By Jullie Y. Daza
Labor contracting or service contracting (preferred by the contractors) implies a hundred rules with a hundred loopholes, so is it any wonder the issue of “endo” or end-contractualization is as dense as it is confusing. What management sees as the answer to aimless job hunting, union leaders decry as a violation of workers’ rights.
Until a short time ago, there were 11,000 agencies calling themselves labor/service contractors. According to the Philippine Society of Service Managers (PSMS), that number has been pruned to 5,000. If reports are accurate, just one company, PLDT, relies on 35 contractors, which shows the diversity of the contractors’ services. Taken as a whole, the industry employs 1.3 million workers and pays P35 billion in taxes every year.
Those 1.3 million, whether they work for ABC or XYZ, are not direct hires of ABC and XYZ, they are REGULAR employees of the contractor that hired them, as it is the contractor that pays their salaries and other benefits, and assures them of security of tenure. This also means that the employee’s loyalty is not to ABC-XYZ but the contractor, who earns a fee equivalent to 10 percent of the worker’s salary. A side- effect of contractualization appears to be the dramatic decline in the number of labor strikes in the last 15 years or so.
Manila became acquainted with labor contracting when the actress Mila del Sol hired men and women to work as janitors for individuals or companies that had no need for a large pool of workers commanding a large payroll. One century later, J. Antonio Meloto, son of Gawad Kalinga founder Tony Meloto, is telling us that after working under his father for 10 years, he quit to put up his own service company offering “workforce solutions,” for the reason that “after someone acquires a house, what good is it if he’s jobless?”
There’s a difference between legit and shady contractors. The illegal ones cheat on their workers by dismissing them after five months to avoid regularizing them and paying the minimum wage and benefits. By themselves, those are violations of the labor law.
Why do companies big and not so big abhor direct hiring and depend instead on service contractors? PSMS’ explanation is that those companies would rather focus on their core competence, grow the business, and leave the hiring and firing – admittedly a touchy people issue – to the professionals.