A New Shade of Slavery

As the country—along with the rest of the world, save for the United States—observes Labor Day on Tuesday, unions of every ideological stripe are set to press for higher wages. However, abysmal pay is not the only cross that millions of Filipino workers must bear.

In their book, Labor-Only Contracting in a Cabo Economy, Rod P. Kapunan and Rhodora DG Kapunan offer a comprehensive analysis of what the authors call a “new shade of slavery.”

Labor-only contracting started out as an ingenious method for hiring messengers, janitors and watchmen from employment agencies that specialize in supplying such types of manpower. Nowadays, the practice has become pervasive.

The Kapunans point out that in every mode of labor activity—from electricians, utility personnel, accountants, office clerks and secretaries, computer programmers and encoders, lawyers, press agents and even managers—specialized agencies are now in place to instantly supply the manpower skills sought by every type of employer.

Businesses that have tapped into this scheme—which the authors call “employer-beneficiaries”—profit from services rendered by agency-supplied workers, but minus the liability for the consequences of employer-employee relations.

The hiring of workers through employment agencies was previously confined to blue-collar workers. Today, white-collar workers and even executives have been brought within the controlled market of labor-only contractors, albeit under such euphemisms as labor specialists or technical consultants.

As “a new shade of slavery,” labor-only contracting has become the most convenient tool used by employers to circumvent the constitutional right of workers to security of tenure, to prevent workers from forming unions for their own welfare and protection as well as for collective bargaining, to deny workers accumulated benefits arising from long years of service and to peg wages to the barest minimum, which all too often is also violated by labor-only contractors.

Labor-only contracting arose from flaws in Philippine labor laws that for years have even been encouraged by the government. It has, according to the Kapunans, aggravated the exploitation of the country’s workers.

Before, direct-hire employees worked to produce goods more valuable than the wages they were paid. Now, employment agencies—which only give workers their job assignments—routinely take an additional cut from the income of the workers they “rent out.” Such cuts are justified as monthly premiums contained in contracts that workers have no option but to sign if they wish to get a job.

As the authors put it: “This means an additional parasite has been created, which role [labor-only contractors] play that is no different from the slave traders of the past.”

The interest of labor-only contractors is not the welfare of the workers they rent out, but the commissions they earn from leased labor. Contracted workers are doubly exploited because labor-only contractors get their share, not from the surplus value earned by their business clients, but from the contracted workers who are forced to accept low wages if they wish to remain employed under conditions not even Karl Marx anticipated.

Rod is a newspaper columnist and labor relations consultant. His wife Rhodora is an accountant-lawyer and associate dean of the College of Law of the Polytechnic University of the Philippines.

Although the authors propose constructive solutions to the problem of labor-only contracting, they dispute the prevailing notion that labor-only contracting is the only tool the country can use to remain competitive in the international market. They suggest an alternative that they say would not only eradicate the problem, but also allow the Philippines to regain its economic competitiveness.

Labor-Only Contracting in a Cabo Economy was formally launched last week by C&E Publishing Inc. in time for Labor Day. It could not have come at a more appropriate time.

Labor-only contracting has allowed scores of business and industries to grow by leaps and bounds. It has generated mind-boggling fortunes for labor contractors and, more so, for their clients in commerce and industry.

Among the country’s Top 1000 corporations are companies that saw their profit margins swell as their labor costs shrank. In sharp contrast, millions of Filipinos who can only get jobs through labor-only contractors remain underpaid and face seasonal joblessness.

This is one of those crucial issues that the politicians running in the May 14 election have carefully avoided. After all, their biggest contributors are businessmen who rely on labor-only contracting to generate the kind of wealth their workers can only dream of.

Labor-Only Contracting in a Cabo Economy is listed on the Internet by AllBookstores, the biggest source of books in cyberspace. Out of 4,173 books on contracts listed on eBay, the book was in the top 20.

By Dan Mariano

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