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INTRODUCTION

Contractualization or labor contractualization is the replacing of regular workers with

temporary workers who receive lower wages with no or less benefits. They do the work of

regular workers for a specified and limited period of time, usually less than six months. The

work they do is desirable and necessary for the companys survival, but they never become

regular employees even if they get rehired repeatedly under new contracts (2003).

In this current administration, the abolishment of contractualization is one of the current

issues the state is facing. Labor contractualization has been a subject of discussions in the

congress and among Filipino citizens. This arises due to the issues of unemployment and under

employment. It is undeniable that most of the biggest businesses in the country are involve in

this situation. Latest news include an article about Anak Pawis Partylist Rep. Ariel Casilao filing

a measure abolishing the contractual employment scheme in the country. During the campaign

period, President Duterte vowed to abolish the contractualization scheme, which he described as

unfair labor practice and tool of exploitation against the working class. The main purpose of

every business is to gain profit. The most common way to achieve this is through minimizing the

expenses of the company. Most business owners today engage in contractualization of

employees. The jobs available for them usually does not require a college degree and therefore

would give them minimum wage. Also, contractual employees do not receive any benefits such

as SSS, Philhealth, and Pag-IBIG contributions unlike the regular employees. This is one

evidence that businesses can lessen their costs because they are not required to pay high amount

of salaries to their workers. This situation is not advantageous to the employees since it does not

give the security of a permanent job. It also cannot develop their skills properly given the period
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of time they have for one job and the great possibility that they would have another job few

months later which is different from that of the current. The businesses may have lesser expenses

however the quality of services they offer may be compromised thus, affecting their sales and net

income.

As graduating students and as future job-seekers, the proponents are concerned with job

opportunities and present employment situations in the country. This is one of the reasons why

the recent issue about contractual employment has caught the interest of the researchers. Also,

given the course, the group is exposed to business operations and this knowledge opens the

possibilities of us becoming business owners in the future. Combining the knowledge and the

interest of the members, the researchers decided to conduct a study that would clarify the reasons

of business owners and managers for engaging in contractual employment and to determine the

perceptions of employers on abolishing contractual employment.

Statement of the Problem

This paper aims to find out the management perception on abolishing contractual

employment. It aimed to seek answers to the following questions:

1. What composes the company profile of entities who are engaging in contractual

employment?

2. What are the reasons of businesses for engaging in contractual employment?

3. What are the managements perceived advantages of abolishing contractual employment?

4. What are the managements perceived disadvantages of abolishing contractual

employment?
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Conceptual Framework

This study focused on the management perceptions on abolishing contractual

employment of businesses within Bacolod City. The researchers intended to provide answers

from companies with regards to their perceived advantages and disadvantages of the abolishment

of contractual employment. The main rationale of this study is to contribute information as

decision making tools for companies whether the abolishment of contractualization would be a

best decision to improve business operations and productivity.

The figure depicts a relationship wherein the study inputs the companys profile, the

reasons of businesses for engaging in contractual employment to come up with perceived

advantages and disadvantages of abolishing contractualization and later on derive

recommendations as an output to the participants with regards to their operations and decision

making as to whether or not to abolish contractualization.

It is assumed that the respondents who are exposed to the abolishment of contractual

employment are likely to have negative effects towards business operations since they will have

an additional cost for the benefits that regular employees must receive such as SSS, PhilHealth,

PAG-IBIG, retirement benefits and the like. But in the long run, it will have positive effects

towards operations of the business in the areas where they will no longer have to spend for

training and recruitment costs for regular employees. Also, in terms of the quality of the service,

employees will likely have a positive influence over the attitudes concerning security and the

best way to perform their duties since there will be a presence of induction and investment in

their skills.
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Socio-demographic characteristics of the businesses such as company information, size

of employees, etc are considered as independent variables which will influence respondents

perception to abolishment of contractual employment.

Scope and Limitations

The researchers investigated management perceptions on abolishing contractual

employment of businesses in Bacolod City. The study has congregated a sample from different

types of businesses and organizations that are engaging in contractual employment based on the

Philippine Statistics Authority 2014 survey of employment regarding statistics on non-regular

workers. The participants belong in the Top 20 result of the survey. It is with best efforts that the

proponents reached out to businesses in different industries in order to maximize the sample size.

The respondents of this study were the only entities present in the city that were willing to
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participate because of the sensitivity of the topic. Most of the respondents originally chosen

rejected the letters provided and refused to be interviewed.

