ILS Discussion Paper Series 2010

Flexibility and Security at Work:

Seeking a Balance of Interests

Katherine B. Brimon

For Discussion Purposes Only

ILS Discussion Paper Series 2010

Flexibility and Security at Work:

Seeking a Balance of Interests
Katherine B. Brimon

INSTITUTE FOR LABOR STUDIES

TABLE OF CONTENTS
Introduction

Flexible Work Today

A Global Trend Toward Flexible Work
Flexible Work in Asia
Flexible Work in the Philippines

Business and Its Need For Flexibility

16

Workers and their Need For Security

19

Toward Balancing Flexibility and Security at Work: Current

Responses

24

The Way Forward

Annexes

FLEXIBILITY AND SECURITY AT WORK:

SEEKING A BALANCE OF INTERESTS

By Katherine B. Brimon

ABSTRACT
Globalization is the driving force behind the current trend toward more
flexibility at work. In the pursuit of competitiveness, businesses need to resort
labor flexibility as a matter of strategy. This need, however, cannot be met without
compromising workers rights. This paper looks into the contentious issues of
flexibility and security at work within the context of on-going firm-based
restructuring as well as urgent calls for policy reforms in this area. It offers the
reader information on the prevalence of various forms of flexible work
arrangements around the world and in Philippine labor market including the
actors present in these schemes. It takes an in-depth look into the issues raised by
workers and businesses relative to the practice of these forms of flexible work
arrangements as well as the current policy responses to these issues at the national
and global levels.
From these information, the paper presents policy
recommendations toward attaining a desirable balance between the needs of
business and the needs of workers.

The author acknowledges the valuable technical assistance provided by Misses Rosario
Mangahas and Paulina Kim Pacete of the ILS in the conduct of this research.

I.

INTRODUCTION

The transformations brought about by intensified globalization presents a

challenge for many countries. Ensuring effective adjustment in a situation of low
economic growth and high unemployment has become imperative particularly
among developing countries. These adjustments involve deliberate changes in
the structure of production, which result in changes in the employment structure
as firms gear for fiercer competition in a global environment. The need to
compete in global trade has pushed firms to implement strategies aimed at cost
and time efficiencies, measures which usually require labor to be increasingly
flexible.
Enabling firms to manage change and to adapt to uncertainties and
pressures at all levels in the organization has become integral to business
strategy. Such initiatives have been undertaken within the confines of human
resource management on the principle that it is a most integral part of business
strategy. HRM has focused on removing rigidities by implementing functional
and numerical flexibility.
Flexibilization as an impact of rapid globalization is highly visible in a
developing country like the Philippines. In the 1980s, during the era of intensive
industrialization in the country and simultaneous with the free flow of capital
and goods, transnational corporations have decided to locate their low-end
labour intensive manufacturing processes in developing countries such as the
Philippines. These firms have responded with restructuring measures to be able
to compete in a global market. Thus, manufacturing companies in the
Philippines now largely operate using subcontracting, flexible work hours, and
contract-based employment arrangements. A 1990 survey conducted by the ILO
showed that 64 % of the firms surveyed in the Philippines practiced labour
flexibilisation or were using the services of workers under labour contracts.
Meanwhile, todays services sector in the Philippines which is strongly linked
with global value chains also relies on flexible work arrangements as an efficient
and even competitive strategy. Thus, controversial flexible work arrangements
practiced in varying degrees among sectors were the focus of concern among
industry, labor and professional associations and non-government organizations
during the 2007 National Human Resource Conference at the Manila Hotel on
April 25, 2007. In that event, flexible work arrangements such as outsourcing
and contractualization were raised as among the problems that affect the
achievement of a harmonious labor relations environment in the country, among
other factors. As of writing, the issue is at the center of labor policy discourse
due to on-going restructuring in certain firms as well as urgent calls for labor
policy reforms that would address the lack of competitiveness of the country as
well as the growing vulnerabilities faced by workers due to globalization.
The contention among stakeholders from the labor sector is that
flexibilization, in its many forms has degraded the growth of trade unions and
consequently derailed the avenues for representation of workers and that such
business strategies are opposed to guarantees of security of tenure for workers.
On the other hand, business finds regulations on flexible work as rigidities that
1

do not promote employment creation as well as decreases the attractiveness of

the country as an investment destination particularly by highly competitive
businesses seeking for efficient markets.
To balance these conflicting interests, the Department of Labor and
Employment has issued some policies as a way of affording some forms of
flexibility in the Philippine labor market without compromising workers rights.
These policy instruments had the expansion of employment opportunities as a
point of consideration while also taking cognizance of protecting workers in
flexible work arrangements. Department Order No. 18-02, the present rules on
contracting and subcontracting recognizes these employment arrangements as a
measure that best serve the interests of workers need for employment as well as
businesses need for efficiency enhancement. The DOLE Policy Advisory No. 2
issued in 2004 on Compressed Workweek Schemes is a similar attempt to
recognize flexibility in business. It provides guideposts within which companies
may be able to practice a different set of working hours. Again, a strong focus on
harmonizing business strategies with the need to protect jobs and to ensure that
workers in these arrangements are free from risks to their safety and health, are
guaranteed of basic rights, and enter these arrangements voluntarily. The latest
policy issuance is DOLE Labor Advisory No. 2 on Guidelines on the Adoption of
Flexible Work Arrangements. As can be seen from these interventions,
emphasis on balancing of interests is key to policy reforms recognizing flexibility
measures. This is because while labor policy reforms are proposed to lean
toward lesser regulation, it is essential that these reforms shall not compromise
basic guarantees for workers. If businesses seek to thrive in an environment of
fair play, it is just proper that workers be given guarantees to basic labor rights,
including security of tenure.
Despite these initial policy efforts to address the need for balance
between flexible work and workers rights, policymakers nevertheless face the
challenge of guaranteeing that security of tenure and over-all protection afforded
to all Filipino workers are much more ensured for those who enter into flexible
work arrangements. Policymakers are also looking into the need to adopt a
catch-basin mechanism once employment tenure ends among which are
schemes on unemployment insurance or severance pay. These challenges are
posed because there are observations that workers in these arrangements tend
to be vulnerable to lower wages, contract violations, frequent displacements, and
to lack any form of voice representation. These observations have, in turn,
negatively influenced efforts toward aligning labor policy to the needs of the
current labor market particularly job creation.
OBJECTIVES
The study offers policymakers with the following:
1. Information on the prevalence of various forms of flexible work
arrangements around the world and in Philippine labor market including the
actors present in these schemes.
2

2. Information on the issues raised by workers and businesses relative to the

practice of these forms of flexible work arrangements.
3. Information on current policy responses to the issues at the national and
global levels.
4. Recommendations toward attaining a desirable balance between the needs of
the business and the needs of workers.
RESEARCH QUESTIONS
Given the above objectives, specific questions were sought to be
addressed by the research:
1)

What issues on flexible work may be addressed by labor policy, either

through legislation or through executive issuances?

2)

How flexible is the Philippine labor market?

3)

Are there arrangements that are illustrative of the issues against flexible
work in the country? Are there arrangements that highlight the balance
between workers and business interests?

4)

How have countries similarly situated with the Philippines addressed the
need the remove perceived rigidities toward flexible work while ensuring
that workers right to security of tenure are never compromised?

5)

What efforts in policy-making have been done to address the need to

balance the business sectors need for flexibility and the workers sectors
need for security at work?

METHODOLOGY
The study refers to the current debates about flexibility and dual labor
markets in situating the problem within the bigger picture of development
issues which in this particular case refers to the countrys unemployment
problems. The decent work framework was likewise used in establishing the
challenges faced by workers in flexible work arrangements. On the other hand,
competitiveness indicators were used to establish the challenges faced by
businesses in a globalized environment.
Primary data through key informant interviews, the discussions during the
ILS Working World Trialogue (WWT) as well as the focused ground discussions
(FGDs) among workers informs the research. The research also made use of the
case study method to describe specific practices observed among service

contractors as actors in the implementation of flexible work arrangements

particularly contracting and subcontracting.
Secondary data was used in establishing the prevalence of flexible work in
the country and in laying down information on on-going policy efforts to address
issues attached to flexible work arrangements.
LIMITATIONS
As far as possible, the study attempted to establish the prevalence of
various forms of flexible work arrangements around the world and in the
Philippine labor marketincluding the actors present in these schemes. While
general information on various flexible work arrangements were gathered
during the research, the absence or the limited statistics on these arrangements,
particularly on flexible work forms including internal flexibilization schemes are
limitations of this study. Notably, statistics on flexible work in Asia have proven
limited or unavailable. Further due to time constraints, data gathering on the
various forms of flexible work arrangements observed in the country is fairly
limited.
The study was able to gather detailed information on contracting and
service contracting and schemes on work time flexibility but has yet to cover
more data-gathering on other forms of flexible work both at the national level
and with reference to data from other countries similarly situated with the
Philippines.

