The problem of contractualization cannot be resolved by issuing an executive order or by legislating to prohibit indirect hiring to subvert the security of tenure of the workers. Instead it is by understanding the basic laws in economics that necessitate employers to resort to the illegal practice of hiring workers supplied by labor traders who style themselves as employment agencies.
Forcing employers to comply with the sacred labor right of security of tenure will not solve the problem. Some will comply to avoid penalty, but those could no longer bear the financial burden of sustaining high wages will have to close down their business establishment. This has become apparent after the value of the peso was made flexible that it affected the cost of wage and materials. Even if retrenchment is allowed by the Labor Code, just the same it is costly to some companies struggling to survive. It is not only project employees, seasonal plantation workers and export-dependent industries, but practically all are affected.
Whether payment for the workers is the result of retrenchment, of illegal termination or of legal services to defend a case before the Labor Arbiter and the corruption that is entailed in the litigation of cases, just the same they are financial expenses which otherwise could be allocated to productive use. We cannot continue with this method just to satisfy the demand in securing the tenure of the workers.
We have to come out with a win-win solution that is acceptable to both the employers and the workers. We have to look at employment not from the standpoint of hiring workers to produce commodities that in turn will have to be sold for profit, but to examine the nature of employment, that is affected by the boom-and-bust cycle. This is what Marx called the “irreconcilable contradiction” in the capitalist system. But like it or not, this contradiction has outlived Marx’s own prediction because every now and then, we come out with palliative solutions to give capitalism an added lease in life.
Only by accepting this stark reality about the nature of business and the indivisibility in hiring workers to produce goods can we come out with a formula acceptable to the workers and to the employers. While security of tenure is accepted as the lifeline to the workers’ survival, wages have to be adjusted to ensure sure that their employment remains available.
Wages have to be adjusted to allow business to overcome the stormy seas they navigate. Employees may suffer from reduced income but employers suffer from less profit, if not loss in capital. It is only through their joint effort can they hurdle the economic crisis.
The monetarist’s trick of revaluing or devaluing the currency to allow the finance oligarchy to constantly reap profit is one factor not understood by many. China, at one point, refused to revalue its currency for fear that increasing the value of the yuan would automatically force it to increase wages to invariably affect the prices of their exports. In that, the Chinese saw the problem from an aggregate perspective.
Taking this as a lesson, our workers should accept the possibility that wages, like commodities, are also affected by the law of supply and demand. The lesser demand for labor results in lesser production work, and this could lead to retrenchment. Unemployment increases the instinct to survive, and workers badly in need of employment would settle for lower wages with the less fortunate ending up as underemployed working less than eight hours a day and earning far below the minimum wage.
My contention is that wage reduction is far better than unemployment. For instance, administration of US President Franklin Roosevelt, created the Work Progress Administration (WPA) to purposely employ a great number of workers who were displaced during the Great Depression that lingered on up to 1940s. It is said that WPA financed variety of projects such as hospitals, schools and roads and employed more than 8.5 million workers who built 650,000 miles of highways and roads, 125,000 public buildings as well as bridges, reservoirs, irrigation systems, parks, playgrounds and so on.
Today, the same tested methodology in running the economy based on securing the right of the worker to employment instead of securing their security of tenure is being observed by China. China’s decision not to revalue the yuan is mutually beneficial to business and to employment. It is beneficial to business because it allowed them to sell their goods at competitive prices in the international market. It is also beneficial to the workers because the door is always open for employment.
Through wages was relatively low compared to their neighbors in Asia, at least China was not burdened in sustaining a vast number of idle labor force. China set its goal in increasing production and exports than in increasing the wage of the workers. Today, Chinese workers reap the fruits of shared prosperity with their country producing more than 50 percent of the world’s manufactured goods.
Likewise, it is a myth to say that our workers leave the country in search of employment opportunities abroad. Taking that myth at its face is to humiliate ourselves as one not being able to provide employment to our people. The truth behind the hegira of most of our workers is that after six months of being employed, their contract is terminated only to be rehired later. If ever they are rehired, they would be receiving the same amount of wage without a chance of earning above the minimum wage. That today is a de facto form of slavery.
It is this bleak prospect why they are forced to leave. This is particularly true to our skilled workers. As contractual workers, many of them fail to remit their monthly contribution to the SSS, PhilHealth, ECC, Pag-Ibig and are denied whatever retirement benefit they should enjoy. All these is the result of their being contractual workers.
Many overseas workers gamble their luck as contractual workers abroad for as they say, they earn far above the minimum wage. If fortune favors them, they can be made permanent that even if they will do a backbreaking job for just ten years, they have the greater chance of sending their children to college, owning a decent home for their family if not, invite them abroad which no employer here could offer. In other words, overseas employment has nothing to do with employment per se but for the lack of assurance to their employment.