This study includes opinions of businesses managers and owners regarding contractual

employment and its effects on business operations specifically on financial aspects. Also, the

focus of the study is on the different advantages and disadvantages of having contract workers

involved in business operations.

Other aspects of business operations such as product control and financial aspect are

not given emphasis on this paper. The mere purpose of this study is to determine the

perceptions of the organizations management on abolishing contractual employment. The

reliability of information gathered and the results of the study are only available to

researchers based on Bacolod City. Given the time constraint, the study will be conducted in

the span of four (4) months starting from June to October of 2016.

Significance of the Study

This study is significant to the following:

Employers. They may know the advantages and disadvantages of contractual

employment to their business operations both in the short run and the long run. This study may

also serve as an instrument to identify possible risks and benefits of abolishing contractual

employment at an early stage. Since this research involves gathering the sentiments of the

contractual employees, they may later on develop strategies to boost employee morals for

products and services improvement.

Contractual Employees. This study intends to enrich their knowledge about their

situation and to improve the understanding of their employers to help them have better and
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permanent jobs. Also, this research may highlight their rights that may pave the way of giving

them the benefits they need and deserve.

Future Researchers. The study may pave way for better and more extensive future study

regarding contractual employment.

Academe. The study may improve learning environment by providing new information

that would help both educators and students be aware and understand current issues that the real

world is facing.

Definition of Terms

Abolish. Conceptually, it refers to the taking out of a companys mission statements,

organizational charts, or any written policies. (Kruse, K. 2016) Operationally, Abolish refers to

the nullification of contractual employment of businesses in Bacolod City.

Contractual Employment. Conceptually, it is an employment that requires employees to

sign and agree to terms of a contract before beginning to work. Contractual work is usually for a

specified amount of time and ends upon completion of a project or assignment. (Tucker, K. n.d.)

Operationally, Contractual Employment refers to the current situation of most of the employees

in businesses within Bacolod City which is being studied in order to know the effects of

abolishing such to business operations.

Management. Conceptually, it can be defined as achieving goals in a way that makes the

best use of all resources. (McCrimmon, M.) Operationally, Management refers to the employers

of businesses within Bacolod City involved in contractual employment

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Perception. Conceptually, it can be defined as an individuals ability to undertand

difference. (Romanov, N. Operationally, Perception refers to the opinions and thoughts of the

employers of businesses within Bacolod City towards abolishing of contractual employment.

Review of Related Literature

Contractualization is a common employer practice of hiring people for a period not

exceeding five months. Employers would normally get the services of manpower companies to

supply them contractual employees after five months to ensure continuity. Nowadays, it is

commonly known as outsourcing. They do this to save on costs and avoid the hassle of

regularizing employees once they have worked continuously for six months. While

contractualization may be boon to employers, it may be bane to employees over the long

term. The practice of contractualization prevents employees to attain job security since their

contracts are terminated every five months. But for the unemployed, contractualization provides

job opportunity albeit on short-term basis. This allows the worker to be trained and learn new

skills that she can use in her next job. (Ong, H. 2013)

The employers who engage in this practice claim they hire contractual employees to meet

the seasonal requirements of their business and that requiring them to be made regular will increase

their operational costs and, in the process, adversely affect their revenue stream.

With the aid of lawyers, these employers have come up with ingenious ways to go around

the law on regular employment by either outsourcing the jobs normally handled by regular

employees, or classifying certain aspects of their business as special projects and hiring outsiders

to manage them, or retiring regular employees then hiring them back to do the same work on

contractual basis. (Palabrica, R. 2016)

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Wandera (2011) stated in her study that the number of companies using temporary

workers was on the increase as global competition increased and the urge to cut down on costs of

undertaking businesses in order to remain competitive rises. According to Kalleberg (2000), due

to the rapid innovativeness in science and the ever increasing competitiveness, companies have

established policies of flexibility and adaptation to the economic changes in order to keep profits

as high as they can (Wandera, H., 2011).

This said competition led most of the companies to have a certain number of short term

workers as a way to deal with periods of decreased productivity or lower demand (Brewster, C.,

Tregaskis, O., & Valverde, M., 2000).

Dr. Benito L. Teehankee, in an online article, answered the question: Is contractualization

necessary to properly manage worker performance? Managers have the duty to exercise

reasonable control over the quality and volume of work done by workers. Workers who fail to

perform or otherwise neglect their duties should be corrected through performance feedback and,

when needed, formal discipline with due process. This can, of course, lead to termination when

the workers refuse to cooperate.

