#contractualization

By Cliff Potts, CSO, and Editor-in-Chief of WPS NewsBaybay City, Leyte, Philippines — January 28, 2026 Job instability is the most significant structural weakness in the Philippine labor market. It affects wages, productivity, household formation, and long-term economic growth. While often framed as a labor-rights issue, job instability is more accurately understood as a system-level economic…

Cinemalaya 2020: 'Excuse Me Miss, Miss Miss' Review #ExcuseMeMissMissMiss #cinemalaya2020 #streamconsciousness

At the first glance, Sonny Calvento’s take on the issue of contractualization in the Philippines may seem like a fluff piece meant to deliver laughs to the audience but its underlying message packs a relatable punch to those who are suffering from the same predicament.

SYNOPSIS:Vangie, a miserable contractual sales lady, is about…

by: Andrei Co

Contractualization has been a political issue around the Philippines due to the firms who have the power to make this happen. Others seem to confuse contractualization with seasonal hiring. These big companies have the ability make contractualization possible because of their power to grant workers jobs when the demand for labor is very high in Manila. Political contestation was very evident because there are people who would like to work at SM for a full time job and get the benefits after the 6 month period that businesses are required to give their workers. Firms on the other hand do not want this in order for them to generate more revenue, which why many big companies like SM practices contractualization.  The government has not done any major changes to contractualization and they just stated that they are trying to ban the practice in the near future. As of now, the practice is liberalistic with minimal government intervention. I was fortunate enough to experience what the workers at SM go through in their everyday life. These workers average 5-6 months before their contracts end, and because of that, they are forced to find a new job. This practice is called contractualization. asiapro.coop stated that contractualization is the limited time of the workers to work in a certain company, this usually applies for the bigger companies of a certain country. As for the Philippines, SM has a net income of 31 billion by the year of 2016. The purpose of contractualization is to generate more revenue. Philstar stated how the company generates more revenue with contractualization “To escape from the responsibility of carrying the load and additional cost of hiring regular manpower, firms would rather overload their current roster of regular employees with work in lieu of hiring regular employees.” What others have a hard time on depicting is what the difference with contractualization is with other types of short term employment like seasonal hiring. Seasonal hiring is when firms hire more workers in a certain season. An example is hiring more workers during the holiday season in a short period of time. Contractualization on the other hand avoiding the benefits of employees by making them work for a finite amount of time. Jobs that have the potential to have long term labor is mitigated because of that. With the advantage SM to give jobs to their employees. They show their power to manipulate how long their stay in SM should be. The government has not been able to intervene with this issue yet which shows why a liberalistic mindset is practiced with the government and one of the most successful companies in the Philippines. We know that contractualization is also less ethical than seasonal hiring because of the avoided benefits that firms do not want to give their workers. With the interests of the firms to generate more revenue and more money for theirselves, they practice contractualization to make it possible. Today, it has become an issue because the labor force knows that they deserve the benefits that SM is depriving them of. In order to rectify the issue of the political contestation, the government is still planning to do something about it for a “more beneficial” future for the workforce.

Sources:

http://asiapro.coop/contractualization-all-need-know/

by: Bianca Tañega

SM Investments Corporation (SMIC or SM, the mother company) is one of the leading business entities in the Philippines. Henry Sy, owner of the popular empire, is known to even contribute to the value of around 6% of the entire Philippine economy. Now, a business doing so well mustn’t have an issue with providing their employees substantial salaries, wages, and benefits, right? Well as it turns out, that may not exactly be the case. SM has been accused time and time again of practicing contractualization.

When a company practices contractualization, they hire employees for less than 6 months before terminating their contracts. What this does is it never allows these employees to become regular employees entitled to employee benefits meant to be provided by their employers. Without these benefits, they are subjected to injustices such as difficulty saving for their retirement and deprivation of healthcare to name a few.

Another thing to take note of is how this issue does not only affect the employees directly. Contractualization affects their families and communities as well, since these people are their breadwinners. If they fail to provide for their families and communities, it can be assumed that the families and communities will either suffer or struggle significantly.

SM has denied this many times, but there have still been many first-hand accounts from their employees themselves. Many people have come to the aid of these people, and there have already been efforts made to effect change. There are also some people who support SM. Here are 5 sectors in society and their stands on the SM contractualization issue!

1. The Church

Church groups such as the Church-Workers Solidarity (CWS) and the National Council of Churches in the Philippines (NCCP) have openly criticized SM for denying that they don’t practice contractualization when they get approached by so many young SM contractual employees. They called it SM’s “anti-worker employment scheme.” As a Church group, these two groups need the support from the people in their communities. They will put the people first to secure that support. This can be why they are so vocal about ensuring that the interests of SM’s workers are met. A manifestation of this would be when they called SM out on their lies and exposed that the company is run by greed since they generate so much but at the expense of their workers to whom they barely even pay the minimum wage. They say that SM takes advantage of their workers, and their workers have no choice but to accept it since they really need the jobs anyway.

