DTI Chief Supports Legitimate Contractualization

One of the Duterte administration’s economic agenda aimed at uplifting the labor sector in the Philippines is to end contractualization. However, a full ban on the practice will hurt investments, posing bigger problem to the labor sector.  This is according to Trade Secretary Ramon M. Lopez during an ASEAN meeting in Singapore.

In his statement, Mr Lopez said:
“We won’t have any permanent jobs or security of tenure if investments drop and we lose many jobs.”

As a draft of an Executive Order (EO) banning contracting is being pushed again by the labor sector, he wishes to pursue a law where legitimate contractualization is allowed by Labor Code. The Department of Labor and Employment estimated in 2016 that 5,150 registered contractors and subcontractors deployed more than 416,000 workers to 26,000 principals.

The rules on subcontracting and contractualization are covered by Department Order 18-A, issued by the previous administration. Since then, labor groups have pushing for the cancellation of these arrangements because it paved the pay for many contract arrangements which are abusive employment practices known as end-of-contract schemes (endo).

“Endo” arrangements fail to provide workers a pathway to permanent employment and benefits because work is terminated short of the six-month probationary period, after which workers are entitled to be permanent employees.

While endo arrangements are without a doubt exploiting, abolishing contractualization will also remove contractual arrangements that are legitimately far from endo.  Due to this, the Department of Trade and Industry has proposed that private firms using contractual arrangements should instead offer those that hurdle probation the benefits enjoyed by regular workers and possible permanent status provided by the contractor.


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