The greatest moral challenge a Filipino can have

 In a country of 100 million and growing, inspite a 7% growth in the economy, the lack of jobs and other income opportunities is a serious problem in the Philippines. If there is any moral challenge a Filipino may have (after fighting graft and corruption) is the opportunity to create a job.

 From the Philippine Daily Inquirer

5 May 2014

The ‘informalization’ of Philippine workers


By , ,

On his fourth month as a salesclerk, Mark finally adjusted to a new work routine just when his contract is about to end next month.

From 7 a.m. to 4 p.m., he works at a supermarket chain in the City of San Fernando, receiving new product shipments and processing “bad orders” or expired items.

He gets one day off every Sunday and is paid the minimum daily wage of P336 in Pampanga province, or about P8,000 a month, a tad below the official poverty threshold of P8,022 a month for a family of five in the first half of 2013.

Come June 5, however, 21-year-old Mark (not his real name) will have to change his routine to a more familiar one that centers on a never-ending job hunt to earn enough money to support his family.

On Sunday, when the Inquirer spoke to Mark, the clerk had just come from a regular work shift although it was his day off.

Even that was practically routine, Mark said. Working beyond the required hours happened often since his five-month contract with the supermarket chain began in January, the tail-end of peak season.

“Sometimes I extend my work to 30 minutes [because I want] to finish it, but that’s not part of overtime,” he said, adding that he wasn’t the only one among his colleagues who did it.

In June, Mark’s contract will end and he will have to find work elsewhere, whether near Santa Ana town where he lives with his parents and three brothers, or in Manila where he said there was more work to be found.


Now, he endures traveling for about 45 minutes from Santa Ana to San Fernando for work every day.

As breadwinner, Mark cannot be on his own yet since he has to help his family.

Being jobless is not an option, he said. There is still a 20-year-old brother’s tuition to pay for his second year in college, a cost he shoulders now that his parents have no work except for his father’s occasional stint as a roof fixer.

Another brother, 18, works at a fast-food chain; the youngest, 17, hopes to enter college after graduating from high school this year.

Contractualization rampant

Mark is one of the many endo, or end-of-contract workers, under what trade unions dub contractualization scheme, which refers to short-term and unprotected temporary work arrangements.

In its many forms, contractualization is rampant in the country. Endo workers, in particular, are bound by a five-month timeframe so that companies will not make them regular employees after six months under the Labor Code.

From this arrangement stems the 5-5-5 scheme in which an endo worker is hired and fired every five months so that employers will not make them permanent employees.

Across industries

Contractualization also “cuts across industries and economic sectors, from construction to manufacturing and even in the information and communications sector,” said Anna Leah Escresa, executive director for the Ecumenical Institute for Labor Education and Research (Eiler).

The supermarket, in fact, is Mark’s second endo stint. In his previous job, also in sales, Mark ended up staying for over a year despite his contract.

After five months, Mark unofficially worked for the company for another 17 months, split between two branches, and was not part of the regular payroll.

At the time, how Mark got the money didn’t matter. It was stable work, he said, and considered himself lucky to at least have a weekly salary.

Not uncommon

Mark’s story is not uncommon where he works. Even his girlfriend, 19-year-old Jessa (not her real name) whom he met on the job, was an endo worker in the same supermarket until March.

Like Mark, Jessa’s contract as a salesclerk assigned to the fresh produce department was for only five months beginning September last year. Like Mark, Jessa does not live in San Fernando but in Macabebe town. Jessa was also paid P8,000 a month and regularly worked overtime in a more demanding and ever-changing schedule.

“Only a few lasted in our area because it was hard,” she said. A Tuesday day-off was her only rest day. “You [also] can’t avoid supervisors who want things done very fast.”

Jessa has yet to find another job since her contract ended, choosing to help run the family’s sari-sari store with her mother. But she plans to find work to augment the money her father sends from Saudi Arabia. She is hoping Mark will help her with that as well when he hunts for a new job by June. “He told me we’d look for work together,” she said.

“Together” for Mark and Jessa could mean another five-month stint at a different supermarket chain recommended by people they know. “Together,” however, could end just as quickly if Mark pursues his plan to work in Dubai with his uncle, or if Jessa finishes another two-year course on hotel and restaurant management in Manila.

