The Philippine Chamber of Commerce and Industry (PCCI) is appealing to the government to settle the issue of illegal contractualization—known as endo—by the end of the year, as foreign investors it has talked to during President Duterte’s visits to China and Japan have raised this as a possible deterrent to future investments.
The Department of Trade and Industry, meanwhile, stands firm on pushing its “win-win solution,” even as this may possibly raise the costs of employers, but assure workers’ security.
For the business chamber, however, the present labor law already suffices, and better implementation is the key.
“The labor law would suffice. The law already states that endo is really illegal, and we also know that there are different types of work that depend on the nature of the business. There’s seasonal, time-bound and project-oriented work; the law provides for that,” said George T. Barcelon, president of PCCI.
Barcelon, who was among the business delegates who accompanied Duterte and his Cabinet in the recent trips to China and Japan, said this issue should be resolved quickly if potential investments are to be realized.
“From my talks with businesses when I went to China and Japan, what they’re saying is that, yes, we’re on the radar and they’re looking at the Philippines as an investment area, but there are concerns—infrastructure and, of course, the labor issue,” he said.
“Is it conducive for investors? Because that is the least they want to have a problem with, that they would come in without a clear labor law. We want this to be settled by year-end,” Barcelon added.
Trade Secretary Ramon M. Lopez clarified that his win-win solution is an improvement of what is already in the law—essentially ensuring that workers employed by third-party contractors (or service providers) are given full benefits.
“The win-win solution is the best solution. This is not illegal endo, which we are against. The solution is about legitimate contractualization, which provides stronger benefits for workers on top of what is provided by law,” Lopez said in a text message.
The DTI chief explained that workers in service providing (SP) companies are deemed as regular and permanent workers, so even if the project of the SP is terminated by the principal, the workers will still be redeployed.
Retirement benefits are also mandatory under the DTI’s proposal.
The issue of endo gained traction during the run-up to the presidential elections when it was raised as a debate issue among the candidates. Duterte, in response to the issue, pledged to stop contractualization.
Voters and citizens are often unaware of the difference between legitimate contractualization and the illegal endo.
The practice of legitimate contracting, or subcontracting, is one where a principal company farms out with a contractor a specific service or job within a definite period.
Endo is a distortion of the legitimate contracting/subcontracting; it is when there is a repeated hiring of employees under an employment contract of short duration or a service agreement of short duration with the same or different contractors.
This endo is done by some principal employers to avoid paying more benefits to workers.
Lopez clarified that per their win-win proposal, the contracting agency will accord both regular and permanent status to the workers they provide to their principals, and not coterminus with the contract with a principal company.
Under the current practice, workers can lose their jobs if the contract between the companies and service providers is terminated.
The Department of Labor and Employment (DOLE), along with the DTI and concerned agencies, has yet to come up with a resolution on stamping out endo, but the trade department has instructed legal service providers early this week to “police their ranks” to comply with the “win-win” solution.
“What is critical now is the compliance of legitimate SPS in giving full benefits to the workers,” Lopez told members of the Philippine Association of Legitimate Service Contractors early this week.
Lopez said the resolution will come in the form of a DOLE department order that will revise the prevailing DOLE DAO 18-A S. 2011.