‘Workers’ Spring’ looms amid government bias against labor-only contracting


In Photo: Militant labor groups stage a rally on Mendiola near Malacañang in Manila during Labor Day.

THE seeds of a “Workers’ Spring” have been sown on the fertile garden of labor-only contracting, with business raising the alarm bells over how much the government’s crackdown on illegal contractualization could adversely impact key sectors of the economy.

Labor groups expect that more strike notices will be seen in the coming months with hundreds of thousands of contractual workers likely to join the fray as the Department of Labor and Employment (DOLE) ramps up its campaign against errant employers. However, some groups frown upon this course of action as counter-productive to the economy.

In previous months, several workers’ protests have sprung up after the DOLE published a list of top 20 companies engaged in illegal labor-only contracting, with some resulting in a landmark win for contractual employees.

One of the high-profile cases are those of 7,300 workers from PLDT Inc., all of whom are scheduled to be regularized.

The case comes with a few caveats, however. The DOLE said PLDT, a publicly listed firm, has so far not acted on regularizing the said workers despite the labor department’s “clarificatory” order on July 11. The case is now pending at the Court of Appeals.

PLDT has insisted it broke no law.

Another publicly listed firm, Jollibee Foods Corp. (JFC), has severed ties with two contracting agencies after these have been found guilty of illegal labor-only contracting. The DOLE has ordered the fast-food giant to regularize 14,960 workers in June.

The Samahan ng Manggagawa sa JFC (SMJFC) claims there are tens of thousands more workers under the company’s shadow that need to be regularized. The group has initiated a series of protests over the past months.

So far, the bloodiest-reported recent protest related to labor-only contracting would be at NutriAsia Inc.’s (NAI) Bulacan plant, where local police and workers clashed after a religious service.

Bandwagon effect

IN an interview, Kilusang Mayo Uno (KMU, May One Movement) National Chairman Elmer C. Labog said the rising cost of living is one of the contributing factors for the increasing number of workers protesting against contractualization.

Contractual workers usually get a much lower pay and enjoy fewer benefits compared to their regular counterparts.

“The severe insufficiency of their wages can’t keep up with [the rising] price of goods and services,” Labog said.

He explained that the biggest driver of the growing labor mobilization against contractualization is the DOLE’s  regularization orders.

The orders have given hope to workers that the Duterte administration shows seriousness in going after companies allegedly violating government regulations on labor-only contracting.

“It’s going to increase because of a bandwagon effect, like if others can defend their regularization, other contractual workers will gain inspiration,” Labog said.

He said the militant Left-leaning group KMU is now organizing more contractual workers.

“One problem, however, is that [the DOLE] do not know how to push for their regularization,” Labog said. “So it’s very important that they establish relations with established unions.”

Labog added that service sectors, along with manufacture and agriculture, may strike in the coming days, crediting the problem to companies not following the regularization order of DOLE.

Growing trend

DATA from the National Conciliation and Mediation Board (NCMB) showed there were more labor strikes but fewer threats of work stoppage after President Duterte was elected in 2016.

In 2015, there were only five declared labor strikes. This grew to 15 incidents in the following year. In 2017, the NCMB reported a similar number of strikes in 2016.

The number of notices of strikes in the same period, in contrast, showed a declining trend with 194 (2015), 175 (2016) and 150 (2017).

This changed after DOLE released its list on contractualization.

During the first eight months of the year, there were already six recorded strikes. However, several labor unions have since then held or threatened to conduct more work stoppage.

Among those that filed notices of strike are two groups of workers related to PLDT: the Gabay ng Unyon sa Telekomunikasyon ng mga Superbisor-PLDT and PLDT Organization of Workers and Employees for Rights. A notice of strike was also recently filed by the Philip Morris-Fortune Tobacco Corp. Labor Union, but the company stressed this was not related to the campaign against illegal contractualization. The tobacco firm had been hard hit by high tobacco taxes, and volumes are down the past few years as a result.

