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Department of Trade and Industry (DTI) Secretary Ramon Lopez challenged the Philippine Association of Legitimate Service Contractors (PALSCON) to police its ranks to ensure the effective implementation of the so-called “win-win structure” involving legitimate service providers (SPs), companies and workers.

Speaking at PALSCON’s 6th National Forum on 14 November, Sec. Lopez reiterated that the “win-win” structure that upholds workers’ security of tenure is not a departure from, but an improvement of what has already been provided by the law on legitimate contracting.

The Labor Code and Department of Labor and Employment (DOLE) Department Orders 10 (Series of 1997), 18-02 (Series of 2002) and 18-A (Series of 2011) guarantee legitimate contracting or subcontracting arrangements.

Consistent with the unchanged position of President Rodrigo Duterte to put a stop on end-of-contract (endo) schemes, the trade chief maintained that as added value to the full and strict implementation of legitimate contracting, the win-win structure carries two specific provisions that safeguard workers’ tenure rights, specifically by making workers regular and permanent, as well as by affording them mandatory retirement benefits.

The DTI-proposed structure also allows companies to either directly employ workers or source workers from legitimate SPs.

Sec. Lopez said that the critical role of the association of legitimate SPs in effectively carrying out the win-win structure is to patrol its ranks to ensure that workers receive appropriate benefits.

“What is critical now is the compliance of legitimate SPs in giving full benefits to the workers,” said Sec. Lopez, adding that the proposal received positive response from President Duterte.

The PALSCON audience showed support to Sec. Lopez’s statement that legitimate contractors’ failure to comply will result in getting blacklisted by client-companies.

Removing contracting and subcontracting arrangements will lead to an immediate reduction of employment, with some foreign investments pulling out, according to him, pointing out the vital link between investment creation and job generation.

He also shared that at least three potential foreign investors in the Philippines began expressing this sentiment in his most recent meeting in Japan this month.

“Changing the ball game now, we will lose investments and miss out on opportunities instead of generating more jobs,” Sec. Lopez added.

According to DTI, it must be recognized that there are certain parts of operations in a company that are best carried out through a service provider mainly due to the seasonality of work or the function-specific nature of some projects, which are deemed to be better handled by a third party, allowing the principal company to focus on growing the business.

Scheduled to hold consultations with another set of labor groups soon, DOLE, with recommendation from DTI, is expected to reach an “effective, legal and mutually beneficial position” on the matter within the year.

“Our fear has always been about losing jobs. To start with, if there are no available jobs, there will be no forms of employment to be discussed today,” Sec. Lopez concluded.

The DTI introduced the win-win structure that is premised on the need to have a business policy environment that creates and encourages job and income generation.