The March 23 to 28 Pulse Asia survey revealed the top concern of the average Filipino today: wage or salary increase.
And for more than 40 million employed Filipinos, a wage hike has traditionally gone to the top of their list of demands come Labor Day.
“The present minimum wage scheme is no longer relevant to the lives of workers. We are calling for national wage fixing,” said Atty. Sonny Matula, president of the Federation of Free Workers (FFW).
Matula explained: Take a worker residing in Manila but works in Laguna. The minimum wage in Laguna is only P400, even as the minimum wage in Metro Manila is already P512. With higher transportation fare, rent, and the average retail price of well-milled rice at P43.70, inflation will continue to eat at the real wage, and the worker will not have enough to support a family.”
The Pulse Asia survey showed that 50% of Filipinos believed that a salary increase was the most urgent issue while 45% think it was inflation.
For organized labor groups, the matter of wages is punctuated by a two-year call to stop once and for all the illegal practice of “endo” (end of contract)—the hiring of employees for only five months to bypass the law requiring the regularization of workers after six months.
It is a demand that sets the tone for this year’s May 1 observance as President Rodrigo Duterte is once again haunted by a campaign promise to stop labor-only-contracting (LOC); a promise he made when he was still a presidential candidate wooing worker votes in 2016.
And yet, as history would attest, Duterte is not the first and only President who said that he would prohibit the practice of labor contractualization.
LOC HISTORY & PRACTICE
It all started in the days of the late President Ferdinand E. Marcos and his issuance of Presidential Decree (PD) 442, also known as the Labor Code of the Philippines, on May 1, 1974.
Article 104 of PD 442 clearly stipulated that “labor-only contracting shall be deemed unlawful,” and then qualified the term “unlawful” as occurring “where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries and work premises, among others, and the workers recruited and placed by such person are performing activities, which are directly related to the principal business of such employer.”
From hereon, every President that followed—Corazon C. Aquino, Fidel V. Ramos, Joseph Estrada, Gloria Macapagal-Arroyo, Benigno Aquino III, including Duterte, expressly prohibited labor-only-contracting. And yet, despite the pronouncements, contractualization of workers continued.
During the time of Corazon Aquino, the Labor Code underwent amendments through the enactment of Republic Act (RA) 6715, also known as the Herrera Law.
The Herrera Law made substantial amendments to the Labor Code but did not touch Article 106 to 109 on contracting and subcontracting labor.
According to the FFW, “Article 106 was intended to balance the interest of capital and labor but as the years went by, it was used by capital to circumvent the worker’s constitutional right to security of tenure.”
Over the years, the practice of contractualization of workers got called by other names like “Endo” and “555”—all referring to the manner of hiring workers for a period of five months only so employers did not have to give them vacation leaves, sick leaves, and other benefits, which started on the sixth month or the regularization period.
In almost every administration, it was likewise evident, that a Department Order (DO) from the Department of Labor and Employment (DOLE) was issued to expressly prohibit the exercise of labor-only-contracting.
It was DO 10-97 during the Ramos administration, the first time DOLE issued a DO expressly stating that “labor-only-contracting shall be prohibited,” while at the same time saying that “contracting and subcontracting arrangements are expressly allowed by law.”
DO 10-97 was rescinded during the Arroyo administration by then Labor Secretary Patricia Sto. Tomas and replaced with DO-18-02, which stated that “contracting and subcontracting arrangements are expressly allowed by law and are subject to promotion of employment and the observance of the rights of workers to just and humane conditions of work, security of tenure, self-organization and collective bargaining,” even as it reiterated that “labor-only contracting (LOC) is prohibited.”
Arroyo’s successor, former President Benigno Simeon Aquino III also supported contractualization. His Labor Secretary, Rosalinda Baldoz issued DO 18-A, Series of 2011, that also contained the rules that implemented Articles 106 to 109 of the Labor Code as amended.
PSA data showed that from 2010 to 2014, contractual workers in private establishments increased by 51%, seasonal workers increased by 254% and agency-hired increased by 82%. Based on PSA estimates, there were about four non-regulars for every 10 employed in establishments with 20 workers or more under the Aquino administration.
A 2014 Philippine Statistics Authority (PSA) survey on companies employing 20 or more workers showed 1.96 million, or 39% of a total 5.06 million workers were non-regulars.
Data from the PSA survey indicated that the construction industry had the highest share of non-regular workers, with six non-regulars for every 10 workers. Industries such as agriculture, forestry and fishing, mining and quarrying and food services industry had five non-regulars for every 10 workers.
In the time of Duterte, DO 174 was issued by Labor Secretary Silvestre Bello, an order rejected by labor groups, saying that “DO 174 only further legitimized the proliferation of contractual employment schemes.”
But a new labor phenomenon crystalized when Duterte became President. For the first time, organized labor—from left to right of the political spectrum—united in calling for an end to contractualization.
For the first time in a long time, rival labor groups like the militant Kilusang Mayo Uno, the middle-ground Federation of Free Workers, and the labor conservative Trade Union Congress of the Philippines (TUCP) broke bread and dialogued with Duterte in Malacañang.
