‘DOLE’s no-endo policy unrealistic’

By Cai Ordinario, Businessmirror, Mar 16, 2017

Ending contractualization in the Philippines will take more than the issuance of an order by the Department of Labor and Employment (DOLE), with implementation deemed to be the bigger challenge due to the current labor-market condition, local economists said on Thursday.

Economists made the pronouncement after Labor Secretary Silvestre H. Bello III issued Department Order (DO) 174 on Thursday, which specified more stringent rules on
contractual arrangements.

“The issue is not the order but can we implement it? Also, with unemployment and underemployment remaining high in urban areas, this will be a challenge,” Ateneo de Manila University EagleWatch Senior Fellow Alvin Ang told the BusinessMirror.

University of Asia and the Pacific School of Economics Dean Cid Terosa agreed with Ang, saying the government cannot “simplify” the labor market into “just firms and workers”.

Terosa said there are different types of firms and workers and that demand and supply conditions are not the only considerations in crafting policies for the labor market. “[The order] is a cause for concern. While it seeks to improve the quality of work of Filipinos, it appears oblivious to the realities of the labor market and firm-level operations,” he said.

“I’m certain that affected parties would protest in the coming days. Productivity might dip and underemployment could rise in the short run,” Terosa added. Bello signed DO 174, or the Rules Implementing Articles 106-109 of the Labor Code, after months of negotiations between labor groups and companies.

In a statement, Bello said the DOLE would have wanted to have a “consensus department order” but the nine-month-long dialogue between the opposing groups did not result in a “happy compromise”.

“Given the impasse and taking into consideration the social and economic impact of prolonged policy uncertainties, I think it would be for the benefit of the greater public if the department through the secretary of labor would finally put closure to this issue, and exercise the power and discretion given him under the law,” he added.

The DOLE said the new department order prohibits labor-only contracting; farming of work through “cabo”; contracting out of job or work through an in-house agency; contracting out of job or work through an in-house cooperative, which merely supplies workers to the principal; contracting out of a job or work by reason of a strike or lockout, whether actual or imminent; and contracting out of a job or work being performed by union members and such will interfere with, restrain or coerce employees in the exercise of their rights to self-organization as provided in Article 259 of the Labor Code, as amended.

It also prohibits contractors and subcontractors to require their employees to perform functions which are currently being performed by the regular employees of the principal; sign, as a precondition to employment or continued employment, an antedated resignation letter; a blank payroll; a waiver of labor standards including minimum wages and social or welfare benefits; or a quitclaim releasing the principal or contractor from liability as to payment of future claims; or require the employee to become member of a cooperative; repeated hiring of employees under an employment contract of short duration.

The DO also prohibits the signing of a contract that fixes the period of employment to a term shorter than the term of the service agreement, unless the contract is divisible into phases for which substantially different skills are required and this is made known to the employee at the time of engagement; and such other practices, schemes or employment arrangements designed to circumvent the right of workers to security of tenure.

It shortens the validity of the certificate of registration of contractors and subcontractors from three to two years and increases the registration fee from P25,000 to P100,000.

To ensure the effective implementation of DO 174, Bello directed Labor Undersecretaries Joel Maglunsod and Bernard Olalia to review the enforcement framework of labor laws and standards under DO 131-B, Series of 2016, or the Revised Rules on Labor Laws Compliance System.

He also requested President Duterte for the creation of 200 plantilla positions for Labor Laws Compliance Officers, which will be deployed in the DOLE Regional Offices. Maglunsod and Olalia will supervise these regional inspection teams.

Bello said the DOLE will push through its plan to deputize labor groups to take an active part in inspection, thus assessing the more than 90,000 establishments in the country targeted this year.

Groups, such as the Philippine Association of Legitimate Service Contractors Inc., had warned that outlawing labor contractualization may increase the ranks of the unemployed. Manpower Group Solutions said the most affected will be the construction sector, where 71 percent of laborer are considered end-of-contract workers.

But labor groups said Filipino workers are suffering the “serious social consequences” of employment arrangements, which are skewed against them, such as the illegal practice of labor-only contracting.