Investors can now drop their wait-and-see stance when it comes to their decision to expand operations in the Philippines after President Duterte officially dropped his plan to issue an executive order (EO) prohibiting contractualization, the country’s trade chief said on Thursday.
In an interview with the BusinessMirror, Trade Secretary Ramon M. Lopez forecasted investments to come in abundance with the President’s decision to not issue an EO banning contractual employment. Duterte’s insistence to permanently outlaw contractualization is holding back investors from expanding their operations in the country.
“They will surely be happy with the President’s announcement he will no longer sign the EO against contractualization. We do expect the President to make more stringent the implementation of the Labor Code and labor laws, which is what we are seeing right now,” Lopez said in Filipino and English.
He branded the decision as a “good move,” saying the President finally realized the limitations of the Executive branch to prohibit contractualization given that it is legal under the Labor Code. “I think we have been saying that it is so hard to come out with a new EO that cannot deviate from the law and yet satisfy the labor sector,” the trade chief added.
For Lopez, Duterte has already made good with his campaign promise to labor groups when the Department of Labor and Employment (DOLE) issued March of last year a department order (DO) prohibiting a number of fixed-term arrangements. DO 174 outlaws labor-only contracting; farming of work through “cabo”; contracting out of job or work through an in-house agency; contracting out of job or work through an in-house cooperative, which merely supplies workers to principal employers; contracting out of job or work by reason of a strike or lockout, whether actual or imminent; and contracting out of job or work being performed by union members and such that interferes with, restrains or coerces employees in the exercise of their rights to self-organization, as provided in Article 259 of the Labor Code, as amended.
“I think the more important thing is we have a very good labor law. Of the same level of importance are the implementation of these labor laws and the direction the President wants to traverse, which is to ensure that there will be no illegal contractualization, such as the ‘5-5-5’,” the trade chief said.
Lopez cited as an example the string of regularization orders from the DOLE, including the directive to make permanent almost 6,500 workers for fast-food chain Jollibee Foods Corp. The move, according to the labor department, is part of its persistent inspections of popular food chains in line with its crackdown against illegitimate work arrangements.
However, Lopez opposed Malacañang’s decision to relay the baton to Congress on the amendment of the Labor Code. He said: “Frankly, there is no need to change the country’s highest labor law, except for maybe an updating of some business models.”
Scuttled EO
Malacañang said on Thursday that Duterte will no longer issue an EO on endo or labor-only contracting. Presidential Spokesman Harry L. Roque Jr. also said the President has already complied with his campaign promise to end endo and 555, which refers to the practice of hiring workers for a period of five months only to avoid giving them benefits and making them regular employees.
“The position of [Labor] Secretary [Silvestre H.] Bello [III] now is it is better to leave the matter now of endo to Congress. And I have also been informed by the Department of Trade and Industry that, actually, the President has already complied with his election promise—to do away with 555, endo,” Roque said.
According to the Article 281 of the Labor Code, probationary employment shall not exceed six months from the date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The same article also stated: “An employee who is allowed to work after a probationary period shall be considered a regular employee.”
In his previous statements, Roque also clarified that what the President promised is to end endo and 555 and not contractualization.
“The matter is now left to Congress, although let’s see if it will be certified as urgent,” he said.
Roque also noted that the contentious provision in the EO was Section 2, which, in one version, said that they must be recognized as regular employees of the hiring company. Another version indicated that they should be recognized as regular employees of the service contractor.
“You know, although we are looking forward to the EO, an EO can only do so much. As you know in our system of government, the executive through an executive order can only implement the law. So if there has to be revision in the law, especially on the definition of what endo is, it has to be Congress,” he said.
The chairman of the House Committee on Labor and Employment on said Congress is eyeing to submit to President Duterte for his signature a proposed law addressing the problems of endo in the country by July.
Rep. Randolph S. Ting of the Third District of Cagayan, the labor committee chairman, said the lower chamber is now awaiting for the Senate version of the endo bill as it already approved on third and final reading its House Bill 6908 in January. HB 6908 seeks to strengthen the security of tenure of employees in the private sector.
“We already approved our own version of the endo bill, and now we are waiting for the Senate, which committed to finish its version by first quarter of this third regular session of 17th Congress or by July. On the part of the House, we are ready to immediately conduct a bicameral conference committee meeting to reconcile the differences of our version and for us submit our final version to the President for his signature,” Ting said.
“The Senate may also decide to conduct its hearing and finish its version when session resumes on May 15,” he added.
Ting said the National Economic and Development Authority (Neda) has already expressed support for the passage HB 6908. “We also presented [last Wednesday] the lower chamber version of the endo bill to the Neda and it said they will support our version.”
‘Salvageable’ parts
Labor groups have long been waiting for the President to fulfill his campaign promise to end the practice of contractualization in the country through the signing of an EO, which has been put off several times already.
In an interview with the BusinessMirror, former Labor Undersecretary and Dean of University of the Philippine-School of Labor and Industrial Relations Prof. Rene E. Ofreneo said that the President’s decision was “not surprising.”
“Of course, the government is balancing labor pressure. You have trade union pressure. You have the business community pressure,” Ofreneo said.
Bello, however, told the BusinessMirror there is still a possibility the DOLE could still salvage some salient provisions of the EO. Among the provisions that could be implemented is the empowerment of the National Tripartite Industrial Peace Council (NTIPC) to determine activities, which may be contracted out. The provision will allow labor and management representatives at the NTIPC to have a say on which positions could be subjected to contractulization.
“We may still be able to implement this. This is not dependent on the EO,” Bello said.
For his part, DOLE Undersecretary Joel B. Maglunsod said he is still hopeful the EO could still be signed, despite the pronouncements of Roque and Bello.
“We have yet to receive the certification [about the security of tenure bill]. Until we do, that is the only time we will give up on pushing for the EO,” he said in a phone interview.
Maglunsod added he is optimistic Duterte may reconsider his decision on the EO once he meets with labor groups. “Malacañang told us that the meeting was only postponed so it could still push through.”
Associated Labor Unions-Trade Union Congress of the Philippines Spokesman Alan Tanjusay also shared Maglunsod’s assessment of the situation. Tanjusay said Roque’s position may not reflect the President’s position.
“This statement [came from] Secretary Bello, Atty. Roque and the DTI speaking, and not the President. This is not the President speaking himself. Bello and Roque are just preempting the President’s desire to sign the labor-drafted EO,” he said. “For the sake of millions of endo workers enslaved in poverty by contractualization work scheme, we urge President Duterte to please sign the labor-drafted EO,” Tanjusay added.
Other labor groups like the Sentro ng mga Nagkakaisa at Progresibong Manggagawa, Federation of Free of Workers (FFW) assailed the decision.
“Clearly, with this declaration of passing the burden to Congress to end contractualization, the strong-willed President has succumbed to the pressure and will of business,” FFW Vice President Julius Cainglet said.
With Jovee Marie N. dela Cruz and Samuel P. Medenilla