History of Contractualization in the Philippines

Contractualization has been a hotly debated issue in the Philippines for decades. It is a labor practice that has affected millions of workers across various industries in the country. But what is contractualization, and how did it come to be?

Contractualization, also known as “endo” or end-of-contract scheme, is a practice where companies hire workers on short-term contracts, which usually last for less than six months. After the contract expires, the worker is either terminated or rehired under a new contract, without the benefits and security of regular employment.

The history of contractualization in the Philippines can be traced back to the 1980s, during the administration of former President Ferdinand Marcos. At that time, the government introduced the Labor Code of the Philippines, which provided employers with more flexibility in hiring workers. One of the provisions included in the Labor Code was the contractualization of workers.

Contractualization was initially intended to address the issue of seasonality in agriculture and other industries, where workers were needed only during certain periods of the year. However, the practice soon became widespread, with companies using it as a way to reduce labor costs and avoid providing benefits and security to their employees.

In the 1990s, the Philippines saw a surge in outsourcing and offshoring of jobs to other countries. Companies, particularly in the business process outsourcing (BPO) industry, continued to employ contractual workers to keep labor costs low. While the BPO industry generated jobs and contributed to the country’s economy, many workers were left in precarious employment situations.

In response to the growing issue of contractualization, various labor groups in the Philippines have been advocating for the abolition of the practice. They argue that contractualization violates workers’ rights and contributes to the widening gap between the rich and poor. Many labor unions have also called for the implementation of a living wage, job security, and social protection for workers.

In 2018, the Philippine government passed the Anti-Contractualization Law, which prohibits the hiring of workers on a contractual basis for more than six months. However, the law has been criticized for its loopholes and lack of enforcement mechanisms.

Today, contractualization remains a contentious issue in the Philippines, with workers calling for better labor standards and lawmakers pushing for more comprehensive labor reforms. It is a complex issue that requires a collaborative effort from all stakeholders to ensure that workers’ rights are protected and upheld.

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