Position Paper on “Banning/Regulating the Practice of Contractualization of Employees in the Philippines” The Philippines has an abundance of skilled labor and as its ranks grow at the end of each school year, job opportunities continually get scarcer and scarcer. Thanks to the sunshine industry of BPO and the work opportunities that abound for Filipinos abroad, the ill-effects of an untenable unemployment rate is somewhat tempered. A seemingly social ill in the employment scene is the so-called contractualization of employees. Companies/employers do not want to regularize their workers even if these people gain experience and develop skills adept to the industry that they belong to. Reasons for this range from employers trying to save on overhead/salaries of long-staying employees to the prevention of potential connivance among employees who are familiar to each other to poor attendance/motivation of aging personnel and even to altruistic reasons of wanting to hire new people to give others a chance at employment. We at the Philippine Amalgamated Supermarkets Association (PAGASA) believe that the one most important underlying reason why retail employers do not want to regularize their employees is that as these employees age, their work motivation begin to wane as their needs and their immediate families begin to grow in size. This results in the great disparity between the desired salary of an employee with a growing family and that which employers are willing to pay their aging employees. If all employers were to regularize their employees upon hiring, a lot of them would be stuck with “eventually unqualified” workers as a lot of the new hires may not mature into the positions of middle management that the companies wish to fill up and develop. It is too premature upon recruitment to tell if an applicant will grow in skill/attitude/productivity/maturity as necessitated by the employer firm when he ages and steps up the ladder of management. In the supermarket business for instance, no employee wants to be retained as a bagger or cashier forever yet establishments are wary of promoting those who have not stepped up in terms of productivity and professional maturity. Even in well-managed and well-paying conglomerates, aging employees cannot keep up with new market trends and technological developments within their industry. This is one of the reasons why a lot of these companies offer early retirement even when it costs them more in the short-run to do so. PAGASA is not insensitive to the plight of the high school and college graduates who have to shift from job-to-job to earn a living because they are forever contractual/casual employees and do not earn merit from one’s seniority. If they get employed in different industries, they can hardly build a career out of work experiences that require different skills. They become the proverbial jacks-of-all-trade and masters of none. What local college graduates really lack is the knack for entrepreneurship. It is very difficult to nurture this so-called sense of entrepreneurship when one lacks business exposure, a network to liaise with and financial capital to develop anything. This is why PAGASA believes that fresh graduates should go out and find work. Any work experience to start with is good even if they do not know yet what industry they want to

belong to or company to work for. This would give them some perspective as to what they are/may be good at and enjoy doing. In countries like Taiwan where entrepreneurs abound, fresh graduates figure out what industries they would like to get into, apply at companies in said industries, learn the ropes in whichever department they end up with and after 2-3 years, figure out how they can supply their companies better with a product or service that is more efficient/cost-effective than how the company previously does things. In other words, once they enter a job, they get serious and develop a career-path in the industry that they belong to by thinking how they can supply raw materials/equipment/ingredients/labor requirements/etc. to their former company/companies or the industry that they belong to. Within 2-3 years they have developed a small network of business contacts that they can liaise with. All they need now is the capital to start a company and the working capital needed as their own company grows. They turn into entrepreneurs, leave the labor force and begin to hire others in the labor force that they once belonged to. PAGASA believes that this is the only way to generate the jobs needed to accommodate the growing number of those joining the ranks of the unemployed year in and out. Easier said than done? Of course. Even with the different livelihood movements like Go-Negosyo and various television programs on entrepreneurship, this proposal is easier said than done! It is the business environment/atmosphere and a country’s culture that nurtures this hybrid of business people especially for those who have just worked for a few years. The mindset is very important from a very young age. Kids have to be amazed at how businesses work and how these can help a country in its economy. To be able to see the bigger picture is key. Everyone, including the young, is enjoined, no, expected to contribute to the national economy! When one finds a job, they contribute to their family’s earnings. When one begins a business, no matter how small, he contributes to the national economy. It is not too late to develop such a mindset though it will take time to reap its fruits. All things must have a beginning. Never mind if it should have been started in 1945 when we were granted independence. If contractual employees feel that they never get enough exposure since they change jobs every five months or so, then stick to the same industry even if they have to work for different companies over a period of time to gain the exposure needed to develop the idea of how they can better service the companies