II.

FLEXIBLE WORK TODAY

Globalization is the driving force behind the current trend toward more
flexibility at work. Faced with intense competition, firms are constantly
exploring adjustment measures toward cost-cutting and efficiency. These
measures involve deliberate changes in the structure of production -- from
systems to production inputs to the use of labor which consequently result in
changes in the employment structure of firms.
Among the factors of production, labor is seen as the most flexible
resource. Adjustment measures are thus more often than not coupled with labor
market flexibility schemes or what is regarded as the ability of an enterprise (i)
to adjust the level and timing of labor inputs to changes in demand, (ii) to vary
the level of wages according to productivity and ability to pay, and (iii) to deploy
workers between tasks to meet changes in demand (Ozaki, 1999, p.2).
Standing (1999) cites six forms of flexibility in the labor market (Figure
1). These forms are not necessarily stand alone measures that a firm employs
but are instead complementary mechanisms that are resorted to by an
organization depending on its current need in the production of goods or the
delivery of services. Also, reflective of the ever-changing needs of the market,
labor flexibility measures have been observed to evolve over time.
Figure 1. Forms of Flexibility in the Labor Market

Source: Standing, G. (1999)

Organizational flexibility pertains to the segmentation of the production

process and the contracting out of non-core functions outside the firm such as
contractualization, labor outsourcing. This form of flexibility is usually observed
among large-scale enterprises and multinational corporations which disperse
parts of its operations or production to various firms located in different places
across the globe.Wage flexibilityrefers to the decentralization of wage bargaining
to the individual worker-employee level if possible or to the individual firm as
the next best alternative, and the removal or erosion of minimum wage.
Practices under this form of flexibility include profit-sharing schemes, payment
in-kind or in-kind pay, piece-rate, and commission-based work such as those
observed in sales or marketing firms. Labor cost flexibilityincludes strategies
aimed at either diminishing or increasing wage and non-wage costs incurred by
businesses recognizing that these have over-all impact on production costs.
Thus, flexibility in labor cost covers business decisions on overhead or fringe
benefits, social security costs, training costs, coordination costs, protection costs
(social protection) adaptability costs and motivation costs.
A widely practiced and documented form of labor market flexibility,
employment or numerical flexibility refers to the ability of firms to hire and
dismiss workers easily and at low cost. This practice has been around since the
early 1970s when firms have tried to become more competitive by wanting to
be able to alter employment with minimal constraints, quickly and with little
cost. In this form of flexibility, also referred to as easy hire, easy fire, a firm has
the option to hire regular, full-time workers or it can turn to forms of nonregular work arrangement such as casual labor, homeworkers, agency-hired
workers, trainees, probationary workers, on-call workers, and seasonal work.
Work process or functionalflexibilityare those strategies that enable a work
organization to be adaptable to technological innovation and market
fluctuations. Thus, adaptation measures here cover working time, job mobility
and flexibility, and work organization. Examples of functional flexibility are shift
work, compressed workweek, flexitime, broken work hours, job sharing and
telecommuting. This form of flexibility at work also refers to a negotiated
arrangement whereby working time is reduced temporarily so as to secure jobs
of workers under threat of redundancy or the so-called Volkswagen time
model.
Meanwhile, job structure flexibility includes strategies toward job
segmentation and stratification, with more jobs being static. In this form of
flexibility, workers perform tasks that are highly specialized and segmented.
Such segmentation actually creates barriers to skills acquisition and narrows
down chances for on-the-job advancement. This practice, in todays labor
market may be related to how call-center jobs a segment in a bigger and highlydispersed service industry structure such as banks are seen as dead-end jobs
where there could be no upward mobility as advancement is only available in a
business structure fragmented from its operations in this case the bank itself.
A call-center agent may have learned all the skills for customer-servicing in
banks but such specialization will not guarantee access to higher posts in the
bank.
In manufacturing, this may refer to strategies at splitting job
classifications in the production line such as quality control, packaging, ironing
6

and steaming in garments or assembly-line work in electronics. Businesses

regard this strategy as specialization or concentration in niches or specific
products, markets, or services.
The manner by which these forms of flexibility in the labor market are
practiced may thus be classified either as external labor market flexibilization
or those arrangements characterized either by the engagement of a third-party
provider such contracting/subcontracting, outsourcing or the direct hiring of a
contingent or temporary workforce; or as internal flexibilization which refers
to firm-level arrangements on working hours, processes or functions, as well as
wages and benefit schemes (Villarante 2006). These arrangements, in sum, have
resulted to the emergence of non-traditional or atypical work arrangements
characterized by flexibility not only with regard to conditions of work including
wages and benefits, but also in the manner of delivery or performance of tasks,
the determination of workplaces, as well as the actors involved in determining
employer-employee relationships.
A Global Trend Toward Flexible Work
With the emergence of flexible work arrangements, the nature of formal
sector employment has been constantly changing around the world.
Traditionally, formal sector work was synonymous with regular contracts
which promised the worker job security and even a sense of lifetime
employment. Today, this is no longer the case. Around the world, rising levels of
temporary, less permanent employment has been observed, with formal sector
employment revealing the growing use of contract labor or other forms of nonregular employment. This trend toward more flexible work has been noted by
ILO given the upsurge in demand for workers and services to a rapidly growing
and flexible labor market (ILO 2009).
For instance, the CIETT or the International Confederation of Private
Employment Agencies presents data (Table 1 and Figure 2) which shows the
continuing rise in temporary agency workers (TAWs) worldwide from close to
4.8 million full-time equivalents (FTEs) in 1998 to just over 9.5 million in 2008.
In the EU, agency work has been the most rapidly growing form of employment
since 1990 (ILO 2009). In the last ten years, the number of agency workers in
Europe has more than doubled with approximately 4 million people employed by
temporary work agencies every day which is equivalent to about 2 per cent of
total employment in the continent. CIETT partially attributes this trend to the
progressive liberalisationof certain tightly regulated labormarkets, notably in
Italy, Germany,and the Nordic countries, and theopening up of new markets
inCentral and Eastern Europe.

Table 1. Number of Temporary Agency Workers Around the World, 1998 to 2008*
1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Europe

1,900

2,126

2,628

2,625

2,605

2,739

2,955

3,121

3,460

3,921

3,876

USA

2,530

2,600

2,700

2,300

2,160

2,380

2,670

2,910

2,960

2,960

2,660

307

395

537

612

693

743

890

1,060

1,220

1,330

1,400

47

46

48

47

34

54

120

438

1,340

1,363

1,580

5,584

5,492

5,916

6,635

7,529

8,930

9,574

9,516

Japan
Rest of
the
World1

4,784 5,167 5,913

*In daily FTEs x 1000, Source: CIETT.

Total

Outside Europe the number of agency workers has nearly

doubledbetween 1998 and 2008, as result of the gradual deregulationof the
Japanese labour market, andthe advent of emerging markets,such as Brazil and
South Africa, on the global scene (CIETT 2010). On the other hand, the ICEM or
the International Federation of Chemical, Energy, Mine and General Workers
Union, a rapidly growing industry-based world labor federation has also
acknowledged these new ways of employment which do away with what used
to be standard connoting a permanent full-time job, directly employed by a
single company, with a regular working week and benefits, and the protection,
including against dismissal, that comes from a legal status as an employee
(ICEM 2010).
Figure 2. Temporary Agency Workers (TAWs) in Europe, Japan and the USA, 1996 to 2008

Source: CIETT
Countries with data are: (Europe)Austria, Belgium, Bulgaria, Czech Republic, Denmark, Finland, France,
Germany, Greece, Hungary, Ireland, Italy, Luxembourg, Macedonia, Netherlands, Norway, Poland, Portugal,
Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, UK; (Rest of World) Argentina, Brazil, Chile, Japan,
South Africa, South Korea, USA.
1