Meanwhile, employees of the Japanese firm Takeda Healthcare Employees’ Union-Federation of Free Workers have been on strike since August.

The number of notices of strikes (NOS) is also expected to exceed last year’s. As of August, there were already 124 new NOS—39 percent higher compared to the 89 cases in the same period last year.

Most of these cases are due to unfair labor practices followed by deadlocks in collective bargaining agreement negotiations.

Data gaps

DESPITE data from the Philippine Statistics Authority, Sentro ng mga Nagkakaisa at Progresibong Manggagawa (Sentro) Secretary-General Joshua Mata claimed numbers “don’t necessarily capture the reality” of the rising number of strikes.

“[This is so] because the DOLE tends to downplay strikes so as not to affect its performance,” Mata said. “Remember, there was a time when the government was actually claiming that we have zero strikes. Though in reality, there never was a year when we didn’t have a strike.”

The Sentro secretary-general added that the umbrella organization had filed more notices of strikes this year compared to 2017, noting there were at least four companies, including Coke-FEMSA, with pending strikes from their workers.

Meanwhile, FFW President Jose Sonny G. Matula said the organization has around 200,000 members with only 80,000 paying dues and having collective bargaining agreements.

He added that the labor group had filed around 10 NOS this year, including those for Boie Takeda Chemicals Inc., IRM Aviation Security Agency Inc., Coca-Cola logistics handler Redsystems Co. Inc., and Central Azucarera de San Antonio, among others.

Labog, meanwhile, noted that the organization had 31 ongoing NOS mostly in the National Capital Region and Southern Tagalog Region, claiming that the number of strikes this year rose in comparison to 2017’s figures.

The KMU website claims it has 115,000 members nationwide, with many in the industrial, service and agricultural sectors.

Better legislation

FORMER Labor Undersecretary Rene E. Ofreneo noted in an interview in June that companies often exploited legal loopholes to save on labor costs.

Ofreneo, dean of the University of the Philippines’ School of Labor and Industrial Relations (SOLAIR), added that the government should either fix the current rulings on contractualization or implement new rules to strengthen the gaps in the law.

Many of the initiatives of the government to amend the labor code and stamp out the practice of labor-only contracting still remain pending.

While House Bill 6908, or the “Security of Tenure Bill,” sponsored by Akbayan Rep. Tom S. Villarin, hurdled third and final reading in January, its counterpart bill, Senate Bill 1826, is still on second reading.

The twin bills, once harmonized and signed into law, will still allow the practice of labor-only contracting but will restrict its practice by further defining its illegal forms.

Among the salient points of the SOT bill version of the Senate is that it will require service contractors to be licensed rather than being merely registered, according to Labor Assistant Secretary Benjo S. Benavidez. Benavidez added the new law will also impose fines against companies violating the new restrictions.

Labor groups called on the Duterte administration to certify the SOT bill as urgent to realize his campaign promise of ending widespread contractualization.

In his third State of the Nation Address, Duterte urged Congress to pass laws to end contractualization “once and for all.”

Largest employer of contractuals

LABOG, however, noted that the passing of the SoT bill won’t stop workers from waging work stoppages. He cited existing laws are pockmarked by holes that the SoT bill couldn’t plug.

“Even if there’s an SoT [bill], it can’t cover all labor standards, [improve] the condition, which is why it can’t obstruct the deluge of protests,” the KMU president said. “The government needs to lead in implementing the regularization of workers and, in the long run, ensure the security of livelihood and jobs.”

This is very significant as the government itself is the largest employer of contractual workers for its offices, he added.

“There’s a larger [percentage] of contractual employees in the government so the government itself must set the example to regularize the many contractual workers in government institutions like the DSWD [Department of Social Welfare and Development], DAR [Department of Agrarian Reform] and many local government units,” Labog explained.

According to the Civil Service Commission, 660,390 of the 2.4 million government workers in 2017 were employed as “job order” or “contract of service” employees.

Labog added that the government must in turn implement true land reforms and national industrialization in order to absorb not just the large amounts of unemployed and underemployed workers, but also migrant workers who wish to come home.

