Employers not happy with ‘endo’ plan

The Employers Confederation of the Philippines (Ecop) has cautioned the government on the possible repercussions of the proposed “win-win solution” purported to end the abusive practices of labor contractualization and the controversial end-of-contract (endo) scheme.

“We will support the proposal but we have to recognize the need to compromise or soften [it] up to make it more acceptable to our partners in labor,” Ecop president Donald G. Dee said.

Dee explained that under the proposed win-win structure, the service providers and agencies must hire their employees on a permanent basis and provide them with full benefits, including a separation or retirement package. If this happens, however, the usual 10-percent additional cost usually charged by the agencies would not be enough to cover the additional expenses.

“The [additional cost] is a main issue to me. If you’re saying that the agency will guarantee the retirement pay or separation pay, that means there will be an add-on—it’s not going to be free. So if the service providers are getting 10- to 12-percent additional charge, that’s not enough. The [mark-up of agencies in providing the services] should be about 30 to 40 percent to cover for all the additional expenses,” Dee told reporters Monday.

“We have to adjust the proposal. It’s good but it cannot be one sided in the sense that only the agencies are made to shoulder everything. The reality is that agencies don’t have the financial capabilities to pay for the additional costs,” he added.

When additional costs are charged by the providers, it will also mean additional costs for the principals or the companies currently outsourcing non-core services from the agencies. It would then become uncompetitive for the companies and there would be a need to balance that, he added.

“At the end of the day, you will see that the manufacturers cannot or will not go through the agencies because it will no longer be competitive for [their operations],” Dee added.

Last week, Trade Secretary Ramon Lopez and other government officials disclosed the planned “win-win structure”, which would allow companies to either directly hire employees or outsource certain services from accredited providers.  Effectively, the main difference between the proposed win-win structure against the current practice was that the worker would be regularized or granted permanent status under the service provider. Under the current practice, workers can lose their jobs if the contract between the companies and service providers is terminated.

Dee also expressed concern that if the proposal was not tweaked or amended, there might be a possibility that labor-only contracting, which is currently illegal, would be institutionalized. This, he said, was where the Department of Labor and Employment must step in and ensure that the service providers would be registered and accredited and that they would be the one to supervise, provide capital and provide the necessary equipment for their respective hires.

The Ecop chief stressed that the simplest solution to end “endo” or the 5-5-5 scheme was to just follow the existing Labor Code. “The endo scheme is illegal and therefore must be stopped. But my proposal is simple: We just need to follow the Labor Code. You can have contractuals because there really are industries that do projects on a contract basis like construction.

But the DOLE should guarantee to us that if we follow the rules of engagement, for example, when we hire and terminate people, we should be given due process as provided under the Labor Code,” he added.