belonging to an industry. If one decides to work for a fastfood chain then stick to that industry until you find a niche/opportunity/goods/services that you can offer the smaller companies in that industry. They need not work for the major chains to gain this perspective but of course the more efficient companies in the industry will expose these employees to the best practices in that industry. If one decides to work in a supermarket, find out what are the headaches of supermarket operators? They may not be privy to discussions on these headaches but they can get drift of this if they are observant enough. Supermarket operators cannot get hold of an efficient air-conditioner maintenance company that is also cost-efficient. They find difficulty keeping costs down for the maintenance of old chillers/freezers. Effective pest control companies are hard to come by. They would be delighted if someone came up with a way to keep grocery wagons and baskets clean and workable. These are just some of the services supermarket operators outsource to others as keeping a full-time maintenance man for each of these functions is too heavy. One need not be an engineer to be able to service these establishments. One needs to partner with engineers who are not exactly business-minded but also just seeking jobs to make use of their engineering skills; probably also shifting from job-to-job as a contractual maintenance man. You find artists, cooks, dental assistants and many other skilled-workers in the same boat. So how will these observant young business-minded applicants/employees who are raring to become entrepreneurs find the financial capital to start even a micro-enterprise to supply or service any client? This now is the proposal of PAGASA to our legislators: Instead of banning or regulating contractualization of employees, maybe we can tweak this practice a bit to the interest of all stakeholders. Currently, employers are allowed to hire contractual personnel up to six (6) months in a year without having to regularize them into their payroll. PAGASA recommends that employers be allowed to hire employees of good standing of up to five contracts (four renewable and one final one after the fourth). Rationale: consistently good workers are hard to come by. Sometimes, some employees work well for up to six months or up to a year or two but then their performance/attendance/sense of cooperation, morality or teamwork deteriorates through time. This, as mentioned, is one of the prime reasons why

companies do not want to commit hiring people on a regular or continued basis. As such, with this “innovative feature,” companies may continue to hire workers who exhibit consistent performance or character and give these employees the chance to shine so that their full potential may be seen over a longer period of time (where steady improvement of skills and attitude is consistently and clearly monitored by the company). In this manner, these consistent employees get a chance to develop a deeper understanding of their work and the industry that they belong to. More people can now get an opportunity at a career and not just a job. Whereas the current practice of replacing contractuals with new ones every five or six months do not provide this opportunity, employees who are steady in their performance now get a chance to move up the ladder within a protracted period of up to two and a half years’ stay (that’s a maximum of five contracts with six months each) in the company and industry where they belong to. Sure, it may seem that employers have the upper hand here. Now they don’t have to go scouting for new replacements every so often. They may cheat by renewing the contracts of good performers more than four times. They may get around the essence of unionism since people who have been around for much longer than six months are still considered contractual. But hey, aren’t all of these happening to us today anyway? Employers who will cheat under this new system are no different from those who are already cheating today anyway. Under this new proposal, employers today who prolong the stay of contractuals beyond six months need not cheat anymore. What is the real rationale why we want to extend the contracts of worthy, deserving and hard-working contractual employees? With the current state of things, contractuals who get to work for six months in a year cannot save enough to tide them over to the first day of their next employment. Most contractuals who are direct hires cannot get new employment a few months after their last job; much less a day right after their previous employ. In other words, whatever they saved from their last job (assuming they were hired a full six months) will never be enough to feed them (or their families) until they find the next job. By giving these deserving employees the chance to work up to a maximum of two and a half years in the same company, they are given that chance to save regularly and religiously (if they are disciplined) so they can accumulate a little capital by the end of their stint with their current employer. Sure, this may not amount to much but if they are disciplined, this obviously gives them the opportunity to save more than what they can given a six-month job. Alone it may not be enough to start any micro-enterprise but if during their two-and-ahalf-year stint with a company, they meet worthy business partners, they can look for six or more of these and pull in enough capital to start something worth investing. Again, by giving worthy contractual employees the chance to prolong their stay in a company and develop gainful knowledge of an industry (or allied industries if their company supplies other industries), they not only earn the chance to creatively develop a business idea over the years, get to meet other contractuals/individuals who may have the same mindset and save up enough to team up with a few others to start a budding enterprise. STC/4-7-11