"It is morally right but economically wrong"
To rid the nation of corruption, crime and illegal drugs within six months was not the only extravagant promise that PDP-Laban candidate Rodrigo Duterte made during the course of the 2016 presidential campaign. There were others. One of the other extravagant Duterte campaign promises was to put an end to the endo (end of the contract) employment practice in this country.
Duterte was likewise unable to deliver on his endo promise.
Endo has been the affected business establishments’ response to the Labor Code provision that requires them to regularize – grant regular status to – employees upon completion of six months of service. Regular employees are entitled to all the fringe benefits mandated by law, including the benefits provided by the Social Security System, PhilHealth (Universal Healthcare System) and Pag-IBIG. End of contract under the endo practice comes before the completion of six months of employment. It is hardly necessary to point out that a pre-endo employee is not entitled to regular-employee benefits and thus entails a lower labor cost to the employer.
At the beginning of his term, with his labor-sector supporters demanding that he deliver on his campaign promise, Rodrigo Duterte made loud noises about going after the endo-practicing business enterprises and directing DOLE (Department of Labor and Employment) to identify the businesses that were chronic evaders of the regularization-after-six-months legal provision. A few business enterprises that were vulnerable because of their well-known endo practice thought it best to comply with the new President’s anti-endo order. But when other large companies and some of the trade organizations started making noises about a possible legal challenge to the endo-outlawing order, Rodrigo Duterte backed down and signed into law a measure that definitely did not write firms to the endo employment practice. More to the point, the new law was not the give-the-employers-hell endo that candidate Duterte had loudly promised during the 2016 campaign.
In all fairness to him, President Duterte probably really wanted Congress to send him a tough anti-endo measure for his signature. But the pressure of the business community on him and his Congressional allies was so strong that the new President had no choice but to accept the realities of the marketplace.
The anti-endo issue needs to be looked at on two levels: the moral and the economic. Morally speaking, it can be said that the practice of keeping employees from achieving regular status – by repeatedly contracting their services for less than 179 days at a time – is wrong. But from the economic standpoint, the standpoint of the bottom line, the endo employment practice is the right way for businessmen to go. The less benefits a business enterprises’ employees receive, the lower the enterprises’ labor cost and the better its prospects of operating profitably.
Assuming that it is observed by them religiously, the medium-size enterprises of this country are the ones that are hurt most by an anti-endo policy. Medium-size enterprises should be given every chance to become big enterprises; an anti-endo policy is a move in the opposite direction.
Given its experience with business-sector compliance with tough labor laws that are likely to hurt profitability, DOLE must have believed that a tough anti-endo Labor Code provision would be observed more in the breach than in the compliance. Morally right but economically wrong – that was President Duterte’s and Congress’s essential problem with enacting an anti-endo law.
Given Rodrigo Duterte’s backdown on endo, not one of the presidential candidates in the 2022 election is likely to promise to end the endo practice. Such a promise is likely to get no further this time around.