2. The Youth

Samahan ng Progresibong Kabataan (SPARK) is a youth group that also called SM out on their contractualization issue. They challenged the company through email to reveal the conditions under which they practice contractualization. It is understandable why they would fight for this issue since a lot of people that “fall victim” to SM’s contractualization are young people new to the workforce. They tried to get the company to budge, however, SM continued to deny their claims. Despite this, they still see SM as the one that started the whole contractualization practice in the Philippines and the young employees as the powerless in this situation with no choice but to accept the conditions their employer dictates for them.

3. The Activists

Militant activist groups Kalipunan ng Damayang Mahihirap (Kadamay) and Anakpawis Partylist are two groups that are against SM’s contractualization practices as well. They are very vocal and quite radical with their stand, too. These two groups represent the masses, and the masses are the ones who usually end up in contractualized positions such as salespeople and clerks for retailers like SM. They are simply actively protecting themselves from being taken advantage of by such a powerful entity. They disagree with this practice because to them, it oppresses the workers. It is an injustice to them. Again, the employees have no power in this situation and the abide by the company’s ultimate desires and preferences because it is their best option for providing for their families and financing their lives.

4. The Women

In the retail industry, women make up majority of the population of salespeople or sellers. If any retail company exploits their workers, women would be the most affected. Gabriela Women’s Partylist (GWP) is an organization that works for the welfare of the women in the country. Their argument is that the harsh conditions of contractualization can take a serious toll on a woman and her health. According to them, SM’s unreasonably short breaks have caused a lot of their female employees to acquire urinary tract infection (UTI). They are also forced to wear heels all day with hardly any time to rest, causing serious harm to their feet. GWP disagrees with SM because they believe that the employees, especially the female ones, deserve to work under better and more just working conditions. The women experience this in addition to the low pay and the deprivation of employee benefits. However, they continue with their job and continue working because they have no choice.

5. The Government

The last sector is the government. There are two arguments for this sector in particular; the first being that of the Department of Labor and Employment (DOLE) while the second being that of our president, Pres. Duterte. When Pres. Duterte was running for office, one thing he promised to work for was the end of labor contractualization. However, DOLE failed to align themselves with the President’s plans when the Secretary of their department, Secretary Bello, signed Department Order (DO) No. 174 (2017) without ensuring that contractualization would officially end. They failed to implement the appropriate policies that protect low-position, clerical employees from contractualization. To them, SM’s contractualization is “legal contractualization,” therefore, there isn’t anything actually wrong. Whereas the President himself is very against it. Pres. Duterte has made himself very clear with his being against corruption. Contractualization is, in a way, a form of corruption in the business and corporate world. Because SM is so powerful, DOLE is perhaps being careful about the whole situation. They want to protect themselves from what the company will or might do if they give them a hard time. In the President’s case, everyone knows how fearless he is. His goal in office is to eradicate corruption and eradicate contractualization. It doesn’t matter to him who the corporation is or how powerful they are. There is contestation present between the two since their beliefs and ideologies clash, and they are both law-enforcing or law-implementing entities. Both entities are exercising their power but since the President has authority that comes into play, DOLE is compelled to accept reconsideration of the issue and make extra efforts to ensure anti-contractualization policies are implemented efficiently even if the order had already been signed.

Although this isn’t a headlining issue that a lot of people are aware even exists, SM’s contractualization is still being discussed, and the fight to end contractualization in the country is still in pursuit to this day.

Sources:

http://www.anakpawis.net/2012/04/retail-giant-has-no-regard-for-human-and-natural-resources%E2%80%9Csm-and-henry-sy-also-under-fire-for-contractualization-policy%E2%80%9D-anakpawis/

http://bulatlat.com/main/2017/10/13/sectors-unite-nationwide-protest-vs-sm-contractualization/

http://business.inquirer.net/110413/philippines-elite-swallow-countrys-new-wealth

http://www.cbcpnews.com/cbcpnews/?p=76618

http://www.gmanetwork.com/news/news/nation/575909/duterte-urges-endo-workers-to-complain-via-gov-t-hotlines/story/

http://www.gmanetwork.com/news/money/companies/584636/youth-group-calls-on-sm-to-reveal-number-of-contractual-employees/story/

http://newsinfo.inquirer.net/893227/contractualization-problem-persists-despite-new-labor-dept-order

