PHILEXPORT QUESTIONS FEES IN SUBCONTRACTING POLICY

The umbrella organization of exporters this week raised a concern in a decision made late last year by the Department of Labor and Employment (DOLE) to regulate labor contracting and subcontracting.

“We laud the objectives and benefits of regulating contractors to curb fly-by-night operators and protect the principals (in such arrangements),” said Sergio R. Ortiz-Luis, Jr. president of the Philippine Exporters Confederation, Inc. (PHILEXPORT) in a letter to DOLE chief  Rosalinda Baldoz.

However, a main harmful issue raised by the export leader is the prohibitive licensing and registration fee of P25,000 to legalize  the operations of labor contractors and subcontractors of parts of a bigger company’s production system.

The fee should be reduced to a more reasonable P1,000 since most members of PHILEXPORT  are micro, small and medium enterprises  that already face so many obstacles to becoming more competitive, Ortiz-Luis argued.  This fee is benchmarked with the fee paid under the Barangay Micro Enterprise Act.

Secretary Baldoz issued Department Order 18-A seeking to regulate the contracting practices late last year.

The issue on labor subc ontracting became a national controversy when many contractors from security guard agencies, providers of messengerial and janitorial services and at least one retail chain were found to have blatantly violated Philippine labor laws.

One lawmaker had called the phenomenon  “the casualization of Philippine labor”.

The issue has become too hot, several congressmen and senators have filed bills in both houses of Congress seeking to criminalize labor-only sub-contracting.

Subcontracting practice is only common in the construction business before the globalization of trade set in during the early nineties.  It has grown to become a common practice worldwide and is now known as “outsourcing” of parts or components of a product or a company’s non-core service like customer relations or sales. In the country, it created the business process outsourcing industry.

In the exporting segment of the domestic economy, outsourcing  has become a competitive weapon practiced by the giants and smaller exporters from ship-builders to handicrafts and furniture-makers. To meet big orders on time, the bigger exporters have enlisted smaller enterprises to manufacture parts. Example is the leg of a table which is later assembled into a complete product.

Some engaged in toll manufacturing contracts.

The practice gained notoriety, however, when a giant retail chain made it its core labor policy.  — Abe P. Belena, PHILEXPORT News and Features 

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