“If more jobs are created [as a result], there are lesser unemployed, [plus] an increased reduction in labor export policy, then the total value of the labor force increases. So those without jobs or lacking them wouldn’t be exploited,” he said. “That’s the logic.”

Wrong message to investors

FOR Philippine Chamber of Commerce and Industry (PCCI) Chairman George Barcelon, labor strikes are “sending the wrong message” to foreign investors.

Barcelon added even the striking workers would suffer since they will not be paid during their lockout.

“You are already giving the signal of labor unrest; it doesn’t do anybody well, whether for the labor or for the country. You’re sending the wrong message,” he said.

The business leader added that contrary to the belief of workers, even employers are against the practice of illegal contractualization like “end of contract” (endo).

But, he said, labor groups should accept the fact that if a worker is employed by a contractor then he is considered as a regular employee of that service provider.

Philippine Association of Legitimate Service Contractors Inc. (Palscon) President Rhoda Caliwara noted that the Philippines might lose its competitive edge if government forces companies to regularize contractual workers.

“The problem here is if the principal companies can’t handle regularization,” Caliwara said. “They might leave the country.”

She warned that businesses could migrate to other countries offering flexibility in hiring and lower labor costs and are less highly regulated as the Philippines.

“The mere fact that the principal companies are outsourcing [means] probably they cannot handle the functions that are fulfilled by service providers, like recruitment, hiring of people, processing and payment of wages, control and supervision and disciplining of people,” the Palscon president said. “Which is why they outsource.”

She pointed out that with the advent of digitalization and artificial intelligence, any company now could automate, resulting in the steady loss of jobs.

“Any company now could automate instead of hire, so that they won’t face regularization. The problem there is the slow decrease of jobs and it’s my personal worry. Slowly we are killing jobs if we forced [to do] that [regularization],” Caliwara said.

She concedes that workers wield strikes as their prerogative due to concerns left unaddressed. Caliwara said strikes are nothing to worry about.

“However, as far as we are concerned, we employers, as long as we give the right wages, the right benefits toward the workers, then we have nothing to worry about,” she said. “That is why as an organization, we at Palscon are really advocating legitimate service contracting.”

Contractuals vs regulars

LABOG noted there was previously a rivalry between contractual workers and regular workers, adding that the feud had been tempered once Duterte stepped in office.

“Today [regular] workers have been educated; [they’re now aware] that contractual workers are not their rivals when in fact they are all part of production,” Labog said. “I would say that when Duterte took office, the regular workers’ consciousness was elevated.”

He added that that was a big step forward for regular workers.

“Undeniably, there is the situation in the past where the regular workers feel that they are of another race compared to the contractual workers,” Labog added. “It’s not absolutely erased, but it’s a huge leap, a huge improvement.”

Mata noted that the idea that contractual workers rob regular workers of jobs is “patently wrong.”

“I don’t know where that view comes from,” he said. “It assumed that contractual workers are consciously out there to steal jobs from regular workers. This does not reflect reality. The truth is, no one wants to be a contractual worker.”

Mata added that all workers prefer to be regular ones, noting that contractual workers have no way of controlling whatever job is assigned to them.

“There is no way they [contractual workers] can consciously steal jobs of regular workers—nor would they even want to do so. So what’s the reality? Employers are wantonly abusing the use of contractual labor to avoid regularizing workers,” the Sentro secretary-general explained.

He added that this was the reason companies tend to hire contractual workers to fulfill the jobs of regular ones.

“That’s not the fault of the contractual workers—that’s the fault of the employer wanting to avoid regularizing workers,” Mata concluded.

Lightly taken

MATA said 10,000 of Sentro’s members are still waiting to be regularized.

It’s not acceptable that employers promise regularization and are breaking that promise. “On the contrary, they also lose their jobs. That’s the reality,” he said. “So workers will not have to take that lightly; necessarily, they will become desperate to do something.”

Mata cited NAI and UniPak as examples of options that workers were forced to take.