https://www.rappler.com/nation/148400-end-contractualization-duterte-100-days

https://www.rappler.com/thought-leaders/164921-endo-contractualization-alive-dole-department-order

by: Piero Dominguez

Politics in SM is the same as most major corporations around the world. Employees don’t really have much control over anything and management have control of almost anything. The only thing employees can control is wether or not they go to work on that day but even then they are “encouraged” to go to work because if they don’t, they will be met with repercussions. It is very clear that the management is the one exercising their power and that the contractualized employees are the ones being subjected by that exercise of power. If you look at SM like it was a society; the management being the government and the employees being the citizens, it is a very socialistic society because the government (management) is in great control and if you don’t contribute then you aren’t part of the society. With the management being the way it is, why do these employees allow themselves to be subjected by the power of the management? Why do they agree to being contractualized and lose the benefits granted to a normal employee? It’s because of their circumstances. They need the job because they need the pay so they have no choice but to accept the contractualization even if it means losing benefits such as medical benefits. However, the interests of both parties, SM and the contractualized employees, are mutual in a sense that they need each other to get to their own goals. SM needs a cheap workforce to man their ever growing chain of malls which make the company money and these contractualized employees need SM to provide them jobs so they can get the pay and provide for their families. These employees however don’t get their preference of working in a company that offers them benefits but the need for a job makes forgoing the benefits a necessity in order to satisfy the interest of them making money in order to provide for their family.

by: Mija Diro

You must first know your rights. Contractualization vs. Regularisation is an issue being faced by many Filipinos today, but how exactly do our laws protect us from the injustices brought about by contractualization? A new DO released by the Department of Labor and Employment have discussed the new guidelines on stricter implementation of “legal contractualization.” Department Order 174 discusses the prohibitions regarding out-sourcing of employees for companies. This means prohibiting companies from getting the people who work for them from agencies that merely supply workers for companies; this means that these people are not their employees but are working for their company. Another problem tackled by the new Department Order is the “end of contract” scheme; which forbids the employers from hiring and re-hiring under a repeated contract of short-term employment. This prevents employers from firing their contractual employees a month before they qualify for being regular workers and receiving the benefits they’re entitled to as regular workers. However, even the new Department Order has its limitations. DO 17 still allows labor-only agencies to operate if they make a substantial investment of 5 million pesos.This is Php 4, 700, 000 higher than its original amount of Php 300 000. DOLE also shortened the validity of their certificate from 3 to 2 years, where the registration fee is also increased from Php 25, 000 to Php 100, 000. Even with the new Department Order, many organisations are still displeased. Labor Secretary Sylvester Bello III admits that even his position comes with restrictions. He mentioned that Prohibition of all forms of contractualization is beyond the powers of the secretary of labor, and further explained that DOLE can only regulate contracting and subcontracting. Contractualization is a scheme that gives even less than the bare minimum for workers. This scheme victimises people in dire need of jobs, and decreases the liabilities of the Company they are working for. SM is one of the largest companies in the country; with many other companies under its brand. SM is also known for having a large-scale of employment, however, they are also being accused of allegedly having the most contractual workers under them. There have been plenty of protests against SM for this “practice,” but they have denied the accusations. SM insists that they are compliant with all labor laws, and that their brand does not practice contractualization, however, they admitted to hiring on a seasonal basis. These seasonal employers are hired for their most hectic months of the year, and their contracts last for about 2-3 months. Even though they denied this, there have been protests done in the past done by their former employees. There have also been statements taken from these people speaking about their daily income of Php 336. There are so many immoral practices that come with this, and the fault is carried out through the politics within SM. The aristocracy being practiced is so evident for their mistreatment of employees; which is why there are organisations asking for a release of annual revenue from SM to even further support their claims of mistreatment. SM contributes to the greatly to the National income, with that magnitude of revenue, why would they choose to deprive these people of their rights to benefits and proper employment?

Sources:

http://www.cbcpnews.com/cbcpnews/?p=76618

http://cnnphilippines.com/news/2017/03/16/contractualization-rules-signed.html

http://www.gmanetwork.com/news/money/companies/564254/sm-claims-it-doesn-t-practice-contractualization/story/

http://www.gmanetwork.com/news/money/companies/584636/youth-group-calls-on-sm-to-reveal-number-of-contractual-employees/story/

http://www.lawphil.net/statutes/repacts/ra1989/ra_6715_1989.html

http://newsinfo.inquirer.net/807270/employees-ask-dole-whats-contractualization

http://newsinfo.inquirer.net/598582/worker-hired-fired-every-5-months

https://www.rappler.com/nation/164366-legal-contractualization-still-allowed-new-dole-order