Contractualization: Pros and cons

Emmanuel J. Lopez (philstar.com) - May 27, 2016 - 4:49pm

One of the ticklish issues that will confront the Duterte administration when its term finally
commences at midday of June 30, 2016 is the continued existence or demise of
job contractualization. Despite several attempts to weed out this very contentious labor scheme,
it has remained in effect until now.

The capitalist nature of the outgoing regime has not given emphasis on this supposed anti-poor
policy of employment for reasons that may be both beneficial and otherwise to labor matters and
stakeholders. But then we also have to acknowledge that many investors deem it wise to put
their money in the Philippines because of the relatively cheaper labor cost, which to an extent is
brought about by contractualization.

The termination of “endo”(end of contract) as a campaign promise of incoming president Rodrigo

Duterte will create various repercussions to the Philippine economy. The labor force especially
the proletariat sees endo as a tool of the capitalist to manipulate and exploit the vulnerability of
laborers. The laborers, as an offshoot of prolonged unemployment and uncompetitive nature,
would rather accept a below par employment contract without full benefits enjoyed by a regular
worker than have no paid employment.

The termination of “endo”(end of contract) as a campaign promise of incoming president Rodrigo

Duterte will create various repercussions to the Philippine economy. The labor force especially
the proletariat sees endo as a tool of the capitalist to manipulate and exploit the vulnerability of
laborers.

Although there are legal implications of endo because a company cannot just practice labor
contracting wittingly or unwittingly without having in their company a roster of regular employees,
it has nonetheless contributed a lot to the total employment and national income by way of short-
term employment opportunities. While endo has deprived many laborers of the opportunity to
enjoy the full benefit of being a regular employee, the stringent measure normally applied to a
regular applicant is relaxed in favor of an endo worker, resulting in a bigger participation of the
entire employment sector.

Cancellation of endo would most likely post stringent requirements for the employers before new
regular employees may be hired. Hiring regular employees in favor of contractual employees, we
have to admit, entails a lot of costs perhaps more than double than what a contractual employee
will get sans benefits. Although this author would not favor a full implementation of
contractualization, but the thought of full cancellation of the same would accelerate the
unemployment statistics that we currently have.

Logic tells us that you cannot force the employers to give what they do not have. Much less force
them to hire regular employees to fill in job vacancies. To escape from the responsibility of
carrying the load and additional cost of hiring regular manpower, firms would rather overload
their current roster of regular employees with work in lieu of hiring regular employees.

To escape from the responsibility of carrying the load and additional cost of hiring regular
manpower, firms would rather overload their current roster of regular employees with work in lieu
of hiring regular employees.

This is the most plausible scenario that may transpire if the government will go for the full
prohibition of contractualization. Prudence dictates that contractualization should still exist in a
case to case basis but with government regulation to avoid abuses by the employers. Firms in
the infancy stage should be allowed to some extent to hire contractual employees until such time
that firms can exist on its own and be stable enough to weather the challenges of investment
risks.

Firms in the infancy stage should be allowed to some extent to hire contractual employees until
such time that firms can exist on its own and be stable enough to weather the challenges of
investment risks.

Unemployment and economic growth

With the current data on unemployment which stands at 5.8 percent, the incoming administration
under the leadership of presumptive president Duterte stands to inherit around 3.48 million
people who are unemployed. This practically puts to naught the 6.9 percent GDP growth the
country was able to accomplish in the 1st quarter of 2016.

The growth component was mainly consumer-driven fuelled primarily by election spending
estimated to be within P10-12 billion. This amount of fund injection created temporary
employment opportunities that generated an income that contributed to the 1st quarter growth
rate. This, however, is a short-term “economic bliss” that after certain “honeymoon period” will go
back to its previous dilemma of exclusive growth, an economy reserved for the ruling oligarchy.

Countless growth have been experienced but the people who consider themselves poor remain
unyielding, the number of unemployed remain at more than 3 million. Graft and corruption remain
unmoved, putting it in the upper index of most corrupt nations of the world.

