Philippine President Rodrigo Duterte recently signed an executive order which will clamp down on abuses of short term work contracts also known as “end of contract” or “endo”. Many including Duterte have expressed dissatisfaction at the abuse of short term work contracts which some employers use to avoid paying their workers benefits or offering them long term job security. According to the current rules which Duterte’s executive order aims at enforcing, if a worker is contracted to an employer for over six months, the worker must legally become a full-time employee rather than a subcontractor.
However, for some, Duterte’s move hasn’t gone far enough as they seek a total ban on endo, even though a total ban would be economic suicide for clear enough reasons.
Some jobs are temporary and some workers only seek a temporary job
If Endo was totally eliminated, it would transform some workers who are wilfully engaged in short-term employment from assets into liabilities for their employers. If for example part time builders, resort workers or those in part-time service industry jobs were automatically given the benefits of full-time workers, it would become incredibly unattractive for any employer, especially a small business owner to hire such people at all. The result could push workers who do part-time work onto the black economy and this would benefit no one in the long term.
Tackling abuses with intelligence rather than rhetoric
While forcing businesses owners, particular small business owners to give temporary or seasonal workers the same rights as full-time employees would discourage hirings and ultimately slow the economy, it is equally unfair for businesses to abuse legal and extra-legal loopholes in order to deprive individuals who are obvious full-time workers, of the legal protections and benefits they are entitled to. This is why Duterte has himself said that his executive order is the beginning rather than the end of the wider move to tackle endo abuse – a fact totally ignored by the fake news anti-Duterte media.
One fault that governments around the entire world are guilty of is treating small businesses in the same way as big businesses. This is one of the reasons that the over-regulated European Union in particular is much less friendly to innovation than many Asian countries and parts of North America.
While a big business, particularly a multi-national can afford to hire full-time workers and sustain their wages and benefits even in an economic downturn, for the small business owner, one’s fortunes are often far more volatile than those of temporary workers.
Small businesses frequently undulate between what is known as ‘feast and famine’. During good months or seasons all the bills are paid, all the workers are secure in their jobs and the business owners take their share of the profits. But in bad months or seasons, companies can go in debt and run out of sufficient funds to pay even a small working staff.
If endo was eliminated for were eliminated for small businesses and they were forced to make all of their workers full-time employees, such businesses could simply run out of money and cease to exist during poor months or seasons. This would be bad for the small business owners and equally bad for the employee who went from having a job to having none.
Therefore, before going any further, the government should draw a line and say no endo for businesses over a certain size, while allowing smaller businesses to not only retain endo but expand their use. This would allow small businesses to hire more employees when times are good without boxing themselves end when times are bad, while simultaneously, it would ban wealthy corporations from abusing employment law in order to same money on the costs of staff.
At the same time, the government must consider which kinds of jobs are appropriate for certain limited forms of endo and in what circumstances, while also working to determine which sorts of jobs are non-endo friendly and should therefore be subject to a more encompassing endo ban.
In this way, the government will be able to balance the rights of workers with the pragmatic realities of small, medium and large business without sacrificing one for the other.
An economy that is too friendly to businesses will result in poor and exploited workers but an economy that has too many restrictions on hiring and firing practices will see businesses either collapse or simply learn how to survive with fewer workers. This too is bad for the over all economy.
Just as is the case with geopolitics, internal economic matters should also strive towards a win-win solution rather than head towards a zero-sum stand-off. Duterte is therefore absolutely right to say that before looking at new rules, existing rules should be enforced properly and then and only then, it will be right to look at long-term endo reform that protects both the economic solvency of businesses as well as the rights of workers.