Reports also observe the growing significance of temporary staffing to

total employment based on the increasing penetration rates in all markets. In
2007, the United Kingdom showed the highest rate at 4.8 per cent agency work
penetration rate. Other relatively mature markets such as Belgium, France,
Luxembourg, Netherlands, Japan and the United States all posted penetration
rates of 2 percent or more. In emerging markets in Central Europe, Latin
America and East Asia, penetration rates are still low from 0.2 per cent in Mexico
and 0.3 percent in the Republic of Korea to 1.4 per cent in Hungary. Limited data
from South Africa shows that temporary agency work vis--vis total employment
has been on the rise since changes in legislation in 1983 (ILO 2009, p16).
Sectoral distribution of agency work, meanwhile, shows that
manufacturing and services together account for about 70 to 90 percent of the
total agency workers in all markets. The number of services-based agency
workers, however, is relatively higher in Chile, Greece, Norway, Spain, Sweden
and the United Kingdom, posting over 50 per cent of the total. On the other hand
manufacturing-based agency workers accounts for over half of the total in
Belgium, Germany, Hungary and Poland. The ILO further notes that use of
temporary work in the agricultural sector is generally low in the surveyed
markets, which may reflect of the informality of temporary employment in that
sector in many countries (ILO 2009, p16).
Comparable data on the occupation of temporary workers is currently not
available. ILO (2009) cites that attempts to bring together national datasets have
proven difficult due to varying timeframes and terminologies. Based on findings
of different national surveys within EU countries in the early 2000s, Table 2
below presents some data on the occupational distribution of agency workers.
Table 2. Distribution of temporary staffing assignments by occupation, selected EU 15 countries (early
2000s)

Country
Belgium

Occupational Distribution
63 % blue collar
37 % white collar
15 % low educational standard; 53% average; 28% higher
education
Germany
32 % in low-skilled jobs
18 % metal workers or mechanics
7 % electricians
9.5 % administrative/clerical
Sweden
22 % blue collar
78 % white collar
United
26 % secretarial and clerical
Kingdom
10 % professional/managerial
8.5 % financial
7 % computing/IT
7 % hotel/catering workers
11 % technical and engineering
2.5 % blue collar
Source: ILO (2009).
9

Flexible Work in Asia

In view of the data limitations, the following discussion provides
snapshots on flexible work in Asia, either through the presentation of certain
flexible work concepts laid down by laws (Table 3) or practiced in the region or
where available, through the discussion of data on flexible work.
The trend toward labor flexibilization has similarly become widespread in
Asia. Reflective of the shift of global production and delivery of services toward
Asia, businesses in the region have likewise resorted to labor flexibility
measures in the name of competitiveness in the global market. For instance,
Korea and China both passed new laws in 2007 to cover non-regular forms of
employment . Chinas 2007 Law on Employment Contracts covers all types of
employment such as regular or open-term, fixed-term, job-specific contracts,
part-time work and labor insourcing through staffing agencies. The same law
also regulates labor organized by staffing firms that provide workers to engage
in temporary, auxiliary or substitute positions in other firms. In Indias labour
law, part-time workers are treated the same as full-time workers, with a
provision that benefits are determined on a pro-rata basis. Fixed-term contracts
are permitted with the proviso that the length of the contract is coterminous
with the activity (ILO 2008, p16). Meanwhile, Korean employers are allowed to
engage workers under fixed-term contracts or on part-time basis to attain
flexibility and reduce costs. In 2004, for instance, about 30 per cent of the
employees in Korea were considered non-regular workers with majority being
on fixed-term contracts of three years or less (Jones 2005 as cited in ILO 2008,
p17).
Table 3. Laws Governing Flexible Work in Selected Asian Countries
Fixed-term Labor
Singapore No specific provisions in Employment
Act, Rev. 1996
Korea
Act Concerning the Protection of
Fixed-Term
and
Part-Time
Employees, 2007
Malaysia
Employment Act, 1955, Sec. 10
China
Law on Employment Contracts, 2007
Sri Lanka
No specific law, common law and
interpretation of related laws
India
No specific law, common law and
interpretation of related laws
Source: ILO 2008.

Labor Contracting
Employment Act, Rev. 1996, Part VI
Act Relating to the Protection of
Dispatched Employees, 1998
Employment Act, 1955, Sec. 10
Law on Employment Contracts, 2007
No specific law, common law and
interpretation of related laws
Contract Labour (Regulation and
Abolition) Act, 1970

Data on various forms of flexible work in Singapore shows a combination

of both internal and external flexibility practices. For instance, labor contracting
(in-sourcing) is governed by Part VI of the Employment and prescribes rules on
the payment of salary of the in-sourced worker. Part-time work in Singapore
refers to work which does not exceed 30 hours per week with the wages,
working days and other details set out in a written contract (ILO 2008, p17). As
to internal flexibility in Singapore, a report shows that only a minority of 3 per
10

cent of private sector employees were found to be under some form of flexible
work arrangement that were either office-based or outside the office. Some of
these employees were working on part-time or flexi-time schedules while a few
were involved in flexi-place or out-of-office arrangements such as teleworking
or homeworking (MOM n.d).
Flexible Work in the Philippines
Labor flexibility in the Philippines started as early as the 1980s along with
the influx of transnational export-oriented companies that located in the country,
particularly in the export processing zones and in the industrial and
manufacturing sectors.The Philippine Labor Flexibility Survey done by the ILS in
2000 reveals that out of 1,208 surveyed establishments2, more than 27 percent
were employing temporary/casual workers, 22.5 percent had part-time workers,
10.2 percent employed contractual workers while the remaining 10.2 percent
engaged the services of agency-hired workers. In the same survey, the bulk of
the flexible workers are in the micro and small enterprises but the same type of
workers were also prevalent in the manufacturing and trade sectors at an
average of 48 percent of the total across all types of workers (ILS 2000). These
survey results would indicate that flexible work in the Philippines, contrary to
the traditional view where the practice is largely dominant in large
organizations, may actually be found in both complex formal structures as well
as in small enterprises that may be characterized by some degree of informality.
This may mean that flexible work in the country may occur both in the formal
and informal economy.
By occupational segregation, the survey cited that the incidence of
employment of flexible workers in establishments were common among
labourers, salespersons and demonstrators, personal and protective service
workers, construction, manufacturing and transportation. Particularly, agencyhired workers were mostly found working as labourers in mining, construction,
manufacturing, personal and security services (ILS 2000).
Today, flexible work in its varied forms, continue to spread in the country.
For purpose of making an exhaustive inquiry on arrangements that are
considered atypical and which may actually be characterized by flexibility, the
study looked into several survey results by the BLES which shows several types
of flexible work. In the results of the 2007/2008 BLES Integrated Survey of
Establishments (BITS), it was found that out of about 3 million total employment
in non-agricultural establishments, 24.3% or 732,000 were non-regular workers.
This number, compared to the results of a similar survey in 2004 is higher by
16.6 percent. In this survey, non-regular workers refer to casual workers,
contractual/project-based workers, seasonal workers, probationary workers,
apprentices/learners. Of the types of non-regular work covered by the survey,
contractual or project-based workers accounted for about one-half or
2

Located in Regions III, IV, VII, IX, XI and the National Capital Region

11

approximately 360,000 of total non-regular employment during the survey

period (BLES 2010).
Agency-Hired Workers. Meanwhile, the survey also looked into the extent
to which firms or establishments across industry groups resort to agency-hired
workers to augment their workforce and the types of jobs or service which the
firms outsourced to manpower agencies to cut their operating costs. Results
show that about two-thirds (64.1 % or 15,675) of the total 24,457 nonagricultural establishments surveyed engaged agency-hired workers. Survey
results, meanwhile, placed the number of agency-hired workers at 364,610 or
10.8% of the total 3.376 million persons engaged by the establishments during
the survey period (Figure 2).
Figure 3. Number of Establishments with Agency-Hired Workers in Non-Agricultural
Establishments with 20 or More Workers by Major Industry Group, Philippines: June 2008