Below minimum

“Endo workers are paid very low wages, oftentimes below the prevailing minimum wage rates and are forced to work for long hours,” Escresa said.

“Various reports from workers confirm that endo workers are often not paid overtime. They only receive minimum mandatory benefits, such as SSS and PhilHealth.”

Mark and Jessa are even considered lucky that they had overtime pay, except it would have given them at most P1,000 each a month. They considered it a small bonus, sometimes not worth the effort to file and have it approved by their supervisors.

The minimum benefit package that endo workers receive doesn’t run parallel with the growth of the top companies in the country.

Top firms’ huge profits

Citing 2012 data from research group Ibon Foundation, Kilusang Mayo Uno chair Elmer Labog said that “in 2006, the profits of the top 1,000 corporations in the country reached P599 billion and just after six years, in 2012, their profits almost doubled to P1.08 trillion.”

“If companies are growing and earning more, why aren’t workers getting more?” Labog said.

Labor research group Eiler sees the inequality as one of the social implications of contractualization.

“The scheme persists precisely because companies find it very lucrative. Hiring contractual workers means saving on labor costs, as contractual workers are paid less than regular counterparts and are denied the full package of benefits,”  Eiler executive director Escresa said.

Attack on labor rights

While contractualization generates immense profit for companies, it is entirely an attack on workers’ basic labor rights, she added. Endos are getting much less than what they are entitled to in jobs that are not even stable.

Without college degrees—Mark only finished three years of computer science at St. Nicolas College and Jessa, a two-year vocational course in hotel and restaurant services at Asian Caregiving Technology Education Center—the two have slim chances of being “regulars.”

Other employees, however, offered the clerks a glimmer of hope. “If you have perfect attendance and if your performance is good, you have a chance to become a regular [employee],” Jessa said, which was what happened to her sister, who was a contractual worker for a year in the same company before becoming a full-time employee.

But with no four-year degree to boast of like her sister—a requirement that helps fast-track job security—Jessa knew that she could never follow in her sister’s footsteps.

Dengue depletes tuition

Mark, too, has heard of this possibility if he performs well enough. But he knows better when it comes to his chances, having quit college after his tuition was used to pay for his hospital bills when he contracted dengue in 2012.

“I don’t think about being regular because there hasn’t been an undergraduate who has done it yet in my area,” he added.

Even with the temporary work they do, the two are grateful. After all, not all undergraduates are lucky enough to have jobs.

Looking at contractualization in a sense that it provides livelihood even to those with minimal educational attainment, an economics professor said it could help bridge socioeconomic gaps.

“If contractualization leads to greater employment for the unemployed, especially for those with lower skill [sets], then we can say it helps in terms of inclusive growth,” said Geoffrey Ducanes, assistant professor at the University of the Philippines School of Economics.

But this is just one face of the coin, he added, because if the system leads to “lower labor standards,” it doesn’t make a difference.

Worsening inequality

“If the result of contractualization is a lower labor standard—for example, wages are fixed always at minimum wage and workers have no other benefits and the lower-skilled people are not employed, then this contributes to worsening inequality in the country,” Ducanes said.

‘Obligations with a period’

But despite the dismal conditions, contractualization is allowed under the law. Although the 1989 Labor Code mentions only four types of employment—regular, project employment, seasonal and casual—contractual workers are allowed under the Civil Code, said Jonathan Sale, dean of the UP School of Labor and Industrial Relations.

“Under the law on obligations and contracts under the Civil Code, particularly under the ‘obligations,’ there is what they call ‘obligations with a period’ and that is the basis of contractual employment. The other terms used in relation to contractual employment is ‘fixed period employment’ or ‘term employment,’” Sale said.


Repeated contractualization, however, in which an employee’s contract is renewed every five months under the same employer is illegal, according to Sale.

“If the purpose of the employer in laying down the [repeated] period [of five months] is to prevent the employee from attaining a regular status or security of tenure, then it’s illegal. It’s contrary to law and renders the contract void,” he said.

“But the problem is: What employer will candidly admit that that is the purpose, ’di ba?” he added.

The varying name of contractualization is just one of the reasons it is rampant today.

Large, growing sector

According to the 2012 Bureau of Labor and Employment Statistics Integrated Survey (BITS), 30.5 percent of total employment constitutes nonregular workers, which account for apprentices, probationary, seasonal, casual and project-based workers.

