Antonio C' Asper Asst' to the President, FFW

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contractualization
Antonio C. Asper (Asst. to the President, FFW)
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contents

• Extended Summary
• Part I Global Trends
• Changes in the World of Work
• Changes in Work Practices
• Emerging Employment Practices
• Typology of Non-Standard Employment
• Part II Philippine Setting
• Problem of Definition
• Typology of Flexible Employment Arrangements
• Extent of Contractualization
• Policy
• Law and Jurisprudence
• Union Responses
• Part III What can be done

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Extended Summary

• Global Trends
• Philippine Setting
• What can be done

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I. Global Trends
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global paradigm shifts

• FROM
• nation-state to global village
• national economic protectionism to borderless
  economy
• mass production to electronic cottage

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impact on firms

• Global restructuring
• focus on core competency
• outsourcing
• flatter organizational hierarchies
• internal competition within MNC (cf Annex 1)
• stronger consumer orientation

• This simply means that the whole world is
  managed as one market and not as a cluster of
  countries or markets that require different ways
  of doing things from country to country.
• 
  R.G. E. Bacarro
• while many of these changes are organizational
  responses to globalization, the emerging era of
  digital globalization is now responsible for
  their acceleration and is introducing further
  changes in the enterprise. (ILO WER 2001)

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Global trends in the world of work

• Use / introduction of new technology and digital
  globalization
• Rise of the service and knowledge economy
• Global production of goods and services
• Increasing productivity
• Decreasing working hours
• Asymmetry in market regulation, statutory
  regulation and voice regulation
• Continuing economic and corporate restructuring

Sources Ohmae (1998), Rifkin (1999), Standing
(1999), ILO WER, 2001, Human Work (Vatican 2002)
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Global trends in Employment Practices

• Lack of paid work and inadequate incomes in the
  formal and traditional sectors new opportunities
  for employment in the new economy
• Employment Relationship still dominant and
  durable (in industrialized countries)
• Labor flexibility (labor market, labor statuses,
  employment labor relations) on the rise
• Race to the bottom in Labor Standards,
  specifically in the informal sector and
  non-unionized firms
• Informalization, feminization, migration of the
  labor force (in developing countries)

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ICTs impact on employment (2)
Source ILO World Employment Report, 2001
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The Reinvention of Employment

• Organization of Work empowered, enriched,
  kaizen, creative
• Value of Work highest value, initiative,
  self-actualization
• Role of Workers experimenters, use of ingenuity
• Management of Work flatter hierarchies
  boundary-less
• Decision-making process at Work participatory
  and self-managed teams

Cf. Annex 3)
The basic challenge of the globalized economy is
(therefore) the requirement to adjust in a
rapidly changing environment. Central to the
effort to compete in the 21st century is the
preparation of a productive, flexible workforce.
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FIGURE 5 A TYPOLOGY OF NON- STANDARD EMPLOYMENT
Non-standard employment All employment OTHER THAN
full time protected wage employment
Precarious employment (UNDP 1994, Pok
1999) Vulnerable employment (Pok 1999)
Temporary employment or Non-permanent employment
(Eurostat 1996)
Contingent Workers (Osterman 1998)
Informal employment Workers in trade or services
that is not registered and who work in
enterprises employing less than 10 workers
People temporary replacing other workers
Independent contractors
On call workers
Employees in non-stable contracts (ILO
1998) Employees who do not have employment on a
regular basis and includes temporary workers and
casual workers
Seasonal workers
Workers hired through temporary help agencies
Unstable employment (Hoffmann 1999) Workers who
have been employed with a spell of unemployment
lasting at least once, or spell of being outside
the labour force at least once
Workers on specified projects who will lose their
jobs on completion of project
Contract workers who are employed by firm for
specific job
Workers on fixed term contracts
Source OECD
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Issues, Debates, Questions

• Flexibility vs security
• Management Prerogative vs Rights at Work
• Business Viability vs Workers Welfare

Is there a workable balance between and among the
contending issues
Is there an acceptable mix of regulation among
Statutory, Market, Voice at Global and National
levels?
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Global Union Reponses

