Who Started Contractualization in the Philippines

Two years after the release of 442, contracting was institutionalized in the construction industry when former DOLE Secretary Blas Ope issued Policy Instructions No. 20-76, which included the definition and rights of project workers and non-project workers, ostensibly to stabilize labor relations in the industry. The 2022 elections have become an arena for workers to strengthen their demands against contractualization. While strengthening property security remains at the heart of the anti-contracting campaign, the labor market needs to align its advocacy efforts and deal with a changed policy environment driven by post-pandemic economic recovery policies that could exacerbate the problem of job insecurity. Contractualization has its roots in 1974 during the reign of Ferdinand Marcos, when Ernesto “Boy” Herrera participated in the drafting of Presidential Decree 442. This decree, which Marcos eventually adopted, would provide the conditions and reasons for the contracting of workers in the Philippines. Currently, contracting continues to increase in various forms of flexible, market-driven hiring programs.- From Contractualization Prevails, IBON Facts & Figures, July 2017. Endo refers to a short-term employment practice in the Philippines. This is a form of contractualisation in which companies give workers temporary employment for less than six months and then terminate their employment just before regularization to avoid the costs of regularization. Examples of such benefits that contract workers do not receive compared to regular workers include benefits from an employer and an SSS employee, Philhealth and the contribution from the Pag-ibig Housing Fund, leave without pay and the 13th month`s salary.

Duterte made many promises on his way to the presidency in 2016. One of them is the promise to end contracting. In the first year, the Department of Labor and Employment (DOLE) issued a departmental ordinance (DO18-A) that established guidelines for the implementation of Sections 106 to 109 of the Philippine Labor Code – the provisions of the law that legalize the practice of hiring agencies, which has been identified and criticized by labor groups as the cause of contracting. [5] Subsequently, another ministerial regulation (DO174) was issued by the DOLE to establish stricter guidelines for awarding contracts. Like the first DO, workers` groups rejected the new order because it allowed “legal” forms of contracting and did not promise to end and prohibit all forms of contractualization. According to OD 174, employment agencies – not major employers – are instructed to regularize their employees. In his second year in office, however, Duterte seemed to have completely given up the fight. Upon signing a presidential decree (EO15) prohibiting illegal contracting or subcontracting, the order added the eligibility requirement “when undertaken to circumvent workers` rights to job security, self-organization and collective bargaining, and peaceful concerted activities,” limiting the scope of what would be considered an illegal practice. Duterte himself admitted that this order “has no teeth” [6], because the order prohibits the practice but does not punish it. According to Duterte, punishing violations would violate the law. The order was again criticized as allowing seasonal or project-related work, such as janitors and cleaners.

Workers also criticized the order for simply repeating current regulatory policies, which have failed to prevent the spread of contractualization. [7] On the other hand, while the exercise of the president`s veto power focused on the need for a more balanced law, Duterte`s actions suggested a bias in favor of forces on the other side of the struggle to end endo- and other treaty plans. Companies, for example, have lobbied hard against the law as harmful to business. [12] Workers unite against contractualization. Workers representing various unions march side by side on Labour Day. Manila, Philippines.1. May 2018. Photo by Joseph Purugganan [13] [Fact Check, Rappler] FALSE: Employment contracts did not exist in Marcos` time, www.rappler.com/newsbreak/fact-check/labor-contractualization-did-not-exist-ferdinand-marcos-era-administration The most recent decree, DO 174, amending the contracting guidelines was signed by Labour Minister Silvestre Bello III on 16 March 2017.

There are two narratives about how contractualization became so pervasive in the Philippines. In the past, many labor groups have regularly accused the late Senator and labor leader (a pillar of the Congress of Philippine Trade Unions) Ernesto “Boy” Herrera of paving the way for the formation of labor contracts with amendments he introduced to the Labor Code in 1989. The late strongman Ferdinand Marcos, not his successor Corazon Aquino, signed the law authorizing “endo” (end of contract), the practice of forming employment contracts in the private sector. Project employment is a form of contractualization; The contract is based on a specific task or project with a clear duration. Although project staff are hired directly by employers, there is no employee-employer relationship between the project employee and the primary employer for the duration of the contract employment. Thus, the anti-worker characteristics of employment projects deprive workers not only of their right to job security, but also of their right to unionize and bargain with major employers for better wages and benefits. According to them, a very limited contractual system – in the past limited to janitorial services and similar short-term commercial arrangements – has become the norm as a result of the radical new provisions; hence the label “Herrera law”. However, when Herrera died in October 2015, his son Ernest – a clarification confirmed by former Labor Secretary Ruben Torres – told reporters (including the BusinessMirror) that it was very unfair to blame the late senator for the uncontrollable proportions with which contractualization had been abused in many sectors.

After the coup d`état of the Marcos government and the imposition of the Aquino government, which lasted from 1986 to 1992, the Herrera Act, also known as Republic Law 6715 of 1989, was passed. It was this law that gave the first major revisions to the original Philippine Labor Code, which was drafted earlier under Marcos` presidency.