The sector with the biggest share of nonregular workers is construction with 71.4 percent, followed by administrative and support services with 39 percent and manufacturing with 29.7 percent.

The BITS results are but rough estimates as the survey is based only on forms submitted by establishments with 20 or more workers, and thus based on a total employment figure of 3,769,259.

Even Sale said the number of temporary workers varied depending on definitions used.

“The statistics varies [in counting the temporary and informal workers]. In the International Labor Organization, about 40 percent to 80 percent workers are in the informal economy …. So I guess we really have to determine it once and for all,” Sale said.

“But whatever it is, whether it’s 40 percent, 80 percent, or anything between 40 percent to 80 percent, it’s there and it’s a large sector. It’s very substantial. It’s large and it’s growing,” he also said.

Labor surplus

This growing percentage has led to a “labor surplus” in the Philippines, said Ducanes. Because of this excess, manpower is the country’s biggest come-on for potential investors.

“It (labor) is our competitive advantage,” Ducanes said. “We have a big pool of skilled or better-educated workers who are also good at English.” These skill sets are also the reason Filipinos are employed overseas in various sectors, he added.

But the labor surplus, according to Ducanes, only makes it that much harder for endo workers to bargain for bigger wages and more benefits.

“On the one hand, you want to protect the workers. On the other, you want to make it easy for business to be established and for the unemployed to be employed,” he said.

In most cases, the latter reasoning prevails because employing contractual workers “affords companies greater flexibility,” Ducanes said.

Should an economic crisis occur or should the demand for certain goods go down, companies have to only wait out the workers’ five-month contracts or fire them on the spot without the need to give separation pay or other benefits.

The surplus even assures companies that they can easily find new and willing contractual workers. “Even if you fire workers, you feel confident that when you need to hire somebody again, you can always get from the pool of the unemployed,” he said.

“Contractualization in essence makes hiring and firing easy,” he added.

Legal reinforcer

Eiler considers Articles 106-109 of the Labor Code, or what they call “Herrera Law,” as the reinforcer of the contractual scheme.

“Articles 106-109 allow contracting and subcontracting arrangements, and empowers the labor secretary to issue rules that promote contractualization,” Escresa said.

To supplement the Herrera Law, the Department of Labor and Employment (DOLE) approved in 2011 Department Order 18-A, which states the illegal forms of contractualization but does not ban it altogether.

For Escresa, DO 18-A merely downplays the harsh work environment contractual workers have to live in.

“DO 18-A deodorizes the rampant implementation of contractual arrangements in many companies, as it tries to promote contractual workers’ rights while encouraging businesses to adopt ‘ethical’ contractualization,” she said.

And while the law allows even contractual workers to organize and protest, it is all but a theory, Labog said, “as we know that management can easily fire these people.”

Not only does it trivialize job security for endo workers but contractualization also makes it harder for regular employees to demand better pay and benefits, Labog said.

“The expanding pool of contractual workers, often outnumbering the regular workers, also has a huge impact on our organizing effort as management can use them against the regular workers who launch mass actions to push for higher wages and more benefits,” he said.

Fight for regularization

It is the contractual workers who keep the business running when unions decide to launch a strike and boycott work, said Nelson Cornelio who speaks from experience as a former union leader and mall employee for 14 years.

“So we in the union realized that we have to also fight for the regularization of these workers,” Cornelio said.

Cornelio’s union once succeeded in this goal with hundreds of endo workers “regularized” but the company eventually responded with new tactics to prevent it from happening again, he said.

The state of contractual workers can be attributed to the neoliberal schemes of policymakers, Labog said.

“They believe that to invite foreign investment, the state of labor should be depressed, meaning lower wages, contractualization, among others,” he said.

“The government keeps on saying that human resource is our biggest asset but they cannot even protect and uphold the rights of the workers,” Labog said.

Ronald has been working for a real estate company for 14 years, but he was never quite sure if he was ever on the employees’ list.

“It seems like we are not part of the company because we have not signed any contracts and we do not receive any benefits, only our salaries,” he said.

Ronald gets between P360 and P400 a day, below the minimum wage of P466, and nothing else—no SSS, PhilHealth, Pag-Ibig and bonuses.

Upon the invitation of his cousin who works as a construction worker in Manila, Ronald left his home province of Bukidnon to try his luck in the Big City.