5050
4050
3050
2050
1050
50

TOTAL ESTABLISHMENTS
ESTABLISHMENTS WITH AGENCY-HIRED WORKERS
Source: BLES

Manufacturing and wholesale and retail trade were the two biggest
employers of agency-hired workers. Together, these two sectors accounted for
nearly two-thirds (63% or 229,818) of the total agency-hired workers reported
in 2008. Substantial numbers of agency-hired workers were also found in
transport, storage and communications; financial intermediation; hotels and
restaurants; private education; and electricity, gas and water supply.
In terms of the share of agency-hired workers to the industry workforce,
manufacturing and electricity, gas and water supply, and wholesale and retail
trade showed 15.6% and 14 %, respectively. This means that roughly one in
every six persons in their workforce came from employment agencies. As to
types of services offered to firms or establishments, the survey results showed
that many businesses rely on agencies to supply their security and janitorial
manpower needs. The survey shows that almost half or 169,736 (46.5%) of total
agency employment in 2008 were for these two services. The next largest group
12

of agency workers were those hired for production/assembly work which

accounted for one-fourth (27.5% or 100,287) of total reported agency
employment. This practice was observed to be peculiar to manufacturing.
Further, hotels and restaurants accounted for almost all of agency-hired workers
in food and catering at 96.1% while wholesale and retail trade accounted for
51.2% of agency workers engaged in marketing/sales.
Part-time Workers. This type of arrangement is relatively less used in the
Philippines compared with the other forms of flexible work. For instance, a
report from Jobstreet.com cites that part-time jobs constitute only 5 percent of
the total jobs posted in its website, with IT/computer-software as the most
prevalent occupation covered by part-time arrangements. In the 2007/2008
BITS survey, part-time workers accounted only for a small proportion of the
workforce of the covered establishments comprising merely 3 percent or about
91,327 of the total 3.012 million employed workers in the establishments
covered as of June 2008. Part-time workers were prevalent in three industries.
Hotels and restaurants, which require additional workers during peak business
hours had 21 percent or 32,491 of the total employed in the industry as parttime workers. Private educational institutions ranked second with 12 percent of
its 229,710 workers as part-time workers indicating the presence of
professionals who moonlight as part-time instructors in colleges and
universities. The third largest sector with a share of 9.4 percent of 95,152 as
part-time workers was the construction industry which is reflective of its
requirement for both skilled and non-skilled part-time workers in the
construction process where services are of short duration.
Subcontracting. Among the flexible work practices, contracting and
subcontracting is one of the most documented and therefore familiar
arrangement among companies. In the 2007/2008 BITS, results showed that of
the total 24,457 establishments surveyed, 9.2 percent or about 2,259
establishments reported to have resorted to subcontracting. Indicative of sectorspecific preference for numerical labor flexibility, construction, mining ang
quarrying, and manufacturing ranked as the top three sectors where
establishments resorting to subcontracting constituted a substantial chunk of the
survered firms at 29.1 percent, 19.3 percent, and 15.3 percent of the total
establishments in each sector, respectively (Table 4).
Table 4. Number of Establishments Engaged in Subcontracting in Non-Agricultural Establishments with
20 or more workers by major industry group, Philippines: June 2008

MAJOR INDUSTRY

TOTAL
ESTABLISHMENTS

Mining and Quarrying

Manufacturing
Electricity, Gas and
Water
Construction
Wholesale and Retail

60
5840
552
618
5407

ESTABLISHMENTS RESORTING TO
SUBCONTRACTING
NUMBER
PERCENT TO
TOTAL
12
19.3
892
15.3
47
8.5
180
350

29.1
6.5
13

Trade
Hotels and
Restaurants
Transport & Comm.
Financial
Intermediation
Real Estate and
Business
Private Education
Services
Health and Social
Work
Other Comm.
Services
Source: BLES.

2941

162

5.5

1416
1135

103
89

7.3
7.8

2476

221

8.9

2624

129

4.9

679

20

2.9

709

56

7.9

Meanwhile, the research also looked into the number of registered

contractors or subcontractors at the registry of the Bureau of Local Employment
(BLE) as a way of completing the picture of this flexible practice in the country,
particularly from the perspective of the contractor agencies. Table 5 below
shows the presence of these contractors and subcontractors across the regions of
the country. Registry information as to the major economic activities or services
where these contractors or subcontractors are concentrated shows that the top
three areas are administrative and support services including security and
building maintenance, construction and transportation and storage.
Table 5. Number of registered contractors/subcontractors, By Region, June 2010
REGION

Registered Contractors & Subcontractors

NCR
CAR
I
II
III
IV-A
IV-B
V
VI
VII
VIII
IX
X
XI
XII
XIII/CARAGA
TOTAL
Source: BLE, June 2010

4,630
98
166
109
1,039
1,333
61
120
474
1,211
192
224
521
1,013
435
171
11,797

14

Finally, for the purpose of the research, Jobstreet.com contributed the

following survey done among 111 human resource practitioners to collate
relevant data on flexible work schemes. The practitioners came from the
following sectors: manufacturing or production; call center and IT enabled
services; retail and merchandise; computer and information technology
(software); property or real estate; transportation and logistics; consulting (IT,
science, engineering and technical); food and beverage including catering,
restaurants and hotels; human resources management, and others. The survey
results showed a wider preference for external numerical flexibility schemes
particularly contracting, project-based employment, and outsourcing. However,
the respondents also showed that there is now a growing trend toward internal
flexibility measures such as homework and compressed workweek (Figure 4).
Figure 4. Jobstreet.com Survey on Flexible Work, 2010.

Positions
available in these
schemes:
IT Personnel
Admin/Clerical
Staff
Accounting and
Finance Staff
Engineers
Housekeeping
Sales Agents

Source: Jobstreet.com, 2010

15

III.

BUSINESS AND ITS NEED FOR FLEXIBILITY

The strong clamor from the business sector to undertake reforms in labor
policy is grounded on several concerns which are believed to undermine
competitiveness of the country including its capacity to attract investments.
Indeed, competitiveness is pressing concern for the whole country. In the recent
World Competitiveness rankings, while the Philippines ranked higher in 2010
than the previous year at 39th overall compared to its 43rd ranking in the
previous year, it still remains the lowest in rank among the ASEAN-6 countries.
With Indonesia having overtaken the Philippines in the rankings for 2009, the
Philippines has also been lagging behind in the areas of domestic economy,
international trade, international investment, employment, prices, institutional
framework, business legislation, management practices, public finance, fiscal
policy, productivity and efficiency. The country is also cited to be faring very
poorly in basic and scientific infrastructure, education and international
investment where it was ranked 56th out of 58.
Urgent calls for reforms are thus being heard from several business
groups to reverse this trend, among which is the need to remove rigidities in the
labor market which results from over-regulation and which eventually deters
competitiveness. Particularly, several business groups have expressed that the
Labor Code should be amended to make it easier for companies to hire and fire
workers; to remove the prohibition on night work for women given the upsurge
in business process outsourcing jobs where schedules follow those of the clients
found overseas; and promote more flexibility, particularly contracting and
subcontracting, as a measure for business survival (JFC 2010, ECOP 2006,
PALSCON n.d).
As an industry player, Jobstreet.com has also pointed out that labor
flexibility as a business strategy will continue as a growing trend brought about
by globalization, difficult economic times, volatility of the market, as well as
availability of jobs and the growing desire among workers to work in a more
flexible manner. It was viewed that labor policy in the country should enable
flexibility because it is a way of providing more jobs and allowing more small to
medium enterprises (SMEs) to thrive. As an illustration, Jobstreet.com cited that
the business process outsourcing (BPO) industry which is highly dependent on
flexible work began in the country with salaries not as competitive with those
received by other workers in competitor locations. However, with the adequate
support it has gained through policies and programs by government, the market
has expanded and eventually salaries and benefits of workers have likewise
grown (ILS 2010).
Meanwhile, Philippine Association of Local Service Contractors, Inc.
(PALSCON) has likewise laid down its stance relative to policy reforms on
contracting and subcontracting in the country. Specifically, it has stressed that
reforms should take into account the employment creation value of allowing
contracting and subcontracting and the possibility that over-regulation of
business practices may result to the closure or transfer of businesses to other
countries which have liberal laws on non-regular employment (PALSCON n.d).
The organization points out that service contracting promotes job creation, a
16

goal that is recognized as crucial to the development and growth of the country.
Recognizing this role, PALSCON says, would be desirable particularly as the
service contracting industry is expected to experience substantial growth in the
coming years. Table 6 below provides a snapshot of the projected growth rate in
the industry.
Table 6. Projected Growth Rate for the Local Service Contracting Industry
YEAR
2008
2009
2010
2011
2012
2013
2014
Source: PALSCON, n.d.

