Trade Secretary Ramon Lopez warned that delays in the implementation of the government’s proposed “win-win solution” to abusive practices of labor contractualization and the end-of-contract (endo) scheme may lead to further job losses.
The proposal, which was bared by government agencies last month, was supposedly meant to ensure workers’ security of tenure.
“One must understand that legitimate contractualization is different from the illegal endo schemes wherein workers are hired temporarily for a five-month contract and transfer again to another entity for another five-month contract. That is illegal. Legitimate contractualization is allowed and accepted,” Lopez said.
Lopez made the clarification as he learned that certain groups did not agree to the proposal or were not convinced of its benefits.
Under the proposal, workers would be regular and permanent employees of the third party service provider who would be mandated to provide the required benefits. Deployed workers should not be co-terminus with the agency’s contract with the principal company.
“Forcing the regularization of employees will simply lead to companies regularizing fewer employees, as they would lose the flexibility of hiring less during off-peak seasons and there are functions that they would rather outsource so they could focus on branding and growing the business. Legitimate contractualization is allowed in the law and the security of tenure and benefits are even enhanced in our proposed win-win structure,” Lopez said.
Last month, the Employers Confederation of the Philippines cautioned the government about the possible repercussions of the proposed “win-win solution.”
Ecop president Donald G. Dee cited the need to compromise or soften the proposal to make it more acceptable to employers.
He said that under the proposed win-win structure, the service providers and agencies must hire their employees on permanent basis and provide them with full benefits. If this happens, however, the usual 10-percent additional cost charged by the agencies to their clients 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 imposing 10 to 12 percent in additional charge, that’s not enough. The [mark-up of the agencies providing the services] should be about 30 to 40 percent to cover all the additional expenses,” Dee explained.