‘Bill on security of tenure could wipe out MSMEs’

In Photo: Sergio R. Ortiz-Luis Jr.

The umbrella group of Philippine exporters has raised grave concerns regarding the substitute bill on security of tenure and contractualization, saying its provisions support “business-unfriendly labor policies” that threaten to obliterate the country’s micro, small and medium enterprises (MSMEs).

This as the House of Representatives approved on second reading House Bill (HB) 6908 seeking to strengthen the security of tenure of employees in the private sector as its response to address the problems of labor-only contracting and endo (end of contract).

Sergio R. Ortiz-Luis Jr., president of the Philippine Exporters Confederation Inc. (Philexport), said in a position paper that the organization fears that HB 6908 is “promoting business-unfriendly labor policies [that] will run contrary to government’s objective of inclusive and sustainable growth.”

Like the Employers Confederation of the Philippines, Philexport strongly objects to the “many restrictive provisions” of the bill, particularly as MSMEs “are threatened to be wiped out should the current version of this bill passes.”

“The scenario gets worse considering the millions of direct and indirect workers mostly in the countryside who are dependents of our members,” Ortiz-Luis warned.

The trade leader also said Philexport finds that “many provisions in the bill are inconsistent with the fundamental legal and constitutional principles and doctrines on contracting and security of tenure.”

Ortiz-Luis further pointed out that no market economies in Asia, including China and Vietnam, impose “such arbitrary measures that would suppress job contracting and outsourcing, as well as coerce enterprises on pain of penal sanctions, to provide permanent and regular employment for all types of workers, unskilled or unskilled, regardless of the need for their services, whether temporary, casual, contractual or fixed term.”  While a constitutionally guaranteed right of the employees, security of tenure “does not, however, mean perpetual employment for the employee,” he stressed.

“This is because our law, while affording protection to the employee, does not authorize oppres­sion or destruction of an employer. It is well settled that the employer has the right or is at liberty to choose who will be hired and who will be denied employment.”

If it really wants to break the cycle of unemployment and poverty, Ortiz-Luis said the government “should put a stop to the overregulation of the labor market…and should instead provide a friendly policy environment to investment where enterprises can thrive to create wealth and jobs.  As it is, we do not have enough jobs to absorb qualified people.”

Specifically on MSME-exporter issues, Ortiz-Luis pointed out that Filipino MSMEs, whom he described as mostly resource-challenged and operating on survival mode against heavily subsidized foreign competitors, have managed to remain afloat amid economic volatility, precisely because of their flexibility to hire, rehire or engage workers, including housewives and workers without the necessary education, training and skills. It is impractical and costly for the enterprise to maintain workers beyond what it needs, the statement explained. “The highly competitive trade environment [in] which MSMEs operate requires just-in-time production. Under this setup, it will be a losing proposition to maintain so many number of permanent workers who will be doing nothing on lean months.”

Ortiz-Luis also noted how outsourcing has been an important source of industry competitiveness worldwide, with companies focusing on their core competence while outsourcing the other tasks to other parties or partners.

“Within this context, we continue to uphold the law and labor policies, since our foreign buyers are very strict in ensuring the social compliance of our exporters. Otherwise, they will give the orders to other suppliers who are compliant,” Ortiz-Luis said.


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