• Use of International Instruments and Supervisory
  Mechanisms, including Codes of Conduct, GCI,
  voluntary accreditation or product certification
• MNC-wide organizing, Works Councils and
  Coordinated Bargaining (e.g. Volkswagen,
  Coca-Cola, Mcdonalds)
• International Framework Agreements (e.g. IKEA)
• Global Campaigns e.g. Clean Clothes Campaign
• Global Union Services (e.g. UNI passport, EMWU)
• Unification of Structures (e.g. ITUC)
  harmonization / complementation of strategies
  (between ITUC and GUFs and among GUFs)

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II. Philippine Setting

• Concepts and Types
• Estimates and Trends
• Conditions of Work
• Representation and Union Responses
• Policy
• Law and Jurisprudence
• What Can be Done

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• Concept and Type

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Concept of Non-Regular (or Flexible) Work

• The concept of non-regular work in the
  Philippines is the same as flexible employment
  defined in the current international literature,
  i.e., any form of employment that is not
  full-time employment for an indefinite duration
  (Ozaki 1999 6).1 It includes part-time,
  temporary, contractual, outsourced,
  subcontracted, home-based, and self-employment,
  and is interchangeably used for non-regular or
  atypical work (Felstead and Jewson 1999). The
  common feature of such arrangements is their
  divergence from full-time and permanent careers,
  which has been taken as the standard of regular
  employment.

Source of Slide Bitonio, Jr., E.R., Labor
Flexibility and Workers Representation in the
Philippines, 2004
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Types of Flexibility at work

• labor cost flexibility is the relaxation or
  removal of restraints that prevent the price of
  labor from adjusting.
• Functional flexibility takes place when firms
  reorganize their workers to perform multiple
  tasks required by the production process.
• Numerical flexibility concerns the adjustment of
  working hours or the size of the workforce in
  response to output demand fluctuations.

Source of Slide Bitonio (2004), citing Esguerra
(1997)
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• Extent and Trends

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Estimates of non-regular employment

• 35 of total employment in1999, based on the
  number of workers who have worked for less than
  40 hours (Maragtas Amante, 2006)
• 30.3 of workforce of establishments employing 20
  or more workers (BLES-BITS Survey, 2004)
• Of the 27.2 million employed, 13.9 million are
  in wage employment. Over six million of those
  employed are in non-regular work in the broadest
  sense (Bitonio, 2004)

While numerical estimates vary, all agree that
flexible employment is on the rise
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Extent of and Trends in Non-Regular Work

• Non-regular work exists across industries
• Manufacturing (highest in casuals)
• Construction (highest in contractuals)
• Wholesale, trade retail (highest in agency
  hires)
• Transport, storage communication
• Financial business services
• . . . accounts for 10-35 of the firms workforce

Source Bitonio, Jr., E.R., Labor Flexibility
and Workers Representation in the Philippines,
2004
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number of establishments employing non-regular
workers increased from 65.5 in 1998 to 86.4 in
2000
increase ranges from 3 to 7 percent notably among
casual and contractual
Source of Slide Bitonio, Jr., E.R., Labor
Flexibility and Workers Representation in the
Philippines, 2004
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Factors that Encourage Employment of Non-Regular
Workers July 1998 to June 2000
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• Working Conditions

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Flexible Employment in the Philippines is
dominantly of the low road variety

• Although flexible employment is often classified
  as either of the high road or low road variety,
  the social policy discourse in the Philippines
  tends to be more concerned with low road
  flexibility. Thus, flexible employment tends to
  be associated with precarious or vulnerable
  employment which offer low pay, unsocial hours,
  poor working conditions, poor promotion prospects
  and minimal job training (Felstead and Jewson
  19997).

