Amid fears of job losses due to the second package of tax reform, government is stepping up efforts to give security of tenure to workers by ending contractualization.
According to presidential spokesman Harry Roque, President Duterte in a Sept. 21 letter to Senate President Vicente Sotto III certified as urgent a proposed law ending labor-only contracting or end-of-contract (endo) practice in the country.
Duterte said Senate Bill No. 1826 or the Security of Tenure and End of Endo Act of 2018 aims to “strengthen workers’ security of tenure by prohibiting the prevalent practices of contractualization and labor-only contracting which continue to immerse our workers in a quagmire of poverty and underemployment.”
The House of Representative’s version of the bill had been passed in January this year.
Roque said the Senate version prohibits all forms of labor-only contracting and it does not exempt anyone including big contractors and recruitment agencies.
He said the proposed law also amends the Labor Code by repealing the provision that allows labor-contracting by big companies with big investments and capitals.
“Labor-only contracting is prohibited. There is labor-only contracting where the job contractor, whether licensed or not, merely recruits and supplies or places workers to a contractee regardless of whether or not he or she has substantial capital or investment in the form of tools, equipment, machinery, work premises among others,” Roque said.
Roque admitted the new law would affect a lot of businesses and employees in the retail and service industries.
Dominique Tutay, director at the Department of Labor and Employment (DOLE) at a Senate hearing yesterday said the proposed Tax Reform for Attracting Better and High-quality Opportunities (TRABAHO) bill which seeks to lower corporate income tax while cutting cut incentives will cause job displacements and will likely hit the industry and service sectors.
But Tutay was unable to provide figures on how much jobs will be lost, saying the DOLE and the Department of Finance (DOF) have yet to complete their joint study on the impact on jobs of TRABAHO bill.
But DOF undersecretary Karl Chua in an interview denied there is such a joint study though he admitted the agency is looking at a “model” shared to them by the DOLE.
“We have not even started on any study, but since they shared their model, we’ll gladly take a look at it,” he added.
Chua said TRABAHO bill provides for a reduction in the corporate income tax, that creates a lot of new money to invest and expand and create jobs.
“We are going to work with Department of Trade and Industry and Board of Investments to ensure that the Strategic Investment Priority Plan really provides incentives to deserving firms. So we can preserve the good jobs and we are going to sunset those that do not deserve because maybe they are very profitable and even without incentives they will continue to operate and keep the jobs,” Chua said.
“But for the numbers, it’s going to be hard to determine this early until we know what are the priorities, who applied and who are redundant and so on,” he added.
Tutay in the hearing said based on DOLE’s job displacement monitoring, 30,000 jobs were lost in the industry and services sectors in the first quarter of 2018. This, she said, is higher than the job displacement figures in the first quarter of 2017, which was only 25,000.
Tutay also said the bill will also negatively impact technology-driven industries “if they are not able to cope” with the new tax regime.
Sen. Sonny Angara said the Senate committee on ways and means, which he chairs, will not proceed with its deliberation of the TRABAHO bill unless the government can present definitive data on the impact on jobs.
“The government should really take this issue on jobs seriously. The bill should stay true to its name—that it would create more jobs rather than kill them,” Angara said.
Angara said the measure’s primary goal should be to create more jobs, especially in the countryside.
“It seems that the grant of incentives is uneven across regions. We want to spread growth and development in the provinces,” he said.
(J. Montemayor, A. Celis and J. Dairo, Malaya)