Tall order
Despite the tall order that awaits the incoming Duterte regime, the resounding mandate that he
received during the last election puts to emphasis the people’s high trust in his leadership. One
thing going for the incoming president that perhaps distinguishes him from his predecessor is the
fact that he approaches the nation’s problem with “coolness’ and serenity. If you are in this mood,
it is most likely you will make a good account of yourself and your decision.

His micro approach to the problem as exemplified by the news item he heard about the group of
pushers arrested in Tanauan, Batangas. The pushers were made to parade in the streets as if to
imitate the traditional “Flores de mayo” but this time renamed “Flores de Pusher,” for purposes of
putting them to shame for their criminal acts.

Perhaps in jest, incoming president Duterte made pronouncements that these people may have
been dead if he was in the position of the mayor. His ability to put premium and emphasis even
for this simple police matters if he continues doing it during his term, will endear him to people. It
shows that he does not want himself isolated from the most basic problem of the society — the
society that elected him and catapulted him to the highest position of the land.

His ability to put premium and emphasis even for this simple police matters if he continues doing
it during his term, will endear him to people. It shows that he does not want himself isolated from
the most basic problem of the society — the society that elected him and catapulted him to the
highest position of the land.

Read more at
https://www.philstar.com/business/2016/05/27/1587537/contractualization-pros-
and-cons#Ued31qMyRToib2Ki.99
 The Pros and Cons of Contractualization
 PB
 OTHERS
 15 OCT, 2016
 0


There has been a lot of buzzing going on in regards to the news

of contractualization in the Philippines as of lately. The new term of government,
headed by President Rodrigo Duterte, has made sure it gained the spotlight by
pledging that they will be ending the practice of “endo” or end of contract as others
would like to call it.

Contractualization actually broadly refers to the practice of Philippine firms and

companies to outsource the process of hiring their staff and employees to other
organizations or agencies. It is by no means synonymous to endo, which is being
implemented by employers in order to get rid of their workers before their
regularization to avoid paying for benefits and bonuses; unfortunately though
many cannot disassociate the two terms from one another.

There are pros and cons that should be considered when it comes to keeping the
practice of contractualization in the Philippines. They include the following:
Pros

Growth in Economy
Contractualization has been devised by previous lawmakers in order to address and
tackle the issue of poor economic growth in the country. Many individuals like Cid
Tereso from the Economics Program at the University of Asia and the Pacific have
argued that the time is right to end this practice because of the improving status of
the Philippine economics but there are also others who have debated that it is
simply not enough to sustain the country in the long term.

Creating job opportunities albeit temporarily will help cater into the growth of
economics here in the Philippines even more.
Staffing Flexibility for Companies
Today, big and small corporations are being asked to supply several requirements
which include flexible working arrangements for their employees. Providing
temporary work is probably the best step they could take in order to offer the
required flexibility while meeting their own needs as well.

According to Denise Ridenour from Kelly Services, employing both a mix of

permanent and temporary workers will result into a more efficient and effective
workplace. She adds that this practice also leads to a flexible job market that
presents greater prospects for both companies and workers.

Cons

Issues with Training

It does not matter whether the temporary worker you are hiring has previous
experiences with a similar company to yours. You will still end up training them so
that they can perform their assigned tasks and responsibilities to best fit the
specific needs of your company where they are currently being employed.

There are times when you will have to exert more training periods to some of your
temporary employees which will waste so much time and effort, coming from the
perspective of the company. You are lucky if you manage to employ someone who
is verse enough with your particular industry that they will not need so much
training.

Issues with Benefits

Big corporations and companies in the Philippines have come under fire because of
maintaining the practice of contractualization and endo. Many organizations
working for the welfare of workers and employees being subjected to them have
made their thoughts known and protested about the lack of benefits and bonuses
workers are receiving because they are not being regularized.

Some of the benefits that they are not receiving include: PhilHealth, SSS, Pag-
IBIG, Home Development and Mutual fund along with many others.

The debate on whether contractualization should be removed altogether in the

Philippines is still being discussed and continued not only in the Senate but also in
multimedia platforms everywhere. How about you; have you decided which stance
to take on this very important issue?

