‘Labor uncertainties may prompt investors to relocate’

MANILA, Philippines — Uncertainties in the country’s labor sector are prompting some investors to consider relocating to other Southeast Asian economies where labor rates are lower, Trade Secretary Ramon Lopez said yesterday.

Lopez warned labor groups that forcing direct hiring by principals and employers could backfire on them and cause harm to the economy.

“To insist that they all get hired directly by the company can only lead to lesser investments and lower job generation, which is what I fear most,” Lopez said.

“A lot of investors have told us that with this uncertainty, many are already thinking of establishing in other countries like Vietnam, Cambodia, and Myanmar where labor rates are even lower. It would be easy for them to move or set up in those countries, so in the end we lose out on the opportunity.  Absent any new investments or expansion, then it would not matter anymore if we force direct hiring by employers because there will be no new jobs to begin with,” he said.

The Department of Trade and Industry (DTI) is for job generation and improving security of tenure, Lopez said.

“DTI supports the improvement of the security of tenure of workers, making them on regular status, with all benefits and even a retirement plan for workers, which can be achieved either in the company itself or in the contractor company,” he said.

“What is important is the improvement of the lot of the workers, while keeping the flexibility of allowing legitimate contracting and outsourcing, which is the business model prevalent globally,” Lopez added.

The trade chief previously opposed calls from labor groups to ban all forms of contracting in the country, citing its negative impact to the economy.

With legitimate contracting being practiced around the world, he said what is important is to ensure social protection for workers.

“We are pro-labor, welfare, and labor generation. Legitimate contracting is also allowed in the current Labor Code, as amended and what is important is that the law is implemented well by DOLE (Department of Labor and Employment), and we see moves in this direction with the issuance of DOLE Department Order 174, Series of 2017. That is the reason why there is difficulty in having another EO that will stipulate another model that is different from the law,” he said.

Malacañang postponed on Monday President Duterte’s supposed meeting with labor groups, wherein the President was expected to sign the much-awaited executive order regulating contractual employment.

Lopez said the issuance of the new EO, or its non issuance thereof, should not be blamed on the DTI or the Office of the President.

“The cancellation of the Monday meeting was not due to DTI, DOLE nor OP.  There simply is difficulty in crafting an EO that will not violate the current law and still meet what the labor sector wants,” he said.

“What is important is that the illegal practice of 5-5-5 or endo or illegal contractualization has been stopped. I believe this is what our President promised to stop during the campaign, not legitimate contracting,” Lopez said.