TOTAL MARKET IN
BILLIONS
25.00
34.10
46.51
63.44
86.53
118.03
160.99

PERCENTAGE OF
GROWTH
36.40
36.40
36.40
36.40
36.40
36.40
36.40

PALSCON also came up with a study involving the outsourcing of logistics firms
to define the reasons behind company decisions to outsource certain functions
or services. The study (Mariano 2006) results showed that costs ranks as the
highest reason for outsourcing. Meanwhile, the study revealed that other reasons
such as improvement, revenues, finances, organization, and employee also drive
firm decisions to outsource.
Underscoring the necessity of flexible work in the labor market, the
International Confederation of Private Employment Agencies or CIETT3, in its
2010 report on agency work industry around the world, highlighted the
following contributions of agency work in the labor market:
LABOR MARKET CONTRIBUTION

Creates jobs

Contributes jobs that would not otherwise

exist. Between 2003 and 2006, agencies
created 669,000 net additional jobs in Europe
or about 7.5% of total job creation during the
period
Facilitates transitions
Offers options or solutions for workers when
faced with personal or family constraints or
when determining career choices
Curbs informality or undeclared Serves as a legal alternative in sectors
work
plagued by illegal labor (as in the case of
migrants) and informal work
3

CIETT is the authoritative voice representing the interests of agency work businesses.
Founded in 1967, Ciett consists of 42 national federations of private employment agencies and 6 of the largest
staffing companies worldwide: Adecco, Hudson, Kelly Services, Manpower, Randstad and USG People.
Its main objective is to help its members conduct their businesses in a legal and regulatory environment that is
positive and supportive.

17

Upgrades skills
Includes vulnerable groups

Training schemes that suit the specific needs

of the labor market results to continuous
upgrading of workers skills
In the EU, agency work has been observed to
be attracting more workers aged over 50;
caters to need for work among young
entrants

Source: CIETT, 2010

These perspectives, coming from local and international actors in flexible

work, particularly agency work and contracting, may be seen as signal that labor
market flexibility can no longer be regarded as a business model that is bound
for obsolescence. In fact, there are opinions that labor flexibility as an effect of
globalization is todays economic game and a key principle of any moves toward
restructuring. As a reality in the labor market, it is therefore crucial for policy to
be able to respond to urgent calls for more flexibility.

18

IV.

WORKERS AND THEIR NEED FOR SECURITY

Amid the upsurge in flexible work and the strong lobby for deregulation
in the engagement of workers for these arrangements, concerns have been
raised regarding the rights of workers. Rights, which under atypical work
schemes are characterized by complex organizational structures, may be violated
if not totally ignored. For instance, global unions today have on-going campaigns
against exploitation of agency workers which emphasize that these workers
generally have little or no job security, have little or no access to sick pay or
pension entitlements or to other non-pay benefits and that their rates of pay
are generally lower than the regular workforce and collective representation or
negotiations are very difficult to achieve, if not impossible (SIPTU 2007). A
document on precarious work issued by the International Labor Rights Forum
presents a number of case studies on how corporations abuse contract labor and
how precarious work if forcing workers deeper into poverty (ILRF, n.d).
On the other hand, ICEM, in its contract and agency labor campaign has
pointed out that contracting out, slowly but surely, has become a problem for
many, if not most, workers in the world, affecting workers everywhere, in
different regions, different sectors, and different lines of work. The global union
notes that contract labor has been a problem before in the construction industry
but it has now spread to all industries and jobs that were otherwise considered
safe from the flexible arrangement. It also stressed that by the very nature of
work in contract labor, workers in these arrangements are the first to bear the
brunt of any crisis (ICEM 2010). Such observation was likewise made by the ILO
in a report on how the latest financial crisis affected the private employment
agencies and consequently the agency workers engaged through these entities
(ILO 2009).
These concerns raised by trade unions cover several aspects of labor and
employment that actually indicate gaps in the attainment of decent work for all
workers. Using the decent work pillars as a framework, the following issues
raised by global unions as well as those operating in the Philippines were
considered by the study4.
Rights at Work

Employment
Opportunities

Social Protection

The triangular relationship between the worker, the user enterprise and the
temporary work agency that supplies the worker can undermine labor and social
protection, as well as the effective realization of the right of all workers to form or
join trade unions and to bargain collectively.
Not all reasons for using temporary agency work are related to staff shortages or
the fluctuation of business and it has become common to use temporary agency
workers to fill previously permanent and direct positions and to reduce costs.
Increasingly, workers provided by agencies are used to fill core jobs but are not
given any opportunity to transition to direct permanent employment. In a growing
number of instances, entire workforces are provided by temporary work agencies.
The increase in non-regular worker has not translated to either positive or negative
employment effect nor to productivity that were the intended outcomes of policies
allowing more flexible work.
Employers often use temporary agencies in order to avoid their legal obligations
that can lead to abuses such as non-payment of social security benefits.

Gathered through review of global union websites and trade union presentations in local and international foras.

19

Social Dialogue

Workers provided by agencies frequently receive significantly lower compensation

than regular employees performing the same work. Such workers are also often
not entitled to the same levels of social protection, such as retirement provision,
the right to unemployment compensation, sickness benefits or maternity leave.
Employers commonly do not invest sufficiently in the education or training of
agency-supplied workers. Inadequate education and training may undermine the
quality of service provided by the agency workers, while lack of training on health
and safety increases the risk of occupational accidents and diseases.
Non-regular workers have been observed to the same work as regulars but are
treated differently through lower wages and non-payment of benefits
Employers are, at times, deliberately using temporary work agencies to reduce the
number of workers covered by collective bargaining at their enterprises or to
prevent unorganised sections of the workforce from seeking union representation
and exercise their right to bargain with the user enterprise, which effectively
controls terms and conditions of employment.
One of the principal reasons why workers do not form or join trade unions is fear of
discrimination or dismissal. In addition, temporary agency employment reduces the
workers stake in an enterprise, as well as the opportunity to participate in trade
unions.
The use of workers supplied by temporary work agencies to replace striking
workers or to undermine industrial action at a user enterprise is a serious violation
of trade union rights.
In the Philippines, only a few flexible workers are unionized with most non-regular
workers generally excluded in collective bargaining. It has also been observed that
there may be overlaps in representation of interests of workers in flexible
arrangements direct (through unions) or indirect (through NGOs or party-list
representatives)

In these on-going debates on flexible work around the world and in the
country, policymakers have always been challenged by the absence of data on
the issues faced by workers who are employed in these arrangements. This is
partly attributed to the lack of well-established monitoring or tracking systems
of those workers as well as the apparent fear of workers to complain about their
conditions which may result to their dismissal from their jobs or simply for not
knowing that their rights are already being violated. From the interviews, the
latter reason is also linked to the workers perception that they do not really
enjoy or are guaranteed the same rights as those in regular status of
employment. The research therefore tried to look into these concerns by
interviewing several sets of workers commonly known to be exposed to the
vulnerabilities attached to flexible arrangements: those that are employed in a
department store, those in janitorial services, and workers in a service
contracting agency. With the whole employment process as the guide for
inquiring on the workers concerns, the following were revealed in the
interviews:
Ease of accessing into jobs

Lack of skills or highschool/college degree is hindrance to finding jobs as

some agencies prefer degree-holders.
Those with degrees still find it difficult to get employed because available jobs
do not match their educational background.
For those with low levels of education, any job is acceptable rather than having
no work at all
Difficulty in getting a job also occurs during off-season in certain industries
Those who lack certain skills are not aware of the training opportunities in
TESDA
Difficulty in the job search process also pertains to costs for preparing a new

20

Mode of accessing jobs

Employment duration

Employer

Application Process

Employment Contract

Work Schedule

Job Description

set of requirements after their end of contract and the expense for processing
them
As walk-in applicants in agencies they have learned about from colleagues
and families
Through service contracting or manpower or placement agencies
Employed on a contractual-basis mostly for 5 to 6 months
Some workers were on a coterminous contract
Other workers also experienced casual-work in factories wherein they were
employed during the peak period of production of the factory and are after
some time, retrenched when there is no factory production. Some of these
workers are given the opportunity to work for the factory again when the
production season comes.
Department store workers regard the concessionaire or consignor as their
employer
Merchandisers are also outsourced from a service contracting agency and
thus consider the contractor as their employer
Some department store workers are employed as direct employees
Observed difference in application procedures across agencies and
contractors they have worked with.
Some required to submit basic requirements while others still go through an
examination and interview or are required to submit a lot of documentary
requirements.
Other workers undergo several orientations and trainings.
Workers do not have a copy of their employment contract. They are asked to
sign the contract before their starting date of work but the service contracting
agency holds the copy of the contract.
They usually have only their identification cards at their place of work as proof
of their employment. The ID indicates the starting date of work and the end
date 5 months after the starting date. The ID is also required in the place of
work or the client for entry in the premises.
A worker in a mall cited that it is the mall that holds his employment contract,
not the service contracting agency. Some workers said that they can get the
copy of the contract after their contract ends or if they resign but for the
workers who have worked in service contracting agencies for a number of
years already they have not gotten a copy of a single contract.
When some workers asked for a copy of their contract from the agency, they
are told that it is prohibited for them to have a copy.
Some workers shared that they did not have the chance to read and peruse
their employment contract. They just filled in their name, address and other
particulars in the contract.
Some workers also said that on the day of the contract signing, they were
being rushed by the servicecontracting agency to sign the contract because
there are more workers that need to sign their contract.
Working schedules change according to the need of the employer, but usually
there is no overtime pay.
In lieu of an overtime pay, some workers can offset the hours they have
worked overtime to make up for their absences.
Workers are required to come to work earlier than the start of their shift. If they
come later, relievers are assigned by the service contractor and the worker will
not have a salary for that day.
The relievers report to the agency even if they are not assigned to a project or
when there is no work available
At times, workers perform job functions that are not included in their
designation. For example, merchandisers or promodizers in department stores
in malls also function as transporters or porters of the product stocks when
there is a lack of personnel. The janitors perform various functions outside
maintenance and cleaning services as needed, like running errands.

