PH gets it wrong on contractualization
Credit to Author: BEN KRITZ, TMT| Date: Wed, 17 Jul 2019 16:17:00 +0000
IN this country, there are few more quintessentially populist issues than that of labor contractualization, and there are almost no issues that the country gets as thoroughly wrong.
On Tuesday, a joint statement signed by seven of the largest business groups in the Philippines and the six biggest foreign chambers of commerce called on the government to reject the proposed Security of Tenure Act (SB 1826), which was unanimously passed by a 15-0 rump vote in the Senate back in May.
SB 1826 would require employers to directly hire employees, instead of getting them through contracting agencies. The bill would also oblige employers to offer regularization to all employees hired on a contract basis, although it does not specify exactly what the parameters that would define an eligible employee are; the intent, however, is to abolish the practice of “endo,” or hiring workers on five-month contracts to avoid existing laws that require regularization after six months of employment.
That SB 1826 is clearly redundant is the main argument made by the business organizations resisting the proposed law, and it is an absolutely correct argument. The same objective is already covered by Department of Labor and Employment Order 174 and Executive Order 51. The Senate, in its perpetual struggle for relevance, has once again mistaken shortcomings in enforcement for a lack of enforceable provisions, and offered an entirely superfluous solution. On that basis alone, SB 1826 should be rejected. Even the argument that enforcement of the existing regulations is weak does not really hold up, because hundreds of thousands of previously “endo” workers have been regularized – half a million in May alone, according to DoLE data.
The standard arguments against contractualization, particularly of the short-term variety that offers only casual employment are that it allows employers to pay lower than market-value wages, and that contractual employees are denied the benefits extended to regular employees, such as SSS and Pag-IBIG coverage and paid leave. Those assertions are true, but only in a literal way; the populist distaste for contractualization is otherwise unrealistic, and in fact more than a little hypocritical given the Philippines’ heavy reliance on contract labor export.
The problem lies, as it always has, in the extreme divergence of the understanding of what labor actually is between “labor advocates” and employers. To the would-be champions of workers, labor is a social construct: A worker needs to work to provide the basic needs of himself and his dependents, therefore, the employer is responsible for providing a “livelihood” rather than a mere “job.” From a business perspective, labor is a necessary resource, and thus the labor-enterprise relationship is a transaction; the employer utilizes the labor to fill his need, not necessarily the laborer’s – although a mutually beneficial relationship is always preferable, being the most productive – and pays for it according to its practical value to the enterprise.
As hard as it is for the ironically arcane progressive mindset to accept, logic favors the employer perspective. The concept of “job security,” and the employer as a surrogate parent rather than a party in a business transaction is no longer a valid notion, an idea left behind in the last century and one the world continues to move away from at an accelerating pace. Permanence in business is becoming increasingly rare. The average lifespan of listed companies is decreasing rapidly, as Unionbank head Justo Ortiz pointed out to the attendees of The Manila Times’ Business Forum on Tuesday; right now, it’s about 35 years, but in less than a decade, or around the year 2027, it will be down to about 12 years. The growth of the “gig economy,” wherein workers work on a short-term or project basis, reflects the changing environment.
Allowing businesses to be flexible in employing workers provides opportunities for more workers to be employed, just not on the no longer relevant social basis of wage-controlled, permanent employment. While outright exploitation of labor cannot be tolerated, and there are laws in place to prevent that, any other regulation should proceed from the realities that first, an employer does not owe a worker a livelihood, he owes him fair value for the labor provided; and second, the only valid judgment of whether that value is being appropriately compensated is that of the worker himself. If labor advocates want Philippine workers to earn more and be able to count on more stable employment, the solution is not to force companies to pay more than what the labor is worth, but to improve the labor resource.
ben.kritz@manilatimes.net
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