Unions continue to rage against the ‘endo’ issue

By Rene E. Ofreneo, Businessmirror – Apr 11, 2018

In 2017, the Department of Labor and Employment (DOLE) issued Department Order No. 174, which tightened the rules on the registration of “legitimate” manpower agencies, now generally referred to as “service contractors”. Capitalization was increased to P5 million (from P3 million) and registration fee, from P25,000 to P100,000. Another new rule: failure of a service contractor to provide employment to an employee after the end of a “Service Agreement” entitles the employee to the payment of separation benefits. These rules failed to impress the labor federations. They kept asking: where is Duterte’s promise to end contractualization?

After the issuance of DO 174, DOLE focused its efforts on tighter labor inspection. As a result, thousands of short-term hires were freed from their non-regular status. The latest development: DOLE’s dramatic announcement that some 7,000 Jollibee employees to be regularized. Still, the labor feds are not impressed. They continue to ask: where is Duterte’s promise to end contractualization? Where is the Executive Order to end the “endo” problem?

The anger of the trade unions over the “endo” issue is understandable. Unionism and collective bargaining have been on the retreat since the 1980s. In its “diagnostics” on “decent work” in the Philippines for 2017, the Philippine Office of the International Labor Organization reported that the number of workers covered by existing CBAs totalled 200,476 in 2016. This is less than one percent of the 42 million labor force! This is also much less compared to the 287,450 workers recorded to be enjoying CBA benefits in 1979 when the Philippine labor force was much smaller at around 28 million.

The trade unions blame the decline on the endless efforts of employers to resort to short-term “endo” hiring arrangements in order to avoid unionism and paying benefits due to regular workers. This, they claim, is facilitated by the liberal rules on “legitimate job contracting” versus “prohibited labor-only contracting” or LOC. The unions complain that agency workers, hired and deployed by third-party service contractors or “manpower agencies” as “project employees”, often outnumber the direct hires in various service industries as well as in labor-intensive manufacturing industries.

Employers and cooperating service contractors also take advantage of the Labor Code provision allowing firms to subject workers to six-month probation, beyond which he/she is entitled to regularization if the job is “regular and necessary” to the business. To avoid the mandatory regularization, some companies and placement/manpower agencies simply put short-term workers on a “5-5 arrangement”, meaning they are hired for only five months without any intention of regularizing these workers.

And yet, under the Constitution, all workers are supposed to enjoy the same rights when it comes to membership in a union and advancement of their collective interests. Section 3, Article XIII, mandates the State to “guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law”. No exceptions given. The modifying “in accordance with law” refers only to the exercise of the right to strike. Similarly, under the ILO Convention 87 (freedom of association) and ILO Convention 98 (collective bargaining), these rights are considered universal.

So why can’t the government come up with laws and rules enabling all the non-regular workers – project, casual, probationary, etc. – to join or form unions and bargain collectively? One reason why unionism is enjoyed today by a minority is that existing laws and jurisprudence reserve this right to regular or permanent workers. If workers are not regular, they are automatically excluded from unionism and collective bargaining. This explains why many unions spend so much time bargaining for the “regularization” of the non-regulars, which is often denied by employers through the “endo” system. Countless cases handled by the court system on the inclusion/exclusion of workers in the CBA revolved around the determination of their employment status as regular or non-regular as well as on who is the real employer: the manpower agency or the contracting principal. Managerial and so-called “confidential” rank-and-file employees are also explicitly excluded.

In Japan, the non-regulars called “dispatched workers” and “part-time workers” are able to either join existing unions of the regulars or form unions of their own. This is one explanation why the Japanese trade union movement is able to stop the downward decline of union membership. Can DOLE come up with rules allowing the union formation of non-regulars or their affiliation in the union of the regulars? If the non-regulars have separate unions, can DOLE come up with rules on how to register the CBAs of the non-regulars?

The point is that non-regular workers have equal rights under the Constitution. They do not enjoy those rights because the exercise of those rights does not have enabling laws and rules. Thus, we have an ironic situation: only a tiny minority of workers, who are better paid, enjoy the rights articulated by the Constitution. And yet, the non-regulars, who have less protection at work and who constitute the overwhelming majority in the formal sector, do not enjoy the same rights.

Meanwhile, some progressive unions have been trying to organize the non-regulars despite the absence of formal labor laws and rules recognizing the rights of these workers. They have been collaborating with enlightened academics and civil society organizations (CSOs) to advance “social movement unionism” or SMU. The SMU means the protective umbrella of the union covers all workers, regular and non-regular, formal and informal. They also try to innovate in terms of organizing and worker advocacy. Thus, union organizers in the non-unionized call center/BPO sector are now talking on the need to shift organizing and representation framework by helping call center agents and BPO programmers, mostly hired on a “project-to-project basis”, form “professional IT associations” based on skills. This, in a way, is a revival of skills-based guild organizing.

There are also organizers of workers belonging to the vast informal sector or informal economy. In Congress, there is a proposal for a “Magna Carta for Workers in the Informal Economy” (MCWIE), which seeks to establish a system of registering organizations of informal workers at the local and national levels. This MCWIE proposal has been languishing in Congress for more than a decade already, that is, since the 13th Congress.

But despite the absence of MCWIE and other enabling laws, these CSOs and people’s organizations (POs) have been organizing different segments of the labor force, e.g., migrants, domestic workers, tribal people, home-based workers, non-wage transport workers, ambulant vendors, coastal fisherfolks, landless rural poor and so on. The problem, of course, is that there is no system of registering and recognizing the efforts of these CSOs and POs. Without a formal legal standing, the organizations of informal workers and non-regulars in the formal labor market face difficult challenges in asserting their basic workers’ rights at the work place, including the right to be heard and be given a seat at the policy table.

Overall, we have a sad situation where trade unionism is limited to organizing qualified workers in order to forge a CBA contract on behalf of a minority in the formal sector. The Labor Code provisions on union organizing and collective bargaining have become meaningless to the majority of workers in the small formal sector as well as the larger informal economy.

The Labor Code, promulgated in 1974, clearly needs an overhaul. The country needs a more inclusive industrial relations framework, one that can help secure and guarantee the rights of all workers, with no exception.