POLICIES AGAINST PRECARIOUS WORK

In partial fulfilment of the requirements in IR 204

Carpio, Jennifer

Narvadez, Karla Krisanta

Prof. Melisa R. Serrano

Introduction

The spread of precarious work has been increasing as a result of policies that

facilitate economic development through globalization (ACTRAV 2011, p. 20). In the

rapid pace of globalization, developing as well as developed countries have been intent

on being more competitive than ever. It is unsurprising how flexibilization of work has

become rampant and served as a tool for leading workers into a vulnerable position in the

market.

With the apparent decrease in job positions that are full-time and with benefits, new

types of flexible employment arrangements (e.g. temporary, contingent, non-standard)

came into view, making the labour market more segmented (Menendez et al. 2006, p. 1).

In fact, 'worldwide, unimaginable numbers of workers suffer from precarious, insecure,

uncertain, and unpredictable working conditions' (ACTRAV 2011, p. 1). Countries across

the globe have come to recognize the impact of the prevailing trend regarding job

insecurity. Although the very concept of precarity in work is not new, there exists the

need to address this glaring issue. As such, this paper aims to explore the existing as well

as the proposed policies (at the international as well as the national level) that would

combat the rise of precarious work.

Precarious Work in the Global Arena

The rise of temporary work in both OECD and European Union countries can be

observed in the tables provided below. For EU countries, temporary work soared to 115

percent (against the 26 percent increase in the total employment); meanwhile, there was a

registered 55 percent increase in the temporary work for OECD countries (ACTRAV

2011, p. 8-9).

During the year 2006, ILO issued the Recommendation 198 which pertains to the

Employment Relationship. In a nutshell, this recommendation encourages countries to

'formulate and apply a national policy for reviewing at appropriate intervals and, if

necessary, clarifying and adapting the scope of relevant laws and regulations, in order to

guarantee effective protection for workers who perform work in the context of an

employment relationship' (ILO 2006, n.p.).

In 2007, the European Commission, through its Communication of the Commission

on the Common Principles of Flexicurity, presented 'an integrated strategy for enhancing,

at the same time, flexibility and security in the labour market' which attempts to reconcile

employers' need for a flexible workforce with workers' need for security – confidence

that they will not face long periods of unemployment' (European Commission 2007).

Policies that can be drawn here include the following: a) Flexible and reliable contractual

arrangements; b) Comprehensive lifelong learning (LLL) strategies; c) Effective active

labour market policies (ALMP); and d) Modern social security systems. Moreover,

according to the European Commission (2007), contractual arrangements would entail the

enhancement of the position of workers in relation to the protection that they could

receive (e.g. equal pay, minimum number of working hours); lifelong trainings would of

course need the participation of the government, enterprises, and workers as this would

ensure that employees would have greater value for the company or the future employer;

active labour market policies would address both the (long-term) unemployed and those

who are 'experiencing frequent intervals of unemployment'; improvements in the social

security systems include providing higher benefits to unemployed people, most especially

in the first phase of their unemployment. The components of flexicurity is summarized by

Vandenberg (2008) in the table below:

The study conducted by Vandenberg (2008) focused on surveying the employment

policies of Asian countries -- tackling on the flexibility (for employers) and security (for

workers). Vandenberg (2008) distinguished two significant systems: employment security

and labour market security. The former refers to the ' security of remaining with the

employer' while the latter pertains to 'a moderate level of employment security along with

support for making employment transitions' (Vandenberg 2008, p. 8). In Sri Lanka and

India, government approval must be required before retrenchment in large firms (more

than 100 workers). Furthermore, in India, China, and Korea offer unemployment

insurance (although the scope in India covers only 2% of its labor force).

An interesting move of the Chinese government in 2007 was the passage of the

Labor Contract Law which 'requires employers to provide written contracts to their

workers, restricts the use of temporary laborers and makes it harder to lay off employees '

(Kahn and Barboza 2007). However, due to the effect that it had in the proliferation of

labor subcontracting, it was revised in 2012 (Gallagher et al. 2013). Its revision included

the increase in the capital requirement of labor dispatch enterprise (from 500,000 RMB to

RMB 2,000,000); requirement to acquire an administrative license before engaging in

labor dispatch; equal pay (as a regular employee) for equal work; clearer delineation in

the categories of positions that can be used for labor dispatch employment (i.e.

temporary, auxilliary, and substitute); and increase in fines for committing violations

against the Labor Contract Law (China Amends Labor Contract Law to Eliminate Labor

Dispatch Abuse 2013).