21

Training

Salary and Benefits

The training period of the workers range from 3, 5 and 7 days and even up to
15 days. Some are paid while on training or they receive an allowance. Others
also train on the job where they basically function as relievers for absent
workers.
For other workers, they pay the agency for the training. One worker from a
janitorial agency paid the agency Php50.00 for the training
The other workers were not paid while they were training. The agency will
designate the trainee as a reliever in a project site, but there is no promise that
the trainee will be hired after. The trainees are also in what is called a floating
status.
For the other workers there is no training provided by the agency and they just
learned on the job.
Some workers receive minimum salary while others do not.
Not every one receives the state-mandated benefits like SSS, PhilHealth,
PAG-IBIG and paid leave.
Some workers in malls are told by the management of the service contracting
agency that the benefits are optional. The workers do not opt to have the
benefits because they just view it as deductions from their minimum or below
minimum salary, and that they can choose to have it when they want to.
The salary amount and benefits given vary according to the agency. Some
agencies are compliant on the minimum requirements while others give below
minimum pay and the benefits are lacking or there is none.
Some workers said that the amount of salary and the payment of the benefits
depend on the project that they are assigned to. In some projects their benefits
are paid for while in others it is not.
In one company the new hires and the absorbed workers have a different
orientation regarding their benefits. The absorbed workers were told that they
are entitled to an incentive leave, and they could receive it as cash if they have
not used it or they have no absences. However, the new hires of the agency
were not told of the benefit. The absorbed workers and the new hires also
have different salaries, with the absorbed workers receiving minimum salary
while the new hires have below minimum salary.
A worker experienced being paid at an apprentice rate of 75% of the minimum
salary but he was not informed that he was being employed as an apprentice.
For a worker who was earning Php250 only per day, there are no deductions
from his salary because he has no benefits.
Some workers shared that they make up for their below minimum wage by
working overtime. Some workers, however, do not have overtime pay but they
can offset the hours they have worked overtime to make up for their absences
so they can still have a salary on those days.
Some workers get a salary increase every 3 months but only for Php100. One
worker who had experienced working in a factory shared that they only got a
Php10 increase after a year. Some workers were told that they will have a
yearly salary increase. One worker shared that he has been employed in his
agency for years already but he has not received an increase in salary so he
has already lost hope.
Some workers were confused about the salary increase (according to Wage
Order 15) because they do not know if their agency will grant it to them. The
absorbed workers in a company were told that they will be receiving the salary
increase but the new hires were not informed if they will be receiving it.
The workers do not receive a payslip. The salaries of the workers also get
delayed at times.
There are some deductions from the worker's salary by the agency. In one
agency, a worker is paying Php300 a month as an agency fee. As a result, the
worker has minimum wage on paper but in effect is receiving below minimum
wage because of the deduction.
Some workers reported that the agency told them that they are deducting the
agency fee because they have to make a payment to the client. They were

22

also told that they have to make that contribution so the agency can continue
its operations.
Another deduction from the workers' salary is the fee for the uniform. One
worker shared that the price of his uniform is Php2,600, and he does not use it
every day because it is so expensive.
Supervision
There are supervisors or officers-in-charge in the company premises who
monitor the workers. The supervisors are employees of the service contracting
agency or the consignors/concessionaires for the merchandisers in malls. The
supervisors receive minimum wage and have complete benefits and are also
regularized employees. The supervisor makes rounds and monitors the
performance of the workers. Hecoordinates with the workers on what needs to
be done. He is also the one in charge of timekeeping, the payroll and in
imposing disciplinary measures like suspensions and memos.
The workers also shared that they sometimes have a problem with the
supervisor in charge because if he does not favor a certain worker then he will
give the worker a harder time in terms of work and in the observance of rules.
Some workers consider both the service contracting agency and the client
ashis superiors or bosses. They follow the policies of the service contractor but
if there are certain tasks that are assigned by the client they also need to do it.
Workers' representation
Most of the workers do not air their grievances for fear of retribution by the
management.
The workers also said that they have no means of communicating their
concerns to the management, like complaints or grievances on their salary and
benefits.
Some workers expressed their uncertainty and hesitation about unionism
because they view it as causing problems with the management and a cause
for being dismissed.
Dismissal
For janitorial workers, the grounds for dismissal depend on the gravity of the
violation. An example of a heavy violation is the punching-in of another
employee's timecard, but there are also arbitrary bases like if one is caught
sleeping on the job. A worker can be suspended because of habitual
tardiness.
Some workers do not know of the period of advance notice required for
resignation. One worker said that the moment he submits his resignation letter,
he considers that as his end of employment. There is also no advance notice
for dismissed workers.
One worker had to leave his work in a factory because the machine operator
before him returned to the factory and was more favored by the supervisor.
Renewal and regularization
Some of the workers were renewed or absorbed by the client company. They
cited their good performance as the reason for renewal, and the service
agreement between their agency and the client was also extended. The
workers are not on a coterminus contract and their contracts are just renewed
depending on their performance or they were chosen to be retained by the
agency management. They can also be absorbed by the client company if the
client chooses to do so
The mall workers employed as regulars were not among those who were
interviewed. The interviewed workers do not know how one becomes
regularized but assumed that if one works well enough and is capable or has
good performance, he can be regularized.
Most of the workers said that for contractual workers, it is rare to be renewed.
Period of Unemployment
The workers usually had to look for work because their contracts have ended
after 5 months.
The workers had varying periods of unemployment, from a week to a number
of months. Some workers take on odd jobs while in the process of looking for
employment, just to have some sort of income.
Source: Interviews with workers in a department store, workers employed for janitorial services, and applicants in
a service contracting agency, 2010.

23

V.

TOWARD BALANCING FLEXIBILITY AND SECURITY AT WORK:

CURRENT RESPONSES

Policymakers have not been remiss in trying to address both calls for
more flexibility and for better workers protection in an environment of
increased labor flexibility. Jurisprudence has established guideposts on
determining employer-employee relationship in contracting arrangements; on
legitimate contracting; and on labor-only contracting. On the other hand, the
DOLE has issued policy instruments that had the expansion of employment
opportunities as a point of consideration while also taking cognizance of
protecting workers in flexible work arrangements.
D.O. No. 18-02, the present rules on contracting and subcontracting
recognizes these employment arrangements as measures that best serve the
interests of workers need for employment as well as businesses need for
efficiency enhancement. DOLE Department Advisory No. 2 issued in 2004 on
Compressed Workweek Schemes is a similar attempt to recognize flexibility in
business. It provides guidelines within which companies may be able to observe
working hours different from what has been set by the Labor Code. This issuance
also indicates a strong focus on harmonizing business strategies with the need to
protect jobs and to ensure that workers in these arrangements are free from
risks to their safety and health, are guaranteed of basic rights, and enter these
arrangements voluntarily. DOLE Department Advisory No. 2 (2009) on
Guidelines on the Adoption of Flexible Work Arrangements was issued to
afford businesses with a coping mechanism in times of economic difficulties and
national emergencies and to offer a better alternative to outright termination of
employees or business closure. Flexible work arrangements under this issuance
were also anchored on a voluntary basis and included the following six schemes:
compressed workweek, reduction of workdays, rotation of workers, forced leave,
broken-time schedule, flexi-holidays. The latest DOLE issuance is Advisory No. 2
(2010) on the implementation of flexible work arrangement as a temporary
coping mechanism and remedial measure during the current power crisis in
Mindanao.
These issuances were all intended to derive that tenable balance between
the interests of business and workers. However, results of interviews with key
informants would show that notwithstanding these issuances, there are
implementation challenges that need to be addressed.
Information gaps. The discussions in Part II of this paper is just an overview of
the varied forms of flexible work observed today. Key informants for the research
pointed out that the concepts of flexible work can be so confusing that policy
implementers at the DOLE, for instance, are at times confronted with problems in

distinguishing schemes such as outsourcing, contractualization and agency

hiring and determining whether current policy issuances such as D.O. 18-02
applies to a certain arrangement. Moreover, it was also discussed that the rise of
the BPO sector, which is predominantly practicing outsourcing, is something that
was not countenanced in current regulations on flexible work, hence, the

