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Interesting and intriguing sound bites on “Contractualization”

THE PHILIPPINE Daily Inquirer’s Marlon Ramos and Tina Santos quoted in their August 5 article President Rody Duterte as saying, “I’m telling this to you. I’m just issuing a warning. You choose: Stop contractualization or I kill you.”



The President said this in his speech before members of the Parish Pastoral Council for Responsible Voting in Malacañang last week’s Wednesday night.

“I cannot inspect every business across the Philippines,” Mr. Duterte said. “If we have no power to close down [the business], I will go there and shoot [the owner]. Then it’s over. The business is now closed down.”


“[But] that’s just hyperbole,” the President said, eliciting laughter from his audience, which included several Catholic priests and nuns.

As a writer, I like figures of speech, like hyperboles and metaphors. They evoke intensity. But sometimes, the audience could take the writer or speaker literally.

Review of job contracting

As we write, the Department of Labor and Employment (DOLE) is the busiest government agency. This week and next, LLCOs (labor law compliance officers) all over the country are being trained in Manila, Davao and Cebu on “How to Detect Labor Only Contracting.” After the training, DOLE will unleash the full force of the LLCOs to inspect companies across several industries, in compliance with the President’s directive to bring down to 50 percent the number of contractual workers in one year’s time.

A parallel activity is the review of the Department Order No. 18-A, the implementing rules and regulations of Articles 106 to 109 of the Labor Code of the Philippines.

Wednesday last week, DOLE Secretary Bello said there is a need to carefully study the proposal of some labor groups to criminalize the hiring of contractual workers. “We have to study that very, very carefully because it might be too harsh to criminalize contractualization,” said Bello. “To me, initially, off hand, my position would be just the administrative penalty – like closure and cancellation of permit,” he said.

Meanwhile, Bello said that one company engaged in manpower services employs over 500 people. Many of the workers were complaining that they were underpaid, and the company therefore is facing possible closure. “The complainants came to us, saying they were underpaid. Their salary is P200 per day. This is clear violation of the minimum wage law… If these are verified, we will enforce the penalty as provided by law,” he said.


Employer consultations

Employer groups, among several social partners, were consulted last August 10 on issues pertaining to job contracting. Labor Undersecretary Ciriaco Lagunzad III ably handled the consultation with employers represented by Donald Dee (Employers Confederation of the Philippines), Jesse Francis Rebustillo and Noel Balsicas (People Management Association of the Philippines), Mary Ng and Stanley Sy (Federation of Fil-Chinese Associations of the Phil.), Ernie Cecilia (American Chamber of Commerce), Peter Wallace (Australia-New Zealand Chamber of Commerce, and Paul Santos (Philippine Retailers Association). Other organizations represented were the Philippine Franchising Association, Philippine Constructors Association, and the Federation of Philippine Industries.
PMAP President Jesse said, “We want to amplify job contracting rules to cover various focus areas: outsourced services, non-core services, O&M and tolling operation, project employment, fixed-period employment, and relievers for absences or temporary volume surge. These areas require different guidelines that are not now covered by DO 18-A.”

USec Lagunzad, together with Director Benjo Benavidez of DOLE-BLR, briefed the group on the initiatives that DOLE is doing to “heed the President’s call to reduce, and later eradicate, the pernicious effects of contractualization.” In tackling the difficult issues, Lagunzad was a picture of complete poise, composure and perspective. He said, “As we protect the workers’ welfare, we do not want our programs to bring out unintended consequences that will adversely affect the workers whom we wish to protect, if by doing so we prejudice the business.”

“Endo” and “5-5-5”

ECOP President Dee and I sought clarification on what the new Administration wants to stop in job contracting. Director Benjo clarified that at the outset DOLE wants to strictly enforce the law on job contracting. He said, “Labor Only Contracting (LOC) is prohibited by law. And so is the practice where employees are hired for not more than five months only in order to avoid making them regular employees. Then another set of employees would be hired for another five months. The relationship in this type of engagement can be either bilateral (direct hire) or trilateral (hiring through job contractors).”

Mary Ng wanted a clarification on what the LLCOs will be looking for when they conduct their inspection, so that the principals and job contractors can correct whatever lapses they have in their operation. After the meeting, NCR Director Nelson Hornilla said, “I am willing to entertain principals and job contractors who seek our help to correct their lapses in implementing job contracting rules. Soon or late we shall meet them anyway, as we go full blast on our inspection.”

Moving forward

The fuzz in contractualization should not end with the “endo or 5-5-5” issue. Government and business must continue to collaborate so that business can increase its capacity to provide more jobs. Labor policies must be progressive, not retrogressive, and must promote productivity as the means to help workers increase their income – not longevity or seniority, not working overtime to do jobs that can be done in lesser time, not across-the-board annual wage increases but real productivity gain-sharing. There should be skills upgrading so that workers can perform higher-paying jobs. Social protection must be enhanced, but workers must be willing to share the expense in exchange for bigger benefits. Those who contribute more should get more in return.

I salute USec Lagunzad and Director Benjo for the short but comprehensive dialogue with social partners. Everybody said their piece, including Peter, Paul and Mary (Wallace, Santos and Ng, that is.) They should have sung “Puff” or “Blowin’ in the Wind.”
(Ernie is the 2013 Executive Director and 1999 President of the People Management Association of the Philippines (PMAP); Chair of the AMCHAM Human Capital Committee; and Co-Chair of ECOP’s TWG on Labor and Social Policy Issues. He is President and CEO of EC Business Solutions and Career Center. Contact him at

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TAGS: Contractualization, Endo, President Rody Duterte
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