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Philippine Leader Vetoes Bill to End Labor Contracting

Dennis Jay Santos and Joseph Jubelag
Davao, Philippines
2019-07-26
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Members of worker groups and labor unions march toward the presidential palace in Manila to demand an end to “End of Contract (Endo),” the practice of cutting a worker’s before six months, when one is considered a regular employee under Philippine law, May 1, 2018.
Members of worker groups and labor unions march toward the presidential palace in Manila to demand an end to “End of Contract (Endo),” the practice of cutting a worker’s before six months, when one is considered a regular employee under Philippine law, May 1, 2018.
[Jojo Rinoza/BenarNews]

President Rodrigo Duterte has vetoed a bill to end labor contracting and give employees job security through tenure, his spokesman said Friday, a move that angered the country’s largest workers’ union, which backed him during his 2016 election campaign.

Passage of the proposed law, known as the Security of Tenure Bill, was a key promise that the populist leader made when he ran for the presidency three years ago.

The bill’s authors and lawmakers in both houses of Congress “should not be crestfallen and disappointed, nor should the labor sector feel saddened and betrayed by the President’s veto of the SOT [Security of Tenure] bill,” presidential spokesman Salvador Panelo said in a statement.

Although Duterte vetoed the bill, “his promise to end unfair practices of contractualization, such as labor-only contracting and end-of-contract (endo) schemes, remains and will be pursued, if not soonest, still within the term of the President,” Panelo said, adding that the leader’s resolve to “put a stop to the practice of exploiting the working class is undiminished.”

“Endo” is an abbreviated version of “end of contract,” a term coined for the practice of companies in the Philippines to terminate employees within six months of employment. Under the nation’s laws, an employee must become a regular worker and receive additional benefits after six months on the job,. While legal, "endo" has become a common practice in the Philippines, where employers can tap a huge labor force.

Enacting the bill into law could discourage investment and even undermine efforts to give jobs to unemployed people, Panelo said.

“The constitutional guarantee of security of tenure does not authorize this Government to oppress or cause the self-destruction of our employers,” the presidential spokesman said. “Our country cannot afford business closures as it will pain us seeing a decline of job opportunities for our labor force.”  

The bill, passed by both houses of Congress, would have lapsed into law on Saturday.

In Philippine law, a proposed legislation endorsed by Congress automatically becomes law if the president does not act on it within a month of receiving the measure. A presidential veto can be overturned with a two-thirds vote by the legislative body, but that too remains unlikely because a majority of Duterte’s allies control the legislative branch.

Union: A betrayal

The Trade Union Congress of the Philippines, which represents millions of workers, accused Duterte of betraying its members.

“Mr. Duterte turned his back and walked away from the workers,” said Raymond Mendoza, president of the TUCP.

“With Mr. Duterte’s presidential rejection of the bill, the most democratic and most peaceful struggle of ordinary workers out of their poverty trap due to endo are shut by a man who promised to introduce genuine and lasting change and uplift them from abject misery and pain.”

The TUCP blamed “scare tactics” allegedly employed by Duterte’s economic managers for misleading the president into rejecting the bill because it would affect the business climate in the country.

“They are trying to box out any labor reform to protect any their excessive profits by threatening our government with fright scenarios of capital flight, relocation and increased labor costs,” Mendoza said. “We remind the foreign chambers, the employers and the economic managers that dirt cheap and exploitative labor policies are no longer come-ons for investment.”

In his message to Congress in which he rejected the bill, the president defended his move and sought to assure the laborers that his commitment to protecting them remained firm.

While labor-only contracting must end, legitimate job contracting must not be banned “provided that the contractor is well-capitalized, has sufficient investments, and affords its employers all the benefits” provided for under current labor laws, Duterte said.

Duterte also emphasized that firms should be allowed to outsource certain jobs.

“This is especially critical since empirical data shows that the Philippines is currently at a disadvantage already in terms of cost and flexibility of labor use compared to its peers in the region,” Duterte said in his message, a copy of which was obtained by BenarNews.

“Our goal, however, has always been to target the abuse while leaving businesses free to engage in those practices beneficial to both management and the workforce,” he said.

Earlier this week, Ernesto Pernia, the secretary for socioeconomic planning, said the proposed bill needed to be tweaked to make it fair to both the business and labor sectors.

“It has to benefit not only the workers but also the employers because if investments are deterred and they shy away because of the security of tenure, then it’s not good for the workers – there will be less job opportunities,” Pernia said.

“It has to be fair between workers and employers because if you want jobs to be available, you need investments,” he said.

Jeoffrey Maitem contributed to this report from Cotabato City, Philippines.

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