He never thought life would be complicated in Manila. Being an undergraduate, he had few choices and finally settled for a job as a utility assistant and water-meter reader.

Now, even his job description is not clear to him. A real estate development company behind a number of subdivisions in Manila and Cavite province hired him as an “on-call troubleshooter” for doing work as an electrician, carpenter, mason, plumber and house painter.

“Sometimes someone calls me in the middle of the night because there’s no electricity in a village and I have to go right away,” he said.


Ronald works under an employment scheme that labor relations expert Rene Ofreneo of the University of the Philippines School of Labor and Industrial Relations calls “informalization.”

While contractual workers are bound by a five-month time frame, Ronald is part of an informal sector that is forced to find jobs “in the limited and underdeveloped organized sector of the economy.”

“Informal-sector work involves coping with the requirements of daily living, no matter how minimal the income is from an informal economic undertaking, which include hawking, home-based production, unregistered repair services and so on,” Ofreneo said in his paper “Precarious Philippines: Expanding Informal Sector, ‘Flexibilizing’ Labor Market” (2013).

Community of builders

Unlike Ronald who has had a steady, albeit informal, job for more than a decade, a community of construction workers in Rizal province is not as lucky.

In Sitio (settlement) Tabing Ilog, when there’s work to do, almost everyone works, no matter what kind. When projects come to an end, everyone is on the lookout for the next one.

For most men in this village near Gate 1 in Cogeo, Antipolo City, construction work has been a way of life, said Rodolfo Cristobal. There are about a hundred families living in Sitio Tabing Ilog which share a unique relationship as neighbors and coworkers.

“Masons. Carpenters. Welders. Electricians. Plumbers. Name it, we have them all. When contractors need men, we usually go as a group,” Cristobal said.

But for a barangay (village) composed mainly of builders who have the skills to put up towering structures and skyscrapers, many cannot afford to construct decent houses of their own.

No electricity, running water

Cristobal, who is in between jobs, lives in a hovel with no electricity and draws water from a nearby well.

He left his last project in Taguig City in September last year when he was hardly bringing anything home for his wife, Marissa, and their 10 children.

As a mason, Cristobal was paid P370 a day, also below the minimum wage. He had no other benefits when he was part of the crew that was building a posh hotel in Bonifacio Global City.

At 49, he can hardly find a job at construction sites because he is considered “old.”

“I’m still strong but jobs are scarce. Actually, I never know when I’m needed, so I just have to be ready anytime,” he said.

The minimum wage for private sector workers in Metro Manila is set at P466, consisting of P451 in basic pay and P15 in cost-of-living allowance.

The cost of living for a family of six in Metro Manila was pegged at P917 per day in 2008 by the National Wages and Productivity Commission.

The figure has not been updated but Partido ng Manggagawa said its own study in 2013 showed that the cost of living in the metropolis stood at P1,217 a day, or nearly triple the minimum wage.

Take-home of P185 per day

“I left my last job because my wages weren’t enough for my family. In Taguig, each meal costs P50 and I only take home around P1,300 per week or P185 per day. I wanted to skip my meals so I could save but I need to eat for strength because my work is mainly physical. This is hard labor work. I might faint if I work on an empty stomach,” he said.

Cristobal said he was spending about P200 per meal daily for his family of 12. As to whether it’s lunch or dinner, it depends on what time he gets the money from doing extra work or borrowing money from friends.

Unequal, exclusivist growth

Times have been harder since Cristobal lost his job last September. He is one of the 12 million jobless Filipinos estimated by Social Weather Stations in the last quarter of 2013.

For a country that achieved a 7.2-percent growth in gross domestic product last year, the second-fastest in Asia next to China, many like Cristobal do not feel its benefits.

“Growth is unequal and exclusivist,” said Ofreneo. “To this majority, it is difficult to connect their own lives with the celebratory view of the dawning of the Asian century,” he said.

Cristobal said he was grateful for any construction work he could find. He belongs to a family of construction workers. His father was a contractor. He became a mason. His sons are also construction peons.

Son’s death

When his son, Benbon, and nine other workers died at the construction site of Eton Residences in Makati City in 2011 after their overloaded gondola snapped, the family cried for justice.

To this day, no one has been held accountable for their deaths. They lost their claim to the case at the National Labor Relations Commission and it was brought to the Court of Appeals, Cristobal’s wife said.