“That’s the problem. They have a regularization order, but the workers weren’t regularized, and instead fired,” the Sentro secretary-general explained. “That’s what’s happening with [JFC] then, last year, early this year. They threatened them. They removed the workers immediately.”

Mata claims the government’s current campaign against contractualization won’t halt the advance of the “Worker’s Spring,” as businessmen stick to their guns, anchored on a firm belief that, as the law now stands, they are not violating anything.

“We explained [that] to Bello over and over again. Unless the law is actually changed, all these campaigns, reported campaign of the [DOLE] would come to naught. It’s going to fail. It’s doomed to fail,” Mata said.

He banks on the Security of Tenure bill as the solution.

“There is really a need to amend the law. And the only way that the law can be amended effectively is if you can have the certification as urgent the SOT bill, which they promised anyway,” Mata said. “But that was months ago.”

Meanwhile, he expressed fears on the push by Duterte for federalism as this may allow regional provinces or states to have separate labor codes.


MATULA, however, disagreed with Labog and Mata, saying Duterte’s bias against labor-only contracting brought about positive change.

“I think it’s good, because there are companies that already volunteered to regularize, although there are stubborn ones,” he added. “For those who don’t comply, we request the DOLE for an inspection.”

He sees a bigger clamor from workers because of the anti-contractualization campaign.

“The positive thing there is there’s awareness to actually regularize the people, especially those who’ve [been working] for two years, three years, who are still contractual. There are already people who benefited from it, so the campaign must continue,” the FFW president said.

As of July, DOLE reported it was already able to regularize 321,964 contractual workers since August 2016.

Matula said the increase in the number of protest rallies should be considered as a benchmark of the success of the anti-contractualization campaign.

“At least the workers are now aware that they have rights,” Matula said. “Before, only FFW members applied for cases. But now, there are outsiders [seeking our help]. At least there’s a rise in awareness, especially in Duterte’s campaign, which is why many people voted for him because they now have hope in being regular [workers], right?”

He noted that current laws don’t have heavy penalties. Like Mata, Matula is banking on the SOT bill to force companies to end contractualization.

“The companies don’t follow because there are no heavy penalties; the law is not a deterrent.”

He noted the penalty—only P1,000 is the penalty or P10,000 at the maximum—as mere pittance.

“If you have P400,000 on hand, you would’ve no obligation, but other companies do, it’s okay because [they] saved [money],” the FFW president explained.

He recommended an increase in the penalty to P30,000 per employee for labor-only contracting in order to weaken resistance.

Rule of law

LABOR Undersecretary Joel B. Maglunsod dismisses as wrong the perception that the DOLE regularization order is anti-employer.

The DOLE order, he said, prompts companies to absorb contractual workers if they are engaged in illegal contractualization.

“Now, if the job of one worker is directly related, meaning directly necessary in the [principal’s] business, you can’t contractualize that. Those contractors feel threatened here because they are engaged in practice; that’s against the law,” Maglunsod said.

“It’s natural that the campaign against contractualization does not look and smell good because [for them, since] they violated the law. It’s like they defy the campaign promises of the President,” he added.

Maglunsod added employers could always avoid the ordeal of being issued a regularization order if they would voluntarily follow the DOLE order.

He also dismissed the use of automation as a bargaining chip to justify illegal contractualization.

While economic progress through automation must be encouraged, employers must comply with the law, Maglunsod explained.

He wondered aloud whose interests are being given primordial concern: “The interests of the Filipino people? Of the workers? Or the interests of the management and investors?”

Given the still wide divergence in views between labor, government and the business sector on whether contractualization is a necessary cog in globalization’s wheel or an “evil” to be cut down, the “labor spring” may well come at a steep price, and also usher in, to paraphrase the clichés on seasons, a winter of discontent among many.

With Cris Eugene T. Gianan


Image Credits: Nonoy Lacza

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A reporter who covers the labor beat for the BusinessMirror. He graduated with a journalism degree at the University of Santo Tomas in 2009.


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