Source of Slide Bitonio, Jr., E.R., Labor
Flexibility and Workers Representation in the
Philippines, 2004
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What statistics and studies say

• Non-regular workers are paid less
• Non-regular workers get less benefits firms use
  non-regular work to avoid statutory cost
• Non-regular workers are insecure always first to
  go in periods of uncertainty

Same work, different treatment
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• Representation and Union Responses

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WORKERS REPRESENTATION AMID FLEXIBLE WORK

• Survey shows
• Collective bargaining generally excludes
  non-regular workers
• But there are unions comprised of non-regular
  workers
• Women less active than men
• Overlaps in representation within and outside the
  firm level
• Two streams of representation are emerging
• Direct or membership-based representation
• Indirect or proxy representation (Non-membership
  based)

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WORKERS REPRESENTATION AMID FLEXIBLE WORK

• Political space for organizing exists
• Legal infrastructure
• Actors have institutional experience

WHAT FORM OF REPRESENTATION CAN BE EFFECTIVE?
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What Unions are doing
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(No Transcript)
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What unions found difficult to negotiate
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• Policy

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Policy Foundation

• MTPDP 2004-2010
• To support the efforts in job creation, the
  government shall issue administrative guidelines
  and propose legislative amendments to the Labor
  Code to recognize flexible arrangements (e.g.,
  subcontracting, flexi-work, flexi-wage especially
  in business process outsourcing and
  cooperatives). However, this shall take into
  account the promotion of decent work and respect
  for core labor standards.

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Policy Elaboration
Philippine economic development
Flexibility gtMore efficiency gtMore
competitiveness But shouldnt impair workers
rights

• Policy labor flexibility can create employment

• 1995 Employment Summit MTPDP 2001-04 2004-10

Firms restructure toward flexible specialization
Source Bitonio, Jr., E.R., Labor Flexibility
and Workers Representation in the Philippines,
2004
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CONCLUSIONS POLICY OPTIONS Survey Findings

• No correlation between flexibility and employment
  or productivity growth
• Core-periphery model Numerical and cost
  flexibility are preferred measures
• Negative correlation between flexibility and
  security/quality of employment
• Low level of representation security for both
  regular non-regular workers
• Flexibility not synonymous with feminization of
  labor

Source Bitonio, Jr., E.R., Labor Flexibility
and Workers Representation in the Philippines,
2004
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CONCLUSIONS POLICY OPTIONS ISSUES

• Big themes Security of tenure right to
  organize
• Selective assimilation of core-periphery model
  into the legal system?
• Promote voluntary arrangements?
• Manage work-to-work transitions and unemployment
  spells? Smooth out consumption and income flow?
  Sustain social protection?
• Flexible employment as an HRD tool?

Source Bitonio, Jr., E.R., Labor Flexibility
and Workers Representation in the Philippines,
2004
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CONCLUSIONS POLICY OPTIONS Representation
Issue Can it be done?

• Multiple channels of representation can be
  mutually reinforcing
• Organizing outside an employer-employee
  relationship can benefit non-regular workers
• Institutions needed to
• Promote social dialogue
• Intermediate social tensions and differences

Source Bitonio, Jr., E.R., Labor Flexibility
and Workers Representation in the Philippines,
2004
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• Law and Jurisprudence on Sub-contracting

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Contract Work Legal Bases

• Article 106 to 109 of the Philippine Labor Code
  (cf Attachment 1)
• D.O.18-02 1, replacing D.O. 19 Series of 1993
  (Cf, Attachment 2)
• Republic Act No. 5487 (Regulating the Operations
  of Security Agencies)
• Article 2180 of the Civil Code (joint liability
  of principal and contractor for negligent acts of
  the employees of the latter.

Some provisions are ambiguous. Some others may
not be compliant with ratified ILO Conventions
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Leading Jurisprudence Valid Job Contracting
Cf Annex

• Meralco vs. SOL and MEWAS (Feb. 9, 1999)
• AFPMBA vs. NLRC,et al, G.R. 102199 (Jan. 1997)
  Insular Life vs. NLRC et al, GR No. 84484 (Nov.
  15, 1999)
• Neri, et al vs NLRC, et al, GR No. 97008-09 (July
  23, 1993) 224 SCRa 7171
• Roune-Polenc Phils. Vs NLRC, et al, GR Nos
  102633-35 (Jan. 19, 1993)
• Securities Message Express Union vs. MOLE, GR.
  Nos. 72671-73 (April 17, 1988)
• Petrofil vs. NLRC, et al, GR NO. 1-64048 (Aug.
  29, 1986)
• SSS vs CA, 39 SCRA 629)
• La Suerte vs. Director BLR, et al, GR No. L55674
  (July 25, 1983 Mafinco Trading vs Ople, et al,
  GR No. L337790 (march 25, 1976)
• Associated Anglo American Tobacco vs Clave, et
  al, 189 SCRA 127