In the 2011 Symposium of ACTRAV, numerous recommendations to combat

precarious work have been brought forward: a) Concentrating on financial market

stability through banking (instead of the volatility that arises from speculations in the

market through derivatives, exhange rate predictions, etc); b) Strengthening of fiscal

space (greater efforts in tax collections; c) Investing in inclusive public services (e.g.

universal access to education, health and care facilities); d) Extending collective

bargaining; e) Limiting the utilization of agency and temporary work to 'legitimate needs

during peak periods of labour demand'; f) Setting a percentage of allowable temporary

employment per company; g) Establishing an 'equal pay' approach; and f) Allocating

higher social security contribution for workers with higher risks of accident and

unemployment. (ACTRAV 2011, p. 26)

Existing Philippine Policies on Flexibility

The increasing use of flexible staffing has been a pressing issue in the Philippines.

Workers are employed on a non-regular basis (i.e. contractual, project based,

probationary, and temporary) which deprive workers of non-wage benefits that regular

workers enjoy, and has shorter job tenure, all of which points to cost minimization of

firms. To survive the increasingly global economic competition, companies avoid being

tied to inflexible contracts with their contracts that would make workers termination

costly and increase hiring costs. On the labor side, the response has been to pressure the

government to curb flexibilization by constraining the companies’ power to terminate

workers. The call for the abolition of this practice aims to achieve security for workers,

employment terms which are typically associated with regular employment (continuous

work, wage and non-wage benefits, security of tenure, separation and retirement pay, and

collective bargaining agreements) (Esguerra et al. n.d., p. 4). As shown in Table 18, the

separation rate initiated by employers (NCR) increased from 2011 to the first quarter of

2013.

As a response, the government defines the scope of lawful labor contracting and

unequivocally by assigning the responsibility of providing the government mandated

benefits and labor standard compliance to either the contractor or the principal company

which the workers are rendering their services to. This is to assure that some party will

provide the government mandated benefits that are entitled to the contractual worker.

(Esguerra et al. n.d., p. 5).

DO 18-A

The Department Order 18-A are regulations governing the contracting and

subcontracting in the Philippines, which applies to all parties in contracting and

subcontracting arrangements where employee-employer relationship exists. This also

applies to cooperatives engaging in contracting and subcontracting. Labor only

contracting (LOC) is prohibited by virtue of the Constitution that the State shall protect

labor and promote its welfare, and shall guarantee basic labor rights including just and

humane terms and conditions of employment and the right to self-organization.

The 18-A also prohibits the 5-5-5 or “endo” hiring practice, “Section 7(A)[7] makes

subcontracting a prohibited activity when it is done through repeated hiring of workers

for a 5 to 6 months employment contract under the same employer or Service Agreement

of the same duration.”

“In case of violation, the Contractor’s Certificate of Registration can be cancelled,

after due process, and the worker becomes regular employee of the principal, and all

benefits due to him/her shall be the liability of the principal.”

It also address the right to union membership of workers, as stated in Section 8, “that

all contractor’s employees are entitled to all the rights and privileges provided in the

Labor Code, and set out in subparagraph (e) the right to self-organization, collective

bargaining and peaceful concerted activities.”

Hence, any practices that circumvent these objectives is considered a violation of

law. For example, if the same employer renews an employee’s five-month contract, for

another five months, the worker is considered a regular employee of the company, and

therefore, should enjoy the benefits entitled to a regular worker.

The 18-A also specified requirements for registration of subcontractors and

manpower cooperatives for legitimacy which includes full disclosure and payment of

P25,000.00 registration or renewal fee; minimum capitalization and a net worth of 3

Million (for single proprietorship); proof of financial capacity and ownership of tools,

equipment, machineries and work premises. This section also applies to subcontractors

that were registered in 2002 under Department Order 18. As shown in table 35, the

registered contractors and subcontractors decreased from 2011 (when 18-A was published

and implemented) to 2013.

Philippine Labor Code Book 2 Titles 1 and 2

Specific provisions on national manpower plans to allocate, provide and utilize

manpower for employment, entrepreneurship and economic and social growth (Art. 46)

and training and employment of special workers, that includes learners and apprentices.

These provisions intend to expand employment opportunities to the country’s labor force

by updating the plan annually, and equipping workers through trainings.

Philippine Economic Resiliency Plan

This is the country’s response to the global financial crisis. One of the programs that

ERP aims to expand is social protection programs such as: Conditional Cash Transfers,

Philhealth indigent program, training for work programs, student loans, repatriation

services, skills upgrading and retooling services and comprehensive livelihood and

emergency employment program (CLEEP). The CLEEP aims to hire for emergency

employment and fund and supervise livelihood projects. (Pastrana 2009)

House Bill 2348

Government contractual or temporary employees who have served ten years will be

awarded a permanent status in accordance to House Bill 2348 by Negros Oriental Rep.

George Arnaiz. He said that many of these employees have served ten or more years, and

yet they can be removed anytime because they cannot enjoy the security of tenure under

the law.

This bill covers all incumbent employees of the national government, corporations,

as well as local government units, in first and second levels.