The Pros and Cons of Hiring Temporary Employees

by Patricia Schaefer

Last Updated: Jan 9, 2017

Temporary workers play an important role in many companies. Are they right for your small
business? Check out these pros and cons of hiring a temp.

Image source: Photospin.com

Depending on the season of the year and whose statistics you look, there are about 2 million
individuals who work at temporary jobs each day in the United States.

The use of temporary help has enjoyed an upward growth ever since entrepreneur William
Russell Kelly opened the first temporary staffing agency in 1946. Today Kelly Services has long
done away with its “Kelly Girl” clerical temp image. Like most present-day agencies, its positions
are no longer limited to secretaries and file clerks. Temp workers currently possess a myriad of
other titles including: accountants, financial officers, assembly-line workers, nurses, doctors,
scientists, lawyers and information technology professionals.

Would your business benefit from temporary help?

To find out, check out these pros and cons of hiring a temp. You may just find that this hiring
arrangement is something that is well-suited for your business right now or something that you’ll
want to seriously consider in the future.
 RELATED: 7 Inexpensive Ways to Retain Employees in Your Small Business

Pros

Enables your business to adjust more easily and quickly to workload fluctuations
Temporary help agencies can quickly provide your business with qualified staff. Some common
reasons companies hire temps:

 Employee absences: illness, vacation, maternity or disability leave, sudden departure

 Unexpected or temporary demands: special projects, seasonal or peak periods, employee
shortages
Maintains staffing flexibility
With the popularity and staying power of flexible work arrangements, employers need to stay
current with the needs of today’s work force. Temporary work is just one of the ways that
businesses can offer flexibility and at the same time better meet their own needs.

Representative Denise Ridenour of renowned Kelly Services foresees that “the employment pool
will increasingly include a mix of temporary and full-time employees. The result is a more
efficient workplace, a more flexible job market, and greater opportunities for both employers and
employees. Additionally, improving productivity enhances a company’s bottom line and
employee job security.”

Can evaluate worker without commitment

Based on your evaluation or preferences, you can employ a temp for a designated short term or,
if desired, offer a full-time position to a worker who suits your business. Some businesses
employ temporary workers as an excellent and cost-efficient way to recruit and test the abilities
of new workers before signing them on full-time. Other companies will repeatedly use the
services of a temp worker who has proven to be a company asset. Hiring a temp can also be a
good way to continue getting work done while you search for the perfect candidate for a
particular job. If unsatisfied with a temp’s work performance, all you need do is contact the temp
agency and they will take care of the rest.

Can save time and money

The cost of hiring temp workers is often cheaper than the cost of hiring permanent employees
with benefits. In the short term, it is generally more cost-efficient to hire a temp. For jobs that
are expected to last six months or longer, it may pay to hire a full-time employee.

RELATED: How To Find and Hire Employees (a Business Know-How® book)

When you employ an agency, it – not you – becomes the temp worker’s employer. The agency
is responsible for and bears the financial burden of recruiting, screening, testing and hiring wo

rkers; payroll expenses and paperwork; payroll and withholding taxes; unemployment and
workers’ compensation insurance; and any employee benefits they may wish to provide. Some
agencies even provide training such as software application tutorials.
 RELATED: What to Do When a Valuable Employee Quits

Can lead to a long-term positive relationship with staffing agency

Temporary employees can provide specialized skills to all types of industries. Temporary help
agency workers are now employed in virtually every industry. Traditionally, companies sought
temporary workers for lower-skilled positions. Today temporary workers increasingly include
highly skilled individuals with a wide range of educational backgrounds and work experience.
These individuals can tackle critical one-time projects that are limited in time and scope. In the
field of Law alone, recent years have seen a dramatic growth and acceptance of hiring lawyers
on a temporary basis.

When you find a temp agency that provides timely and quality service and referrals, and is
experienced and accommodating, you may want to work with them exclusively. A good
relationship with your temp staffing provider will go a long way toward meeting your company
needs.

Cons

Training Needs
Every time a temp starts a new work assignment – no matter how skilled or unskilled – a certain
amount of training is required in order for them to perform their assigned tasks to suit the specific
needs of that company. Of course, if the same temp is brought back again, this might not be
required.