UNLESS EXPRESSLY LIMITED BY LAW OR COLLECTIVE
AGREEMENT, JURISPRUDENCE DEFERS TO MANAGEMENT
PREROGATIVE
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III. What can be done

• Organizing and Representation
• Collective Bargaining
• Mutual Aid and Assistance
• Advocacy and Legislation
• Proposed 9pt Policy Issuances or Advisory

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Organizing and Representation

• Cascade ITUC Formula at national level and shift
  to SMU-mode of organizing and representing
  workers.
• Expand and strengthen GUFs at national level
• Harmonize ITUCs and GUFs strategy at national
  level
• Advocate compliance to International Instruments
  and use International Supervisory Mechanisms,
  voluntary instruments, and legislation to align
  national laws to global standards
• Use global campaigns to focus advocacy along the
  value chain
• Organize and re-organize membership also along
  trade or craft lines to facilitate incorporation
  of self-employed and employed trades or crafts
  persons into the labor movement
• Maximize social dialogue mechanisms to protect
  non-regular workers The Labor Standards
  Enforcement Framework can be used side by side
  with CB.

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Collective Bargaining

• Negotiate protective clauses in case of corporate
  restructuring extending unionism and CBA in case
  of outsourcing, spin-off, merger acquisition
• Negotiate for (extended) coverage of all types of
  non-regular workers even as non-regular workers
  retain their non-regular statuses.
• Negotiate for training clauses in CBAs skilling,
  re-skilling, upgrading, equivalency, in a
  competency-based and/or DTS modes of training
  delivery
• Negotiate for portable social insurance package
  on a defined-contribution or defined-benefit
  schemes

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Mutual Aid and Assistance

• Set-up own program for training for work or
  training to ease work-to-work transitions,
  together with employment counseling, matching and
  placement services
• Set-up own frugal social insurance or social
  assistance schemes for all types of members to
  supplement negotiated schemes focus on portable
  defined-contribution type of financial assistance
  in case of involuntary loss of employment, death
  and preventive medical care.

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Advocacy and Legislation

• Align law and practice to ILOs CILS and Priority
  Conventions and Recommendations, especially
  those related to employment and human resource
  development.
• Promote social dialogues and social partnerships
  for productivity, competitiveness and decent
  work. (e.g. High Performance Work Practices or
  HPWP)
• Expand coverage of employment relationships for
  purposes of extending protective labor standards
  to all types of non-regular employment
  arrangements (cf. adapt dutch model)
• Advocate for a frugal, one time unemployment
  benefit in the short term. With increased premium
  rates, perhaps a joint employment insurance
  scheme by the various institutions can be set up.

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Proposed 9pts Policy Issuances or Advisory (1)

• Distinction between trilateral arrangements
  (contracting, sales, recruitment/placement),
  clarification with regard to toll manufacturing
• Control test relativity (varying degrees of
  expected control, based on nature of work, e.g.
  consideration of stringent foreign buyer controls
  in the garments industry)
• Substantial capital relativity (depending on
  nature of work)
• Control and substantial capital tests results
  variances (not one result per contractor, but may
  have various results among different clients of
  one contractor)

Source Cacdac, Hans Leo J. The Supreme Court
and Contractualization, 2004
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Proposed 9pts Policy Issuances or Advisory (2)

• Definition of activities directly related to the
  main business of the principal
• Application of Articles 106 to 109 to government
  principals
• Subsidiary liability of principals in wage order
  increases
• Cooperatives engaged in contracting/subcontracting
  
• Clarification on applicability of Articles 106 to
  109 to business process outsourcing (BPOs)

Source Cacdac, Hans Leo J. The Supreme Court
and Contractualization, 2004
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Thank you.
Why reinvent the wheel? Because the terrain keeps
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