Conclusion

Numerous policies and recommendations have already been formulated at the

international setting. Some address both the flexibility of the employers with regards to

their manpower requirements and also facilitate security amidst worker transition. The

initiative of the Chinese government to put stricter rules on hiring temporary workers and

agency registration displays that with strong government commitment, workers can enjoy

higher job security. In the case of the Philippines, despite its existing policies (on

contracting and subcontracting) to protect the rights of contractual workers, there has

been a difficulty in determining when employers are complying with these policies.

Reformation on these policies for example, higher registration and renewal fees to serve

as filtering mechanism in putting up contracting and subcontracting companies. The

newest house bill passed in favour of the contractual workers from government

institutions is a good start, which, proves that precarity can be contained. Government

assisted programs such as the ERP, may provide quick relief or cushion from the global

financial crisis, however, without concrete measures to enforce labor standards, mitigate

the practice of temporary employment, and opportunities for worker training and re-

skilling, these programs, will not address the precariousness of employment in the

country.

Establishing new policies that would lead in diminishing of the precarious sector may

be beneficial if and only if they are strong de jure and de facto. Compliance and

enforcement are the keys towards uplifting the people from the binds of precarity.

REFERENCES:

ACTRAV 2011, ‘From precarious work to decent work. Policies and regulations to combat precarious employment’, ACTRAV Symposium on Precarious Work, viewed 6 October 2013, http://www.ilo.org/wcmsp5/groups/public/---ed_dialogue/---actrav/documents/meetingdocument/wcms_164286.pdf

China Amends Labor Contract Law to Eliminate Labor Dispatch Abuse 2013, viewed 7 October 2013, http://www.bryancave.com/files/Publication/030e4ed6-0109-4ce8-9d0a-4c9928c016d8/Presentation/PublicationAttachment/91bb2766-574c-417f-ad07-4e32cd68550a/LaborAlert4-18-13.pdf

Department Order 18-A http://www.dole.gov.ph/fndr/bong/files/DO%20No_%2018-A-11.pdf , viewed 7 October 2013

Esguerra, E & Canales, KL, n.d., ‘Searching for the balance between flexibility and workers’ security (Is it time to reform labor market policies?)’, Policy Brief Globalization, Adjustment and the challenge of Inclusive growth , no. 6 , pp. 1-6 http://www.dlsu.edu.ph/research/centers/aki/participant/trainings/policyBriefs/Esguerra.pdf viewed 7 October 2013

European Commission 2007, ‘Towards Common Principles of Flexicurity: More and better jobs through flexibility and security’, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, viewed 6 October 2013, http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:52007DC0359:EN:NOT

FAQs on Subcontracting http://blr.dole.gov.ph/index.php/faqs/issues-and-concerns viewed 7 October 2013

Galllagher M, Giles, J, Park A, & Wang, M 2013, ‘China’s 2008 Labor Contract Law Implementation and Implications for China’s Workers’ , The World Bank Development Research Group Human Development and Public Services Team, viewed 6 October 2013, http://www-wds.worldbank.org/external/default/WDSContentServer/IW3P/IB/2013/07/24/000158349_20130724092209/Rendered/PDF/WPS6542.pdf

International Labour Organization (ILO) 2006, ‘R198 - Employment Relationship Recommendation, 2006 (No. 198)’, Geneva, 95th ILC session , viewed 7 October 2013, http://www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:12100:0::NO::P12100_ILO_CODE:R198

Kahn, J & Barboza, D 2007 ‘China Passes a Sweeping Labor Law’ New York Times, viewed 6 October 2013,

http://www.nytimes.com/2007/06/30/business/worldbusiness/30chlabor.html?pagewanted=all&_r=0

Menendez, M, Benach, J, Muntaner, C, Amable, M, Campo, P 2006, ‘Is Precarious employment more damaging to women's health than men?’, Social Science & Medicine vol. 64 pp.776–781, viewed 2 October 2013, http://natlex.ilo.ch/wcmsp5/groups/public/---ed_dialogue/---actrav/documents/meetingdocument/wcms_161322.pdf

Pastrana, C,2009 ‘The Informal Sector and Non-Regular Employment in the Philippines’ , A paper presented during the Employment in the Post-Crisis Context Conference,15-17 December

Q & A on ERP http://www.neda.gov.ph/erp/downloads_/Q&A%20on%20ERP.pdf viewed 7 October 2013

Statistics of private agencies/contractors/subcontractors http://www.bles.dole.gov.ph/PUBLICATIONS/Current%20Labor%20Statistics/STATISTICAL%20TABLES/PDF/Tab35.pdf, viewed 8 October 2013

Vandenberg, P 2008, ‘Is Asia adopting flexicurity? A survey of employment policies in six countries’ The World Bank Development Research Group Human Development and Public Services Team, viewed 6 October 2013, http://www.gurn.info/en/topics/precarious-work/forms-of-precarious-work/is-asia-adopting-flexicurity-a-survey-of-employment-policies-in-six-countries