“We are uniting in the midst of the epidemic of abusive contractualization that is still malignant in workplaces all over the country. Employers still continue to practice endo, 555, and labor-only-contracting. This is the reason why labor opted to lobby for an Executive Order,” said Nagkaisa, a labor coalition consisting of 47 labor federations and workers organizations in the public and private sectors.
The worker groups wanted a policy shift from the current practice of tapping manpower agency in contracting out of jobs to a policy of hiring of regular employees by principal employer as the norm in employment relations, they added.
“We cannot follow contractualization as our global business model suggested by the employers group. Making the poor poorer and making the rich richer is not FFW’s cup of coffee. Eliminating contractualization is good for the economy. Giving workers decent jobs and substantial puchasing power is good for our country,” Matula said.
EO, HB 6908
Labor has presented Duterte with a draft Executive Order emphasizing direct hiring of employees by the principal employer as the general norm in employment relation, adding that this can be legally defended by the provision of the Constitution, the Labor Code and existing jurisprudence.
More than the Executive Order, labor leaders are also pushing for the passage of House Bill (HB) 6908, “An Act Strengthening the Security of Tenure of Workers, Amending for the Purpose Presidential Decree No. 442, as amended, otherwise known as the ‘Labor Code of the Philippines.’”
The bill has passed the Lower House on third reading and now awaits Senate action.
Reports said that the President may certify HB 6908 as a priority bill—a development welcomed by organized labor.
The prospect of the signing of an Executive Order banning contractualization, however, was doused by Presidential Spokesperson Harry Roque who earlier said that Duterte may not issue an EO to that effect.
Still, Matula said: “The strength of HB 6908 is on stiffer penalty for violations. It fines P30 thousand for a non-registered agency and P30 thousand for each worker who will be found under labor-only-contracting, endo, 555, or other forms of illegal contractualization. The present penalty ranges from P1,000 to P10,000 only.”
He added that the provision of the definition of “labor-only” contracting is sharpened in Hb 6908. “It categorically prohibits ‘labor-only’ contracting while the present Art 106 of Labor Code left the decision to prohibit or not with the Labor Secretary.”
The FFW president concedes that under Duterte, there have been results. “The findings of DOLE that Jollibee, PLDT, Coke, and many other big companies maintained labor-only contracting manpower agencies involving tens of thousands of workers each and then ordering their regularization of employees is a welcome development.”
He added that there are “thousands of workers who are now regular and now have the chance to be regular employees of their principal employers, a turn-around from the days when they were contractual or agency workers for a number of years. I guess this did not happen during the time of former President Aquino.”
Matula stressed that more workers needed to be regularized. “The trade union campaign against contractualization has pressured DOLE and its regional office to take seriously the labor law standards compliance in all regions.”
Labor groups geared for a huge protest mobilization against contractualization on May 1. In the face of Duterte’s still unfulfilled campaign promise, there is the faith of thousands of organized workers that they and the President will overcome.
Last May 1, President Rodrigo Duterte issued EO 51, “implementing Article 106 of the Labor Code of the Philippines, as amended to protect the right to security of tenure of all workers based on social justice in the 1987 Philippine Constitution.”
EO 51 was outrightly rejected by both militant and conservative labor unions.
“We condemn President Rodrigo Duterte for once again making a mockery of Filipino workers, by signing the deceptive, grossly anti-worker Executive Order (EO) 51 that ignores the just demands of the 50,000 workers who marched to Mendiola and the 150,000 more who gathered in other protest centers around the country,” said the Kilusang Mayo Uno in a statement posted on their website.
As told to the Manila Standard, Trade Union Congress of the Philippines (TUCP) spokesperson Alan Tanjusay said the EO did not end Endo and contractualization. “Nevertheless, we welcome his frank admission as to the limitation of his authority to issue an EO that will curb epidemic scale of abusive contractualization and his directive to certify the security of tenure [SOT] as urgent.”
Days after the issuance of EO 51, Duterte urged Congress to give priority to the SOT bill already passed by the Lower House.
In the continuing debate over the President’s efforts to rid the labor landscape of contractualization, the FFW has opted to view EO 51 as “a clear recognition that after two years in office, illegal contractualization is still a persistent reality” and that, “legislative action is still urgently needed.”
This recognition was a result of a united trade union action against abusive contractualization, the FFW said.
FFW president Sonny Matula recognized that EO 51 is not enough to address rampant, abusive contractualization in the workplace, but “since the House of Representatives had already passed its own version (of the Security of Tenure Bill or HB 6908), the Senate now must act and act fast on its own version to come up with an appropriate social legislation on security of tenure that will include stiffer penalties for violation of said law.”
In the meantime, Matula proposed that labor groups go all out in seeing to it that workers seeking regularization are not harassed or discriminated upon. “We have to inform the workers that if a directive to regularize them is ordered by the DOLE, they cannot be terminated. If their termination is done pending appeal, it shall make the order of regularization executory, as stipulated in Section 4 of EO 51.”
FFW likewise said that its unions and its Legal Center will offer free legal assistance to affected workers. It recently established the “Free Workers Right Watch” to organize and assist workers in precarious work.
“We offer legal assistance to workers that will be terminated by employers who want to avoid a government order to regularize them,” Matula said.