Morale Issues
Morale and employee relations problems can arise when you have temps working alongside
permanent employees for months, doing the same work and putting in the same hours, but not
receiving the same benefits afforded their permanent employee coworkers.

RELATED: 5 Simple Things That Will Make Your Employees Happier

Safety Issues
Certain types of jobs are inherently dangerous and require careful safety training. Studies show
that frequency and severity rates of on-the-job injuries are significantly higher with temporary
workers. No matter what a temp’s experience is, care must be taken to see that dangerous tasks
are performed safely. Never assume a temporary worker is fully prepared to work unsupervised
until you have taken the time to see that they can safely perform their work tasks.

Legal Concerns
Recent court decisions have highlighted the fact that businesses must be careful how they
contract for temporary staff. There must be no doubt about the workers’ status and about the
lack of eligibility for the benefits of permanent employees. And treat temp workers with the same
respect and care you would for your permanent staff.

The question of reliability

Some surveys of employers have found an assumption that temporary workers are generally less
reliable than their permanent employee counterparts. Is this myth or reality?
Joe Broschak, Assistant Professor of Organizational Behavior at the University of Illinois at
Urbana-Champaign, shared some of his findings about a particular study of temporary workers:
“On average, these temporary workers displayed better performance relative to goals compared
to their full-time counterparts.” For those temps later hired as full-time employees, Broschak
reported that “they continued to become better workers after becoming permanent.”

Choosing a reputable staffing agency – and establishing a good employer/staffing agency

relationship and communications – are key elements to finding reliable workers, say Ridenour
and Broschak. Furthermore, Ridenour pointed to the rise of “free agents” to 22% of the U.S.
workforce, comprised in part by termporary workers, and increasingly possessing impressive
credentials: “As more and more employees choose to work as free agents, the actual
professional and education qualifications of free agents help dispel the myth that temporary
workers are less reliable.”

***

When choosing a temp agency for the first time, you will need to spend some time selecting one
that meets your particular needs. Take a look in your local Yellow Pages for the names of some
agencies in your area. Check out their websites to find out how long they’ve been in business,
their “mission statement” and the types of workers and services they provide. Some agencies
focus on a particular line of work; i.e., accounting/finance or healthcare.

Ridenour suggests that businesses consider asking the following questions in order to choose
the right staffing company: What type of staffing help do you need? How was your first
interaction with the companies you contacted? Is the company a member of the American
Staffing Association? Will the company do a presentation for you and your management team?
How well run is the organization? How does the company recruit and retain its qualified and
reliable workforce? How are potential staffing company employees screened and tested? Does
the company fully understand your needs? And, Does the company carry workers’
compensation for its employees?

The Real Deal On Contractualization or ENDO

Filed under: General Topics — 1 Comment
August 4, 2016

Contractualization is the practice of hiring workers for a period of about five months before they
are relieved of their job assignments, only to be replaced by another employee who is willing to
 go through the same process. This manner of employment strips the worker of his right to
security of tenure and other benefits enjoyed by a regularly employed individual. It is for this
reason that Filipinos are clamoring to put an end to this labor practice (deemed “unlawful” by
many).
On the contrary, contractualization has, to a certain extent, contributed to making our country
attractive to investors because they know they can get relatively cheap labor costs here. Pinoy
workers, on the other hand, agree to be employed on contractual basis instead of not being
employed at all. Often, individuals who have limited educational attainment and work
experiences are drawn into this cycle (although contractualization is also practiced even in
government agencies and offices) as it gives them an opportunity to earn a living in spite of not
having ample academic training and the necessary skills and work experiences.
In view of the above, we endeavored to research on the most probable advantages and
disadvantages of putting an end to contractual employment in the country. Who will truly benefit
from this move? Who will suffer the consequences?
Pros:
1. Employees enjoy security of tenure and can look forward to a considerable retirement package
after years of serving their employer.
2. Companies’ investments on training and developing its people are maximized as they capitalize
on employees’ loyalty and retention.
3. Issues on security of trade information and business insights can be better addressed as there
would be lesser staff turn-over.
Cons:
1. If a company could not afford to replace its contractual workforce with regular employees, it will
be left with no choice but to pass the workload to its regular employees. Overworked employees,
albeit paid the necessary overtime fees, may soon become lethargic and unproductive.
2. Unemployment rates may skyrocket as job application requirements become more stringent and
discriminating. Employers will most certainly require that applicants possess skills and talents
worthy of the regular compensation they are mandated to provide.
Last Monday, the President issued a tall order for business firms, corporations, and agencies to
cease placing its workers under contractual status, unless they are prepared to battle it out with
him and lose their “money and their pants”.
Tell us what you think about the government’s directive to abolish contractualization. On which
side of the barricade do you stand?
Is there even a barricade to begin with?
How Businesses Are Affected by
ENDO
February 27, 2017