Strangely, many believe that the best way to guarantee performance is to altogether

remove security of tenure and due process for workers. But if managers do not know how to

engage employees to contribute good work and instead can only extract performance through the

fear of imminent job loss, how can Filipino businesses be truly competitive? Fear and insecurity

are incompatible with sustainable, high-quality work. Managers need to move away from a fear-

for-compliance approach to an engagement-for-performance strategy. (Teehankee, B. 2016)

According to Sicat (2016), in his online article, contractualization was one of the ways to

keep labor costs down but is mainly true to employment where there are a lot of applicants and
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has become as an escape route to companies who are under the regulations of the Philippine

labor market. Tackling about the tightness of a specific skill in the labor market, such has led to

the rise of wages (Sicat, G.P., 2015).

On the other hand, Michael Wolfe (2016) stated in his article that one of the

disadvantages of contractual companies is that it can create a litigious atmosphere in the

company for people who are forced to sign contracts which arent coinciding in their own terms.

They will most likely seek legal counsel for that (Wolfe, M., 2016).

Bernabe, Endozo, & Pacia (2014) in their article from Inquirer.net entitled Worker

hired, fired every 5 months, cited a data from research group Ibon Foundation, Kilusang Mayo

Uno chair Elmer Labog said that in 2006, the profits of the top 1,000 corporations in the

country reached P599 billion and just after six years, in 2012, their profits almost doubled to

P1.08 trillion. Ducanes added that if the result of contractualization is a lower labor standard

for example, wages are fixed always at minimum wage and workers have no other benefits and

the lower-skilled people are not employed, then this contributes to worsening inequality in the

country. He emphasized that the government keeps on saying that human resource is our biggest

asset but they cannot even protect and uphold the rights of the workers (Bernabe, K., Endozo, P.

P., & Pacia, S., 2014).

Companies and the contracting agencies described contractualization as a means to

promote cost efficiency and a way to avoid having labor unions. The contracting agencies also

view contractualization as a means to provide services to companies. Therefore it is their duty to

ensure that specifications requested or imposed by the company are strictly adhered to.
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Contractual workers, on the other hand, view contractualization as a means to diminish

their control on their working condition and environment. Although this perception greatly lowers

their job satisfaction and motivation as employees, they feel helpless and incapable of changing

their situation. They are also unsure as to who or which institution can help change their plight and

take care of their well-being as employees.

The human resources (HR) practitioners clearly stated in the interviews that the contractual

workers are not their employees, all employee- or labor-related concerns and issues must be dealt

with by the agency. However, the agencies also claim that they are not their employees since they

only serve as a go-between.

The issue of which organization should look after the welfare of contractual workers is

highlighted even more if it involves fly-by-night agencies that do not have sufficient capital or

resources. Both HR practitioners and worker interviewees emphasized that such agencies make the

employment conditions worse for contractual employees. (Cainglet, Vega, Zapata, 2012)

Docena, in an online article, stated that if we ban or significantly limit contractualization,

they argue, many companies will either close down or not be able to open to begin with. Their

profits will fall, many workers will lose their jobs, the economy will contract, and all Filipinos

will consequently suffer. Hence, to ban or limit contractualization is not only anti-worker but

also anti-Filipino. This argument is not only self-serving, it is also wrong.

By allowing capitalists to intensify their exploitation of workers, contractualization actually

enables capitalists to pay workers less for the same work, stunt economic development, and

therefore harm the interests of all Filipinos including of capitalists themselves. But, more than
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that, contractualization also enables capitalists to weaken the working classs ability to resist

exploitation, organize collectively, and fight for a better society. (Docena, H. 2016)

Section 6 of the Philippine labor code defines labor-only contracting as a set-up where a

labor supplier or recruiter supplies workers to a principal employer but without the necessary

tools or enough funds to perform services for the principal. The workers would then perform

services that are essential to the business of the principal but the contractor cannot control or

supervise the work of the employee. This set-up necessitates the use of the labor supplier as a

cabo or middle man to handle the supply of workers to the principal, and at the same time, help

the principal avoid responsibility of managing employees. Employees are then left with the cabo,

who doesnt have a direct hand or funds to shoulder the costs of workers wages and benefits.

This is to prevent an employer-employee relationship between principal and contract

employee, which lets the principal avoid any direct responsibility for manpower and its

subsequent labor cost. This arrangement benefits the principal because they are able to benefit

from shabby treatment of contractual employees and they dont have to bear any responsibility

for them (Maklang, K., 2014).

