Fair questions about labor reform

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IT is unfortunate that the Labor Day holiday – a traditional day for the “progressive” elements in society to rally in favor of various labor and social causes – was largely muted by the volume of public noise over the election campaign, which is reaching a fever pitch with just eight days remaining before the vote.

It is unfortunate because, whether we agree with them or not, the activists are raising two legitimate questions concerning the state of the working class, questions that should inform one’s choice at the ballot box next week.

The first issue, which was raised in one of the presidential debates, is the persistence of labor contractualization, commonly known as “endo,” in which workers are repeatedly hired on five-month contracts to avoid the legal requirement that employment of six months or more be considered permanent, a status that entitles workers to participation in PhilHealth and SSS, 13th month pay, and other benefits. All of the presidential candidates were forthright in promising to put a stop to the practice, but none provided any details.

The second issue, which none of the candidates have addressed, is the always contentious issue of the minimum wage; the consensus among the various groups holding Labor Day demonstrations in different locations around Metro Manila yesterday is that it should be raised to P750 per day (the minimum wage in the NCR currently ranges from P444 to P481 per day).


Both issues are important, and should be prioritized by all the candidates, because they are manifestations of the widespread dissatisfaction of the Filipino people with the state of employment in this country: the gross imbalance between the number of available workers and number of available jobs leads to low wages and exploitative job contracts. The overarching priority for the next government, therefore, is to encourage job growth, and at a rate that so far in this country’s history has never been achieved, one that is faster than the expansion of the workforce.

That objective is complicated and will take years of sustained, coordinated effort; addressing the issues of contractualization and minimum wages – neither of which are as simple as they first appear, either – can, if they are handled correctly, help the job creation effort, but are not ends in themselves. And if they are handled incorrectly, any gains they might support can be quickly lost; for instance, studies of places where significantly higher minimum wages have been implemented (places like San Francisco and Seattle, for example) show that the most prominent effect the move has on the local economy is to cause higher prices, which cancel out many of the gains from workers’ increased spending power.

Dealing with labor contractualization can have unintended consequences as well. In the case of businesses that practice “endo” for employees they hire directly, the law is clear; the practice is prohibited, and stopping it is simply a matter of enforcing the law. The matter is a bit more complex when it comes to regulating indirect hiring, when businesses rely on employment agencies to provide them workers. Many of these workers are subjected to “endo” conditions or otherwise unfavorable terms by means of loopholes in our current labor laws. On the one hand, it is vital that workers be protected from exploitation; on the other, those protections should not be inflexible as to reduce the already limited opportunities for employment that face most workers.

If an economic environment in which anyone who wishes to find gainful employment can do so is important to you – and it should be – then the candidate who has demonstrated that he or she has thought deeply on the matter and developed ideas about how best to approach it should be your choice for the country’s next President.

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