End of contract, or most commonly known as “ENDO”, has been one of the
fieriest topic in the Philippines this year. The moment President Rodrigo
“Digong” Duterte perched as the 16th President of the Republic of the
Philippines, he mandated an iron-fist against endo.

But what is really endo and how does it work?

It is indicated in Article 281 in the Labor Code of the Philippines that after six
(6) months of working with a company, workers shall be considered as
regular employees unless one fails the qualification of being a candidate for
regularization with reasonable standards at the period of his/her employment
with the company.

In lay man’s term, a regularized employee shall enjoy benefits such as paid
leaves, 13thmonth pay, health insurance, and other benefits that other
regular employees have.

However, most of the companies today try to avoid this by hiring people
under 6 months and end their contracts, eluding them for being regularized.
Many are victimized by this scheme which leaves them jobless, and most of
them are Filipino wage earners and working students.

This is the main reason why President Duterte has pointed his guns to
businesses that practices this system. He clearly ordered both local and
foreign companies situated in the Philippines to end endo, or he will literally
kill them with his own hands.

Because of the President’s command, several companies had complied to his

orders and backed up the battle against contractualization. The Department
of Labor also issued a policy regarding the ban of “end-of-contract” and other
related “labor only” employment pacts in the Philippines.

There are a lot of talks about this issue, though the majority supports this
idea. However, there are a few skeptical minds querying if this is what the
Philippines need at this point in time; Will it work? Will it be the solution to
the growing unemployment rate in the country? What will be its impact to
local and foreign businesses? What would happen if contractualization in the
Philippines end?

SUDDEN DISRUPTIONS OF BUSINESS PROCEDURES

The cessation of the Contractualization system in the Philippines will greatly

impact businesses that are used to adding and removing people to work for
them in a definite period. They will be forced to get rid of extra training
teams that they saved for the 6-month hiring phase.

GROWTH OF UNEMPLOYMENT RATE WILL INTENSIFY

The result of endo can make millions of workers unemployed. Since

businesses cannot hire them for a short span of time, the option of hiring
short-term employees will be out of their preference. Companies will be
obliged to appoint people who are fit for a possible regularization than
others. Skilled workers in the construction industry will most likely be
affected by the end-of-contractualization policy.

PHILIPPINES WILL BE LESS COMPETITIVE IN THE JOB MARKET

Employers are in constant search of workers that requires less cost, which is
present in the Philippines. That is why proprietors are attracted to the
country because of that reason. Exterminating the endo in the country would
mean that companies would acquire less workers in the Philippines which will
greatly affect not just the employment rate but the country’s economy.
The obliteration of the endo system in the Philippines has its upside points,
too. One is the abolition of abuse to working Filipinos who are under this
battering structure. Employees would not suffer being underpaid for their
services to the company and their chances of getting what is right and just
for them will be mistakably high. They can also enjoy the benefits of being a
regular employee including SSS, NHIP, HDMF, 13th month pay, incentive
leaves, and meal and rest allowances as per what the Labor Code denotes.

Another plus for the implementation of this campaign is the elimination of

excessive resources devoted in the training program for future trainees of
employees. In return, the additional resources of the business can be added
on the benefits and incentives of present employees which will establish a
secure and productive manpower within the company.

The end-of-contractualization has its fair share of pros and cons, but the
significance of this matter is that the Filipino people are beginning to exercise
their rights as an employee here in the Philippines; starting with the
annihilation of endo in the employment domain.