Endo

by Boo Chanco (The Philippine Star), Apr 13, 2018

There is no such word in the English dictionary. Endo is a word coined in this country to refer to a controversial labor practice that the presidential candidate Rodrigo Duterte promised to end once he is elected president. Two years after, Duterte concedes it is tougher than he thought. But labor unions are hounding him to keep his promise.

Endo stands for end of contract. To go around labor laws that require employers to give their new hires permanent status after six months, they terminate them after five months. This practice saves employers the cost of paying benefits like leaves, overtime pay, and 13th month pay, among other things.

Regularization also means employees can only be fired under specific guidelines and after getting due process. Some employers feel it reduces flexibility to act as business conditions change. Taking this from a macroeconomic perspective, this also makes employers reluctant to hire more people and may partly explain a high unemployment rate.

This is the same problem French President Emmanuel Macron is trying to solve in his recent decrees instituting labor reforms. But French labor unions are violently protesting any such changes and have declared crippling labor strikes nationwide.

In the Philippine context, many large retailers and fast food companies have been accused of engaging labor contractors using “endo” to fill up positions in their organizations. Sales clerks, janitors and security personnel are typical positions contracted out.

Under endo, there is no employer-employee relationship between the firm that is using the worker’s services and the worker. The worker is technically an employee of the labor contracting firm.

The use of endo for some positions is justified mainly by claiming such positions are not inherent to the conduct of the business. A department store is not in the security business. A fast food company is not in the janitorial service business.

But labor unions argue that sales clerks, janitors and security staff are inherent in, for example, a department store business. Try running the business without these people and see how inherent they are.
Labor unions also fight to have all these people in permanent employee rolls because that means more dues-paying members. Many employers don’t like having labor unions because labor disputes easily end up as crippling strikes.

There are, however, obvious exceptions depending on the industry. By the nature of the television business, for instance, some workers are hired attached to a program because there is no telling if the program will be there beyond the first season.

In some export oriented manufacturing operations, they gear up for seasonal demand for products like gift items for the Christmas holidays. There is need for more workers only some months of the year.

Other industries, on the other hand, have practices that are even more abusive than endo. Hospitals are notorious for treating new nurses as worse than slave labor. Claiming the nurses are under training beyond the internship required for graduation, they are even required to pay the hospital a fee for the privilege of claiming experience they can use when they apply for work abroad.

And so the situation is truly a mess. To the credit of the labor department, they have been trying very hard to see the problem from the perspectives of employers and labor. They have carefully crafted what looks like a middle ground that apparently makes no one happy.

But that’s the role of government: to see a situation from the perspective of what is good for society. I would take the current department order on endo as still a work in progress. Labor rules should protect workers without discouraging entrepreneurs from hiring more employees.

Rather than hiring more workers, entrepreneurs can ask employees to render overtime as a reaction to overly strict labor laws. We need to see a sharing of a scarce resource: jobs. At the same time, employers must be fair to those they do need to pursue their businesses.

Indeed, all the claims for corporate social responsibility fall flat if a company is engaged in something like endo. It doesn’t matter if they are barely within the law. The more successful the company is, the more it is expected to be more generous. Never mind the mom and pops that are still struggling.

It is in this light that I think Jollibee is wrong to ask for a reconsideration of an order to regularize some 7,000 employees. I initially gave Jollibee the benefit of the doubt until I found out that McDonald’s Philippines has never used endo.

I bumped into George Yang, the founder of the local McDo franchise at the Tower Club last week. I asked him how the Jollibee ruling affects him. He told me he has never used endo. All McDo employees are direct hires from the start and he has been in the business for decades too.

This demolishes the position of Jollibee because a direct competitor has profitably operated without resorting to endo. Sure… there will be an immediate impact on the bottom line that can affect the stock market price of Jollibee. But that is a momentary loss compared to a permanent damage to Jollibee’s image if they insist on their existing practice.

From the reaction of my friends on Facebook, it seems they were shocked to learn about the Jollibee situation versus McDo. Many are fans of Jollibee like myself. We feel somewhat betrayed. Jollibee owes it to the masa who sustained them all these years and brought them to the top to do what McDo is doing.

Or is Jollibee waiting for President Duterte to angrily order them to regularize? With Labor Day just two weeks away, that’s a risk Jollibee shouldn’t take.