Casilao said contractualization is not a mere short-term tactic to reduce costs or to defeat

a union organizing drive, but a long-term strategy for shedding all obligations to workers and

eliminating all employee rights based on the existence of an employment relationship. Citing

recent studies, Casilao said contractualization is extensive in the Philippines, with seven out of

10 firms implementing combinations of flexible work arrangements, and with estimates showing

that contractuals now outnumber regulars among Filipino workers. As labor groups and

advocates have described, contractualization is a dagger in the hearts of Filipino workers.

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Casilao said majority of the countrys 37.6 million employed persons are either employed

in contractual, temporary, probationary, seasonal and odd jobs. Based on official government

data, an estimate of 44 percent of workers employed in various industries are not regulars. In the

past decade, Casilao said contractual employment proliferated due to the neoliberal policies of

globalization. The bill defines contractor or subcontractor as a person or an entity with whom an

employer or principal enters into a contract for the performance of the latters work. Under the

bill, when the contractor or subcontractor contracts to perform work that is necessary and

desirable for the business of the employer, the employees or workers of the contractor or

subcontractor shall be considered the employees of the employer and not of the contractor or

subcontractor. The bill provides further that the contractor, subcontractor, agency, person or

intermediary shall be considered merely as agent of the employer or the principal who shall be

responsible for the workers in the same manner and extent as if the latter were directly employed

by the said employer or principal (2016).

According to Cid Tereso (2016), contractualization was applied in the Philippines during

the time when the economy was unstable and when the unemployment rate was very high.

However theres no need to abolish it because as long as the economy of the Philippines stays

robust and improving and the cost of doing business is reduced due to contractualization, then it

wont lower the profit margins of companies here in the Philippines (Schnabel, C. & Tereso, C.,

2016).

Aspillera (2016) stated in his article, during the heights of contractualization, companies

experienced impressive increases in net profits. For example, Ayala Land Inc., their first 9

months of profit was 8.6 Billion which is 30% higher than the previous years 6.62 Billion. Coal
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Asia Holdings also revalued their income of 500 million to 714 Million, Globe telecom in

their first quarter, they reached 2.5 billion from the 2 billion last year. It keeps on improving.

Also Manila Water Co. had an 11% increase in net income reaching them to 2.91 billion and also

for Megaworld, they had a 15% increase in net income yielding them an income of 4.45 billion.

But still at the back of these impressive increases in net profit are the economic states of

businesses which are in disharmony, where abused contractual workers with no benefits are hired

from agencies behind all these. Many businesses then will be affected once contractualization

will be on hold. (Aspillera, D., 2013).

The Labor Code of the Philippines prohibits the following acts of the principal employer:

in addition to his assigned functions, requiring the contractual employees to perform functions

which are currently being performed by the regular employees of the principal or of the

contractor or subcontractor; (b) requiring him to sign, as precondition for employment, an

antedated resignation letter, a blank payroll, a waiver of labor standards including minimum

wages and social or welfare benefits, or a quitclaim releasing the principal, contractor or

subcontractor from any liability as to payment of future claims; and (c) requiring him to sign a

contract fixing the period of employment to a term shorter than the term of the contract between

the principal and the contractor or subcontractor, unless the latter contract is divisible into phases

for which substantially different skills are required and this is made known to the employee at

the time of engagement (Labor Code, 1987). However, it is evident in status quo that there is

discrepancy between what the law states and its implementation. Non-regularized, contractual

employees are not even allowed to form unions and are not allowed to take part in collective

bargaining.
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From the article written by Lopez on Philippine Star entitled Contractualization: Pros and

cons he stated that The capitalist nature of the outgoing regime has not given emphasis on this

supposed anti-poor policy of employment for reasons that may be both beneficial and otherwise

to labor matters and stakeholders. But then we also have to acknowledge that many investors

deem it wise to put their money in the Philippines because of the relatively cheaper labor cost,

which to an extent is brought about by contractualization. Although there are legal implications

of endo because a company cannot just practice labor contracting wittingly or unwittingly

without having in their company a roster of regular employees, it has nonetheless contributed a

lot to the total employment and national income by way of short-term employment opportunities.

Cancellation of endo would most likely post stringent requirements for the employers before new

regular employees may be hired. Hiring regular employees in favor of contractual employees, we

have to admit, entails a lot of costs perhaps more than double than what a contractual employee

will get sans benefits. Although this author would not favor a full implementation of

contractualization, but the thought of full cancellation of the same would accelerate the

unemployment statistics that we currently have.

