at $1 : P51.125) wage hike for contractuals. They also tried to plug loopholes in the Labor Code that open the workers to exploitative setups in the name labor flexibilisation.  .

On the other side, the administration sponsored Senate Bill 2570 and 6031 providing for flexible work arrangements.  The DOLE also released orders legalizing contractualization and other flexible work arrangement such as the compressed workweek, which allows companies to extend the work day beyond eight hours without overtime pay.  .

At present, DOLE and employers’ groups are batting for amendments to the Labor Code consistent with the recommendations of the 2000 Labor Code Review Project, which reinforces and legalizes existing practices of labor contractualization, lengthens apprenticeship periods, sets hourly wage rates, allows flexible working hours, provides for shortened breaks and a compressed workweek, and redefines the status of workers.   .

Thus, in Congress there are two conflicting proposals to amend the Labor Code, one coming from administration legislators, DOLE and employers’ groups and the other from progressive party-lists and labor federations. Employers and the DOLE are openly campaigning for their version, throwing the specter of firms closing down and abandoning the country if workers’ wages and benefits are slightly improved.

Workers can only hope that their version be heard in Congress. But then again, they may have to start from redrawn battle lines – the few representatives they have in Congress are currently under persecution by the Arroyo administration. Bulatlat




© 2006 Bulatlat  Alipato Publications

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