Ending ‘endo’ and ‘5-5-5’: what’s wrong with DoLE’s ‘win-win solution?’

by Carmel V. Abao, Businessworld, Feb 14, 2017

The marching orders of President Duterte are clear and unequivocal: end “endo” and “5-5-5.”

“Endo” and “5-5-5” are colloquial terms for illegal contractualization where the “end of contract” is deliberately and repeatedly set by employers at five months — often with the aid of third party service providers — to avoid the regularization of workers. As per the Philippine Labor Code, a worker must be granted regular status after six months of work.

Thus far, President Duterte’s order has been translated by the Department of Labor and Employment (DoLE) into a proposed “win-win solution.” Said solution was initially conceptualized and recommended by the Department of Trade and Industry (DTI) and the Employers’ Confederation of the Philippines (ECoP). Labor groups, however, have unanimously rejected the DoLE-DTI-ECoP proposal.

DOLE’S PROPOSED SOLUTION

DoLE’s proposed solution was first articulated by DTI Secretary Ramon Lopez who posited that the problem was not contractualization per se but the failure of third party service providers to comply with labor laws. The solution thus was to mandate the regularization of workers upon hiring by third party service providers. These providers or “contractors” should hire regular, not contractual workers, and, pay workers the same benefits as regular workers (including SSS, PhilHealth, 13th month pay and retirement and separation packages). Moreover, employment should not be co-terminus with the service provider’s contract with the principal company. The service provider will be obliged to continue paying salaries and benefits of workers until they are redeployed and/or pay the workers the legally mandated separation pay if redeployment is not possible.

In a number of news reports in September and October 2016, DTI Secretary Lopez was quoted as saying that the proposal was a “win-win” solution because “for management, we assured them we were keeping the flexibility of legitimate contractualization (and) for the labor groups, we have assured them that the right to form unions would stay.” Still according to Secretary Lopez, the proposed solution “will just be a question of transferring the relationship of employer-employee from the principal and the worker, to the worker and service provider.”

ECoP President Donald G. Dee was also reported to have argued that the proposal “answers the concerns of everybody that workers are given security of tenure and they’re protected. On the part of business, it will cost them much more, which they should, so at least they’d be able to outsource.” The Federation of Filipino Chinese Chambers of Commerce and Industry, Inc. or FFCCCII and the Philippine Association of Local Service Contractors or PALSCON were also reported to have declared support for the “win-win solution.”

A few weeks after said pronouncements, DoLE Secretary Silvestre Bello claimed that DoLE would look into the proposals of DTI and employers’ groups as well as those of labor groups who, by then, were already opposing the win-win proposal.

During the High Level Dialogue between representatives from employers and labor groups held on Oct. 25, 2016, Bello reportedly declared that “we will decide whether we will end contractualization, allow contractualization, or come up with a balance of the two positions.”

As of this writing, the win-win proposal is embodied in a proposed, new DoLE Department Order (DO) that seeks to replace the previous government’s DO 18-A.

LABOR GROUP’S REJECTION

Practically all labor groups in the country have rejected DoLE’s win-win proposal.

According to Renato Magtubo, chairperson of Partido Manggagawa or PM and spokesperson for NAGKAISA, the broadest labor coalition in the country today, composed of PM, Trade Union Congress of the Philippines or TUCP, Sentro ng Nagkakaisang Progresibong Manggagawa or SENTRO, Bukluran ng Manggagawang Pilipino or BMP and the Federation of Free Workers or FFW, contractualization is an “epidemic” and DoLE’s solution is “not enough to stop this epidemic.” The proposal, Magtubo says, hinges on the “good faith” of employers and third party providers, which, he further argues, is recognized even in the previous DO 18-A but has never been fully realized — because of the culture of “impunity” where government is unable to enforce labor laws, and, employers are able to get away with abusive labor practices.

Magtubo also doesn’t believe government’s claim that a new DO will promote unionization of contractual workers because “workers without job security will not opt to unionize for fear of losing their temporary jobs.” The main problem, he says, is the “trilateral relationship” that deliberately obscures the employee-employer relationship through the presence of a third party “employer” — which is actually meant to “cut production costs” and, therefore, “favorable only to the principal companies.”

This sentiment is echoed by Wilson Fortaleza, deputy secretary general of PM. Fortaleza claims that the biggest problem in the win-win solution is the concept that labor needs “middlemen.” Workers are “free to sell labor,” Fortaleza says, but only “their labor” and “not the labor of others.” Fortaleza, along with NAGKAISA, has been advocating for a “Security of Tenure” Law that will eliminate the need for such middlemen. Said proposed law is now HB 4444, sponsored by TUCP party-list Representative Raymond Mendoza. The bill aims “to totally prohibit contractualization and all its forms including all fixed term employment.”

The Kilusang Mayo Uno (KMU) has also rejected DoLE’s win-win solution. According to KMU Chairperson Elmer Labog, as quoted in a post on KMU’s official Facebook page, dated Dec. 15, 2016, “Bello is missing the point. Contractualization has proliferated precisely because our laws allowed it to. The DoLE could end it by junking laws and policies, especially the DO 18-A and the Articles 106-109 of the Labor Code, which has legalized this gross violation of workers’ rights.”

PRESIDENT DUTERTE’S END GAME?

At the end of the day, the DoLE proposal is not enough because it does not fully implement President Duterte’s marching order. The full implementation of the “end endo-555” policy is important — even to the President — because it is one of those few policies (if not the only policy) that exhibits government’s direct and supposed bias for the working class. The class bias of an “end endo-555” agenda cannot be denied and, therefore, any compromise on said agenda compromises the class bias of the President. Concretely, if employers and workers disagree on a proposed “win-win” solution, as they obviously do now, whose voice will President Duterte ultimately follow?

From a governance perspective, contractualization is one of those issues that reveal the complex dynamics between political and technical requirements, between desirability and feasibility, and, between short term and long-term outcomes. Is job security and decent work really incompatible with the survival of firms?

Under the “win-win” proposal, can everyone involved really win? Will allowing principal companies to contract out their labor needs to third party providers result in better incomes for the companies, the providers, and the workers or will it result only in cost-cutting measures for the principals (who no longer need to directly hire or manage workers)? Will the third party providers thus be compelled to keep regular workers even when they have no new contracts or no new principal companies where their workers can be redeployed? Without new or continued contracts, where will the third party providers get the funds to sustain the employment of these so-called regular workers? Will the win-win solution actually end contractualization or will it just mean that workers can get some benefits as they jump from one non-secure job to another?

From an ideological perspective, the problem with DoLE’s win-win solution is that it is embedded in the logic of free market competition where there are always winners and losers — never all winners. President Duterte may have to decide which section of society he wants to strengthen with an “end endo-555” policy: labor or capital? His self-proclaimed “socialism” will be tested with this issue.

Carmel V. Abao is a faculty member of the Political Science Dept. of the Ateneo de Manila University. She teaches political theory and international political economy.