But Benbon’s death did not stop Cristobal’s two other sons, Valentino and Junie, from working on construction projects. They are only high school graduates and cannot find other work.

“It’s hard labor and we risk our lives out there. We just try to get through the day,” he said.

Exponential growth

No official data on the size of the informal sector is available because it is not part of the country’s labor statistical system but a number of factors show it “has grown exponentially.”

In the absence of official statistics on the informal sector, estimates give a sense of its size.

The Bureau of Labor and Employment Statistics placed the informal sector at 41.5 percent of the total employment figure of 36 million in 2010, an “underestimate,” Ofreneo said.

The Employers’ Confederation of the Philippines said it was 77 percent, or 25 million out of the 36 million employed in 2006, “an overestimate but is closer to reality, given the large number of unregistered microenterprises in the country,” he wrote.

No papers, social protection

In Ronald’s and Cristobal’s cases, their employers don’t even bother to put their workers’ employment on paper. The number of workers under this scheme is said to be huge.

With no papers, no taxes paid and no formal ties to the company that supposedly employs him, Ronald, like other members of the informal economy, receives no social protection from the government.

When a catastrophe strikes, like an illness or natural disaster, they are left scrambling for money. For them there are no PhilHealth, Pag-Ibig and SSS benefits to cushion the impact.

Ronald, for example, has three children, one of them with special needs. Every time his son suffers a seizure, he has to shell out at least P6,000, which is more than half of his salary for a month.

“We have to borrow money from anyone—neighbors, friends,” said his wife, Sol, who works as a house helper earning P3,500 a month.

According to Ofreneo’s study, although there were efforts from the government to protect informal workers, none have substantially eased their plight.

“In the past, the government exhibited a combination of benign neglect and occasional programs of assistance that were generally limited in scope and budget,” he said.

It cited the antipoverty programs of the government, like the conditional cash transfer program, PhilHealth coverage of indigents and lending initiatives, among other things, but “coverage and funding for these programs are generally limited.”

Magna Carta

Ronald and his family have not benefited from any of these programs. For one, based on 2013 government statistics, they are not considered poor because they earn more than the poverty threshold of P8,022 monthly for a family of five.

It is because of this kind of stories of informal workers that the Magna Carta of Workers in Informal Employment has been introduced and refiled since the 12th Congress.

“The idea is to push for the passage in Congress of a so-called Magna Carta of Workers in Informal Employment or Macwie (House Bill No. 768) that guarantees the following universal rights for informal workers: the right to a job, the right to form an association and the right to get social protection in crisis periods, including the right to protection against harassment by agents of the state in relation to their micro and informal economic activities,” Ofreneo wrote.

Recent events at the workplace made Ronald realize the risks and uncertainties of his job that the Macwie could address.

For instance, citing the case of Ronald’s coworker who died in a construction site, “they (their bosses) almost denied they knew the person,” he said.

“They made it appear like they were just helping the worker, like doing an act of charity,” Ronald said. “And we had to act like we saw and heard nothing.”

“What if it happens to me? What will happen to my family?” he said, adding that the worker’s bereaved family “somehow got a donation.”

In terms of regularization, too, Ronald recalled how his coworkers were suddenly laid off from work when the company realized it had too many drivers and fired almost all of them.

“What if one day they decide they no longer need me?” he asked. “I only trust that they would at least consider my loyalty for the past years but I will never know for sure.”

Enabling environment

Many of the workers themselves said education and poverty were a chicken-and-egg question in which education could lift the family out of poverty while poverty was depriving them of education.

Ofreneo, however, said that aside from education, the government should act to create an “enabling environment” for workers to get better conditions and improved labor-worker relations.

Among the suggestions are:

– Offering cash-for-work to workers instead of awarding projects to big companies in building infrastructure.

– Improving the electric wholesale system because while the Philippines has cheap labor, electricity is more expensive than in Vietnam or Thailand, which hinders foreign investments.

– Revising the system on land reform and reviving agricultural reforms because the landless poor are more susceptible to taking on temporary jobs.

– Taking decisive action against smuggling because the large monetary losses from it can be used to improve labor conditions instead.

– Passing the Macwie for workers’ social protection.

Until these are implemented, Ofreneo said contractuals, casuals and informal workers—whatever Ronald and Cristobal are called—livelihood opportunities would remain hanging by a thread.

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