24

constant need by the industry to make clarifications on the application of Labor

Code provisions to its workers.
Information gaps may also exist in terms of how flexible work occurs in a
developing country such as the Philippines and how it impacts on employment
creation. Part II showed some data that flexible work in the Philippines is not
similar to what has been observed in more developed markets such as those in
Europe or in the US. What has been noted in the key informant discussions is
that policy responses may have been focusing on flexible work in formal
employment structures alone instead of taking account of the forms of flexibility
that occur within informal structures such as homework or piece-rate work or
seasonal work in the agricultural sector. This may be attributed to the fact that
the Labor Code, from which current regulations of flexible work emanate,
precisely addresses labor and employment concerns that are predominantly
found in formal employment.
Given these, a key informant even pointed out that the current
institutional mechanisms for regulation may not be capacitated to do so if it does
not keep itself in line with the developments and if policy responses are always
lagging behind. Another key informant highlighted the fact that labor flexibility
practices will continue to evolve depending on the demands of the market. As
these happen, it is crucial for policymaking to keep abreast with these practices
as it should be expected that changes will always have implications on the goal of
keeping the balance of interests between business and workers.
Lack of awareness of rights and obligations. The research also found
that even as there is a general recognition in policy that those workers in flexible
work arrangements enjoy the same rights as those in permanent or regular
employment, this fact is not known to the stakeholders themselves. During the
interviews with workers and as can be gleaned from the discussions in Part IV,
some workers are unaware of what is due them not only in terms of salaries and
benefits but also in terms of the collective rights that are guaranteed them.
On the other hand, in the interviews with several leaders in the service
contracting industry it was pointed out that some businesses which engage
contractors or which undertake other forms of flexible work are not actually
aware of the relationship that should be observed with the employees of the
contractor as well as the obligations that they need to render. Some businesses
were also reported to be unaware if not misinformed about the guarantees to
basic rights among workers, regardless of status of employment.
Among
contractors themselves, it was cited that fly-by-night operators are also
amongst those who are uninformed of the proper way of conducting its business
and consequently of treating its workers.
Non-compliance with statutory benefits. While the Labor Code and its
implementing rules clearly state the coverage of statutory benefits, the key
informants shared that compliance to the same remains an issue. For instance,
the key informant from SSS discussed that as a matter of policy, almost all kinds
of workers in the Philippines are covered by the SSS and that dual coverage may
25

actually be possible for workers with multiple employers which may be the case
for flexible workers. Despite this, it was highlighted that the SSS still handle
cases where some employers that engaged temporary workers do not recognize
employer-employee relationship that exist between them. It was reported that
these employers do not report their temporary employees to the SSS for
coverage. Another issue for the SSS is that some employers are guilty of nonreporting or non-remittance of contributions.
Further, it was observed that when various forms of flexible work are
practiced in an establishment, the same may in the process downgrade or
compromise compliance with labor standards. For instance, compressed
workweek schemes have been noted to affect rest periods and compensation for
overtime work. In a study (Molina 2009) on the flexible work arrangements
resorted to as a coping mechanism during the recent global financial crisis,
workers under the reduced workweek, rotation, and forced leave schemes were
reported to suffer loss of income as the schemes resulted to less take home pay.
In some cases covered by the 2009 study, wages were reduced by as much as
50%, significantly affecting the sustenance of the affected workers families. In
another case, non-wage benefits were also affected because of lower
entitlements brought about by lower SSS premiums.
Difficulty in labor standards enforcement. Part II discussions also
highlight another facet of policy implementation that of enforcement. Once
more, the current policy issuances have been noted as adequate in terms of
clarifying the coverage of labor standards. What has been noted as wanting,
however, is the enforcement of this set of standards among all actors in flexible
work arrangements, for instance in the case of contracting/subcontracting the
principal, the contractor and the worker himself or the placement agency in the
case of agency-hired workers. It is noted that the complex structures in these
arrangements add additional burden to an inspectorate system already being
called to task for not being broad enough to monitor labor standards compliance
even among firms. The complex structures would dictate that labor inspection
should cover all entities outside the principal-firm, which would include
placement agencies and service contractors.
Absence of a link with employment creation, productivity
improvement, skills upgrading and social protection mechanisms. The
policy issuances on flexible work are all grounded on the need to boost
employment creation, improve productivity, ensure skills upgrading of workers,
and social protection. Key informants, however, observed that since these policy
instruments were issued, efforts have not been coherent enough so that these
goals are actually realized. For instance, it was pointed out that along with the
establishment of a registry of contractors, there should have been some efforts
toward building their contractors capacities so that they can actively contribute
to employment creation and skills upgrading. Moreover, despite having
recognized that security at work is the core issue of flexible work, key informants
note that the mechanisms to provide social protection for workers in flexible
arrangements has not been considered in current efforts to amend relevant
provisions of the Labor Code. It may be noted that social protection for flexible
26

workers may prove highly crucial taking into account that the same workers
tend to bear the brunt of any economic adjustments as what has occurred during
the recent global financial crisis.
With these issues at hand, achieving the balance of interests through
policy-making may actually relate to several factors. Policy should be able to
address business need for efficiency, competency, lowering costs, and the ability
to respond to shocks or adjustments in the market. On the other hand, policy
should be able to safeguard the workers basic rights, guarantee the availability
of jobs, ensure better wages and income sustenance, and promote voice and
representation which is a crucial component not only for workers protection but
also for social dialogue as a component of policy-making in the country.

27

VI.

THE WAY FORWARD

Policy responses to the issues attached to labor flexibility has always

emphasized the importance of creating a balance of interests of business need
for flexibility and for workers need for security in their jobs. What has been
observed in the study, however, is that ensuring security for workers remains a
grey area either due to lack of awareness of these guarantees and also because
current mechanisms guaranteeing protection are perceived to only cater to
workers with permanent or regular employment status. Moreover, the right to
security of tenure as applied to workers in flexible arrangements has been
construed as an assurance that one will keep his or her job for an indefinite
period. Given the call of the times, policy shift should be geared toward giving
businesses the leeway to address shifts in demand for goods and services thru
flexible work arrangements while also ensuring that workers in these
arrangements do not suffer from income discontinuity, the absence of social
protection and the opportunity for representation of their interests.
Policy Implementation. As a matter of strategy, businesses employ various
forms of labor flexibility as determined by the market. It is therefore
recommended that labor policy issuances should not be limited to presenting
what flexible work schemes are allowed to be practiced as such decision should
be within the ambit of industries or businesses. Rather, policy should focus on
preventive and remedial measures that do not deter business efficiency nor
curtail the observance of workers rights.
Preventive efforts may include the following measures:
a) Clarification that workers, regardless of status of employment, enjoy
the same basic rights that cannot be compromised. This should be
reflected in the workers contract for employment as well as in the contract
for services between the principal and a contractor in the case of
contracting/subcontracting. It was established in the research that the
contention on flexible work is not really about the schemes but how it results
to the race to the bottom in labor standards. Representatives from the
service contracting agencies acknowledge that the buyer-firm tends to dictate
the price of the services to be provided, with the lowest bidder getting the
contract on the assumption that wages of workers can likewise be set at a
lower rate. This, exploitative practices along with the derogation of rights
guaranteed by the constitution and other international treaties should be
stopped. For this purpose, it is crucial for the labor inspectorate system to
be improved so that workers can find at least a modicum of dignity in the
work they do because they are assured that a system is in place to safeguard
their rights.
b) Setting of procedures to be observed by employers, employees and
other concerned parties when deciding to embark on flexible work
arrangements including the reporting process prior to, during and after
the implementation of such arrangement. Singapores Tripartite Advisory
28

