‘Post Endo’ does not mean no endo

As the end of the month approaches, government agencies involved in the President’s election pledge to end the practice of hiring employees for five months as a means to avoid regularizing them as prescribed by law are hurriedly putting the final touches to amending an existing Labor administrative order.

The way discussions are shaping up, there will be a big show of regularization in selected industries (and areas, like Davao, where the President comes from). In reality, though, the five-month contract work practice will not disappear.

More popularly known as “endo” (for end of contract before the sixth month of work), the practice has gained widespread acceptance among companies that seek to cut labor costs especially if they operate on seasonal peaks and lows, or those that are scared of organized labor.

Companies that rely on temporary workers are passing the responsibility of putting an end to “endo” to their manpower services firms, who they point out, should be responsible for hiring their workers on a permanent basis, i.e., with full benefits.

These contracting companies have intimated they are amenable to increasing the fees they need to pay for temporary workers in recognition of the higher costs of operations that their contractors would encounter once they regularize the manpower they need to retain to keep their businesses operating.

Burden of regularization

The manpower services companies, however, are not mollified by this seeming generosity. Even if they are able to pass on the added cost of regularization to their contractors, by the very insecure nature of their business, regular workers receiving full benefits stipulated by law will likely become a burden on operations, especially if the manpower company’s contract to supply temporary labor ends.

Will companies like shopping malls and hotels, who need temporary help only on months when they anticipate more customers, sign up long-term manpower supply contracts with a company? I don’t think so.

Already, manpower supply companies are barely earning enough from local contracts, and were it not for the more lucrative overseas manpower supply opportunities, many would have closed shop.

The burden of regularization in the Philippine labor environment is the main cause why many companies have tried to pass on the responsibility to others, and in this case, to the manpower service firms which have somehow skirted around labor laws for so long.

Once regularized, a Filipino employee’s mandated benefits include 13th month pay, sick leave and vacation leave credits, enhanced retirement remuneration, plus Social Security Services and PhilHealth benefits.

Overprotective labor policies

Being part of the company, regular employees in the rank-and-file category have the right to join a union – and this is where the burden of regularization is magnified.

Unions demand for across-the-board wage increases and additional perks like rice subsidies, and are generally protective of employees that underperform. The mandatory wage increases screw up a human resource’s salary structure where a machinist serving over 20 years may already be getting the equivalent salary of a middle manager.

Worse, undesirable workers – who either underperform or have become incompetent – are zealously protected by union officers, who understandably guard their membership ranks from any possible dissipation in numbers.

Enlightened, but not realistic

That Philippine labor laws have been criticized as being overprotective of workers’ rights has been the subject of many studies in the past, but had been somehow swept under the rug when hiring contract workers became an acceptable and prevalent practice.

In the same breath, the studies pointed out that Philippine labor laws, while lauded internationally for being “enlightened,” are not realistic for local conditions, having been largely patterned after those governing developed countries.

Adapting period

For sure, now that the era of contractual “endo” labor is being forced to an end, new forms of labor practices will ensue that will try to balance the need for employers to keep their operations within reasonable and sustainable levels.

And as some labor officials are saying, the practice of hiring contract workers will not end. This could roughly be translated to mean that there could be less manpower service firms that will be keen on providing the temporary workers to bigger firms on a seasonal basis, if only to avoid the burden of having to hire permanent workers. Or there will be new forms of hiring by these manpower contractors.

How business will adapt to the new environment will be interesting to observe. Don’t count out seeing migrant workers from Nepal or Bangladesh who will work on one- or two-year contracts with manpower services companies at no risk of having to be employed on a regular basis.

The boisterous era of unionism, prevalent during the pre-Martial Law days, is unlikely to be revived mainly because employers will want to keep the upper hand when it comes to ensuring that industrial peace is maintained.

Less intervention is better

The departments of Trade and Industry and Labor are currently discussing with business the possibility of increasing the ratio of regular to temporary staff, which currently stands at 60:40 in favor of regular employees, to 80:20.

Many companies, especially those related to tourism, have raised their objections to this. This will unnecessarily raise their operating costs at a time when the tourism industry, for example, is still at its infancy stage.

Determining the human resource requirements of businesses should be left alone to those who manage the business. Protecting workers’ rights, as embodied by laws, should be the job of Labor; and encouraging additional employment opportunities, by Trade and Industry.

In view of the still sizeable unemployment and underemployment statistics, government should come up with a more solid policy that would ensure that these numbers are reduced, either through job opportunities here or abroad.

There will be an appropriate time in the future when the concept of decent work is upgraded, and this is what the government should look at. Definitely, we would want the best terms of employment for our workers, but only if this will not kill the goose.

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