MANILA - President Rodrigo Duterte has signed an executive order prohibiting illegal contracting and sub-contracting, but labor groups were not happy as it supposedly favors employers.

Labor groups have long bemoaned the employers’ practice of “endo,” short for "end of contract," where workers are terminated repeatedly and then rehired to avoid regularization, denying them of benefits and security of tenure.

In issuing the EO, Duterte sought to allay the claim of labor groups that he has abandoned his campaign promise of ending contractualization.

Labor groups, however, were dismayed by the EO’s wording.

1. Why are labor groups not satisfied with the EO?

Labor groups Kilusang Mayo Uno, Associated Labor Unions-Trade Union Congress of the Philippines (ALU-TUCP), and Nagkaisa had submitted to the Palace their proposed EO on contractualization.

They sought to include in the EO a provision stating that “direct hiring of the employee by the principal employer shall be the general norm in employment relations.”

This stipulation, however, was not included in the EO that Duterte signed and Labor Secretary Silvestre Bello III unveiled Tuesday, in time for Labor Day.

Labor groups alleged that the version of the EO that prevailed was the one submitted by the employers’ groups and the Department of Trade and Industry.

The most crucial and contentious provision of the EO is found in Section 2, which pertains to the prohibition on contracting and subcontracting.

In the Duterte-approved EO, contracting or subcontracting is strictly prohibited “when undertaken to circumvent the worker’s rights to security of tenure, self-organization, and collective bargaining and peaceful concerted activities pursuant to the 1987 Philippine Constitution.”

"Ang kailangan ngayon ay maglabas ng policy na ipagbawal ang lahat na forms of job contracting. Gusto lang ng EO na ito ay pahupain ang galit ng mga manggagawa sa pagtalikod ni Pangulong Duterte sa pangako niyang wakasan ang 'endo' at kontraktuwalisasyon," Zarate said.

(What is needed now is a policy that bans all forms of job contracting. This EO only serves to appease workers who are angry at President Duterte for turning his back on his promise to stop 'endo' and contractualization.)

Rep. Ariel Casilao of Anakpawis party-list said there was nothing new in Duterte’s EO.

“That was just a reiteration of existing labor laws that have been proven anti-worker. Prohibiting labor-only contracting is already there but employers continue to circumvent and abuse it,” Casilao said.

“What the workers demanded is total prohibition of contractualization by via direct hiring.”

2. Why won’t Duterte accede to the labor groups’ demands on the EO?

Labor groups and the labor department have been at odds over how the EO should be worded.

Labor groups had wanted that all forms of contractualization be banned, but the government said this is not possible because the labor code allows contractualization.

Bello said there are certain jobs which are temporary in nature, making regularization of employees unlikely and banning all forms of contractualization not feasible.

“For example, services of sales girls in malls are indispensable in the retail [sector], so they should be regular employees. But during seasons like [the] start of school, you need to add sales girls because of [the] influx of customers. These people will be seasonal contractual workers,” Bello said in an ANC interview.

“A project-based employee, like for putting up a building, cannot be kept because the project is [eventually] finished. These employees can be outsourced.”

Some groups, such as the Partido ng Manggagawa, however, have taken a moderate stance on contractualization, saying they are willing to cooperate with the government in identifying industries where contractualization is absolutely necessary.

In March 2017, the labor department released Department Order (DO) No. 174, which seeks to regulate labor-only contractualization, a practice that is not allowed, according to Article 106 of the labor code.

It also restricted the "end of contract" scheme, where employees will be terminated before the end of their probationary period and then rehired for the same job, still without the benefits being given to a regular employee.

Labor groups, however, were not satisfied with the order, saying it still allowed “legal contractualization."

3. What is the solution of the government to its deadlock on ‘endo’ with labor groups?

Amid an uproar from labor groups accusing him of reneging on his campaign promise, Duterte signed the EO on Labor Day.

The President, however, warned that a “mere” executive order was not enough to address the demands of labor groups.

“I could only do so much and a mere Executive Order is not enough because you have to change or modify or entirely abrogate some of the provisions diri sa atong balaod (in our law). I cannot be a legislator. It is not allowed. But I can only implement,” Duterte said in his Labor Day speech in Cebu City.

“But because there are laws already, kaning akong Executive Order na gipirmahan karon (the Executive Order that I have just signed now) would help a lot in alleviating the problem.”

The President said he has certified as urgent the passage of the bill on security of tenure pending in Congress “to once and for all address the issue and provide long-term solutions that would further strengthen the workers’ right to security of tenure.

4. Are employers groups worried about the EO?

When the labor department released DO 174, the Employers Confederation of the Philippines (ECOP) said it would comply with the order even while it would be difficult.

While labor groups said the EO seemed to favor employers, ECOP said it still had reservations about the order.

ECOP said it found "worrisome" the definition of “security of tenure” in the EO and the possible “loose or absurd” rules of engagement in the order’s enforcement.

In the EO, security of tenure is defined as the “right of employees not to be dismissed or removed without just or authorized cause and observance of procedural due process consistent with the Constitution, Labor Code, as amended, and prevailing jurisprudence.“

Still, ECOP said the government “must be credited in its serious and sincere effort to craft an EO that meets the expectations of both labor and capital.”

“The EO is signed and despite our reservations… employers will live with it and comply.”