on Responsible Outsourcing Practices is instructive in this case. The advisory

encourages end-user companies to ensure workers supplied by their thirdparty contractors meet basic employment terms and conditions, encourage
written employment contracts, encourages end-user companies to check on
the financial capacity of contractors, and encourages retention of experienced
workers.
c) Promotion of industry-based social protection mechanisms for workers
in flexible work arrangements. In a flexible work environment, it is vital
that workers are guaranteed security within their jobs and even beyond it.
The controversial flexicurity concept proposes the following indicators of
security for workers: labor market security or having the capacity to move
across jobs, job security or having a sense of occupation, skills security or the
ability to develop ones skills while in a certain job, employment security or
protection from arbitrary dismissals; and, representation security. This calls
for stronger mechanisms that will facilitate smooth and faster transition of
workers from one job to the next without falling prey into exploitative
schemes that will lower incomes or compromise rights. In highly flexible
labor markets, these are addressed through mechanisms for unemployment
insurance or some form of severance pay, training programmes for skills
upgrading, and easily accessible job facilitation services. These practices
recognize that support systems must be in place once workers end their
contracts and that the same should be a joint undertaking of all actors alike.
For instance, workers in the US receive severance pay that is granted
upon termination of employment. It is usually based on length of
employment for which an employee is eligible upon termination. However,
there is no requirement in the Fair Labor Standards Act (FLSA) for severance
pay. Severance pay is a matter of agreement between an employer and an
employee (or the employee's representative). The Employee Benefits
Security Administration (EBSA) only assists an employee who did not receive
severance benefits under their employer-sponsored plan. In Canada, the
Employment Insurance (EI) program provides temporary income support to
those who are between jobs; cannot work for reasons of sickness, childbirth,
or parenting; or who are providing care or support to a family member who
is gravely ill with a significant risk of death. Meanwhile, another practice
worth studying is that of CMTEU in Mauritius which managed to ask
employers to pay a one-days salary per month into a fund to cover dismissal
fees.
Case Focus: Training Provision from Service Contractor as Social Protection Measure
Company A considers the development of those in the manpower pool through trainings and
seminars as its corporate strength. It trains applicants and have them undergo orientation
seminars and competency-based programs. The applicants are trained with the core skills
needed in the positions they are applying for or where they will be deployed. The applicants are
trained in the center which is a sister company of Company A and is TESDA accredited. For
the workers in specialized positions such as in electronics processing, they have higher
requirements like educational background in technical/vocational schools and engineering. The
29

applicants must have reached at least second year to third-year college in the preferred
courses and the training is conducted by the client on the job.
The seminar orientation or training conducted by Company A has generated positive results,
such as the minimized complaints about the workers because they were able to change their
values and attitudes on work and the development of teamwork. Some clients also engage
Company A to conduct the seminar on their regular employees. Company A trains and
develops the applicants who have difficulty in getting hired because of lack of skill or
knowledge. They let the applicant choose what kind of core competency he would like to
develop. Company A cited their training program as an additional service for the clients and the
workers. The training can also be taken by non-applicants of Company A. They also provide
scholarships for some applicants or workers.(Source: Key informant interviews).
d) Promotion of industry and firm-based mechanisms for collective
negotiations and grievances. With flexible practices continuously evolving
that policy may not be able to immediately and effectively respond to it, it
would be desirable for actors in flexible arrangements to develop their own
schemes for grievance-handling as this would contribute to organizational
efficiency as well as harmony. A research key informant opined that flexible
work arrangements need not depend on the issuance of government
advisories on the condition that there are viable dialogue and collective
bargaining mechanisms where these matters may actually be negotiated
between management and workers, including details regarding workers
contracts, social protection measures, transition plans during restructuring,
etc. For instance, some ICEM affiliates have forged agreements directly with
major temporary work agencies such as Adecco or UK-based Manpower.
Some unions also have national collective agreements such as the ICEM
affiliate TEAM in Finland with the Services Employers Association.
e) Establishment of a signaling mechanism between government and
industries during the process of deciding to employ flexible work
arrangements. Business decisions today are bound not just by national
conditions but by global rules depending on the level of a firms integration
into the global market. So that it can respond effectively, it is crucial for labor
policymakers to be a step ahead by ensuring that it gets timely signals on
restructuring plans which would likely involve retrenchment, outsourcing of
functions, internal adjustments toward flexible arrangements or such other
schemes that when not properly handled may lead to adverse consequences
on business sustenance as well as preservation of jobs. Signaling systems
may be incorporated in industry dialogues, in industry tripartite councils and
similar venues.
These guideposts may be complemented by awareness-raising programs seeking
to educate all parties to flexible work arrangements the principal-firm, the
agency-contractor, the outsourcing entity, and the workers themselves on the
rights guaranteed to all workers regardless of status as well as the duties and
obligations of all parties to flexible work arrangements. It may be noted that
these policy interventions may be integrated to the current labor education
program, the technical advisory visits (TAV) under the inspectorate system,
30

policy discussions within the industry tripartite councils (ITCs) and tripartite
industrial peace councils (TIPCs) and similar consultative foras involving the
business sector.
Remedial measures, on the other hand, should ensure that government is
effective in providing a catchbasin for workers who fall into the cracks of
vulnerability that may be attendant in some forms or practices in flexible work.
Thus, enforcement of labor standards, which has traditionally been focused on
checking compliance at the principal or firm level should be broadened to cover
service providers of firms which would likely include contractors, recruitment
agencies, and outsourcing firms. As vulnerabilities in flexible work also refer to
its temporary nature, employment facilitation services should be made more
accessible to flexible workers and should be complemented with skills upgrading
measures that may promote upward mobility for workers. Results from the
research show that the latter remedial measure is recognized as an imperative
given the fast-changing needs of industries for certain skills such that there are
service contractors which have incorporated skills upgrading into their range of
services.
Business Involvement. Current policy responses to flexible work have created the
unintended effect of setting more regulations to legitimate business practices
without necessarily curbing the exploitation of workers. With a policy
environment that seeks to promote a level playing field for business and publicprivate partnerships, it may be timely to redirect policy response beyond
regulation per se toward engaging the actors themselves in achieving the
intended outcome of policies on flexible work which is business sustainability
and employment creation or preservation. Some practices from globallydispersed private employment agencies may be worth studying for this purpose
(see Illustrative Practice below).
In the spirit of partnership and self-regulation, industries or sectors should be
given a freehand to develop industry-specific or firm-specific flexible work
arrangements with the condition that basic rights of workers are in no way
compromised. This may be done be encouraging industries or firms to develop
codes of good practice on hiring workers, social security arrangements, skills
development and dispute settlement as well as mechanisms for self-monitoring
areas which when made transparent may actually guarantee attainment of
results for both business and workers. Toward this end, practices from other
countries on responsible outsourcing and similar arrangements may be good
starting points for policy-making.
Illustrative Practice: Manpowers Corporate Social Responsibility Initiatives
Manpower Inc. offers client-business with a range of services and solutions for the entire
employment and business cycle including permanent, temporary and contract recruitment;
employee assessment and selection; training; outplacement; outsourcing and consulting. It
has a worldwide network of nearly 4,000 offices in 82 countries and territories that caters to the
needs of its 400,000 clients per year, including small and medium size enterprises in all
industry sectors, as well as the world's largest multinational corporations.
31

Among its CSR programmes is Manpower Argentinas "Juntospor los Jvenes" (Together for
the Youth) program in association with the Direccin Nacional de la Juventud (DiNaJu), the
Social Development Ministry, and the non-government organization Fundacin SES. The
program aims to prepare economically disadvantaged youth who are about to enter the
workforce, teaching them how to recognize and discover their strengths and talents to help
them gain economic independence as well as self-confidence. Launched in 2004, the program
has trained more than 1,500 youth in 40 cities across the country. Volunteers from more than
35 Manpower branch offices have carried out 100 workshops. In addition, more than 30 public
and private associations have offered support and/or joined the program since its inception,
helping it continue to grow. The branch also developed a program dedicated to finding
employment opportunities for people with disabilities called Oportunidades paraTodos
(Opportunities for All) and a Manpower volunteer program called Entrelazados (Intertwined).
Manpower Inc. also maintains its Global Learning Center, which provides free online training to
its permanent and temporary employees around the world. The award-winning program has
successfully enhanced the skills of over nine million people worldwide and there are currently
over 3,600 free courses available, ranging from IT courses to general business skills. Source:
www.manpower.com.
CONCLUSION
The conditions in todays labor market require urgent actions from all
stakeholders. Not doing so will aggravate the unintended outcomes of increasing
poverty among workers, low productivity levels and diminishing
competitiveness in the economy. This research attempted to define the issues
on flexibility from the perspective of those who hold a stake: business and
workers -- and thereafter looked into the problems of current responses that are
deemed adequate in substance but is wanting in stronger implementation and
coherence in action
The recommendations put forward in this study are intended to contribute to the
achievement in the Philippines of well functioning labor market that affords a
balance between flexibility, stability and security -- one that is based on respect
for rights, shared responsibility, and the pursuit of decent work for all.

32

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