Duterte rejects anti-endo bill, says it destroys 'balance'

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President Rodrigo Duterte has vetoed the bill that bans contractual work arrangements.

Metro Manila (CNN Philippines, July 26) — President Rodrigo Duterte refused to sign the Security of Tenure (SOT) bill that he certified as urgent and which seeks to fulfill his campaign promise of ending contractualization.

In his two-page veto message sent to Congress on Friday, Duterte said he rejected the landmark measure because it "unduly broadens the scope and defintiion of prohibited labor-only contracting, effectively proscribing forms of contractualization that are not particularly unfavorable to employees involved."

"I believe the sweeping expansion of the definition of labor-only contracting destroys the delicate balance and will place capital and management at an impossibly difficult predicament with adverse consequences to the Filipino workers in the long term," Duterte said.

The bill defines labor contracting as a practice wherein a job contractor "merely recruits and supplies or places workers to a contractee." The measure, which was supposed to lapse into law Saturday, prohibits business entities from hiring workers on a contractual basis. It requires businesses to directly hire employees, effectively banning the practice of outsourcing workers through manpower agencies. It also wants companies to absorb or regularize all workers. All employees, including project and seasonal employees except those on probationary status, are entitled to benefits received by regular workers.

Duterte stressed that he remains committed to eradicating all forms of abusive employment practices and protecting the workers' right to security of tenure. "Our goal, however, has always been to target the abuse, while leaving businesses free to engage in those practies beneficial to both management and the workforce," he said.

He stressed that there should be a "healthy balance" between the conflicting interests of laborers and employers.

The National Economic and Development Authority (NEDA) earlier submitted to the President recommendations and proposed adjustments to the SOT bill. Socioeconomic Planning Secretary Ernesto Pernia did not disclose what these are, but stressed that "we have to be sure that the law benefits not only workers but also the employers."

Several business groups and firms also requested the President not to enact the bill, saying it could discourage investors from venturing into the country, resulting in job losses. The Employers Confederation of the Philippines said the President might have realized the measure's drastic impact on the economy, and that what the country needs is not a new law, but the enforcement of existing measures against illegal contractualization.

Malacañang in a statement agreed, "Our country cannot afford business closures as it will pain us seeing a decline of job opportunities for our labor force."

Presidential Spokesperson Salvador Panelo also noted that the President during last year's Labor Day signed Executive Order No. 51, enforcing a government crackdown on unlawful contracting and subcontracting. He added that government efforts against contractualization have resulted in the regularization of over 460,000 workers from August 2016 to May 2019.

The Federation of Free Workers, however, maintained that existing measures have failed to end all forms of "illegal contractualization" or "endo."

"Endo" or "end of contract" is a highly contested form of contractualization widely practiced in the country – workers are hired for not more than five months, so employers don't need to regularize them on the sixth month as mandated by the Labor Code. It strips millions of workers of all the benefits granted by law to regular employees.

Senate President Vicente "Tito" Sotto III said he will ask colleague Joel Villanueva, chairman of the chamber's labor committee, to refile an anti-endo measure. Villanueva also committed to continue the decades-old fight to end illegal contractualization.

READ: Back to square one? Senators eye refiling of anti-endo bill

Labor groups have been calling on Duterte to fulfill his campaign promise of putting an end to endo. As early as September 2018, the President certified the SOT bill as urgent, allowing lawmakers to fast-track its passage.

"It makes no sense to me why Malacanang would declare it a priority measure then just to Veto it after its approval," Senator Miguel Zubiri said, calling on the Palace to clarify the matter.

Rep. Jericho Nograles, an author of the anti-endo bill in the House, told CNN Philippines that lawmakers can refile the measure anytime, but the executive "should be clearer" this time on how it wants labor contracting defined.

CNN Philippines Correspondent Ina Andolong contributed to this report.