Logic tells us that you cannot force the employers to give what they do not have. Much less force

them to hire regular employees to fill in job vacancies. 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. (2016)
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Segal (1996) Short-term employment affected productivity of staff in the organization since a lot

of time and effort was used in training new employees as their turnover was high. The research

also noted that the very nature of temporary employment increases feelings of divided allegiance

on the part of temporary workers. This reduces their level of commitment and hence their

productivity. In addition, temporary workers worked on average fewer hours per week compared

to permanent ones because in most cases they were allocated less involving duties compared to

permanent workers.
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METHODS

The four purposes of this chapter are to (1) describe the research methodology of this

study, (2) explain the sample selection, (3) describe the procedure that the researchers used in

designing the instrument and collecting the data along with the sources of data, and (4) provide

an explanation of the statistical procedures the researchers used in analyzing data.

Research Design

This study utilized the descriptive research method. Descriptive research design helps

provide answers to the questions of who, what, when, where, and how associated with a

particular research problem; a descriptive study cannot conclusively ascertain answers to why.

As widely accepted, the descriptive method of research is a fact-finding study that involves

adequate and accurate interpretation of findings. (Salkind, N. & Rasmussen, K. 2007)

Relatively, the method is appropriate to this study since it aims to seek the reasons of

businesses for engaging in contractual employment and perceived advantages and disadvantages

of abolishing contractual employment here in Bacolod City.

In this study, the researchers used direct-data gathering which is interview.

Participants of the Study

The participants are from different types of businesses and organizations that engage in

contractual employment based on the Philippine Statistics Authority 2014 survey of employment

regarding statistics on non-regular workers. The participants belong in the Top 20 result of the

survey. These include a Provincial Office for Administrative Services which is 27.4% of the total
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population, A supermarket for Retail Trade which is 10.9%, Food Processors for the Agriculture

sector which is 7.6%, a fast food chain which represents Food Service activities which is 6.4%, a

salon for Professional Activities which is 1.7%, government owned entity representing Water

Supply which is .7%, and a Private Corporation for Electricity Supply which is .5%.

The respondents of this study were the only ones that agreed to participate and be

interviewed because of the sensitivity of the topic involved. With their request, this paper

maintains respondent confidentiality since the study involves laws and regulations that might put

the names of different personalities and businesses at risk.

The Research Instrument

Interviews were conducted to the respondents of the study.

A letter was provided for setting appointments with the business managers or employers.

Unstructured interview was used. The questions covered matters regarding the composition of

company profile and the perception of management towards contractual employment and the

arising issue of abolishing it. Specific objectives that were addressed include the differences

between contractual and regular employees and the reasons of businesses for engaging in

contractualization as well as its perceived advantages and disadvantages of abolishing

contractual employment in the business.

Data Gathering Procedure

The primary data needed for this study were directly gathered through interview with the

business managers and Human Resource Department heads of business engaged in contractual

employment within Bacolod City. Also, views and opinions of people knowledgeable for the
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matter such as regular and contractual employees were gathered in the same procedure. The main

objective of this is to collect information regarding the reasons of these entities in having

contractual workers as their employees and the possible effects to the operations of their business

if contractual employment is abolished.

A series of steps were conducted in gathering the data needed for this study. The group

based the chosen companies from the Philippine Statistics Authority 2014 survey of employment

regarding statistics on non-regular workers. These types of businesses are the ones most known

as contractual employers. A letter was given to each business for a schedule of interview with the

managers or human resource department heads in the city. During the interview, an interview

schedule served as guide for the interviewer to stimulate the conversation; however, the

interviewee freely expressed his or her opinions regarding the topic.

The results of the interviews served as answers to some of the objectives of the study

which are: (1) the company profile of entities who are engaging in contractual employment, (2)

the reasons of businesses for engaging in contractual employment, (3) the managements

perceived advantages of abolishing contractual employment, and (4) the managements

perceived disadvantages of abolishing contractual employment.

The procedure also included gathering opinions of several employees of the chosen

business participants. Interviews were given at the respondents own convenience in order to

know their stand as the ones experiencing or not benefiting from incentives that must be

provided by the companies based on the labor code of the Philippines.

The proponents gathered information coming from previous studies, viewpoints of other

authors that are relevant to this research, publications in different sources such as online articles,

magazines, newspapers, and books regarding the contractual employment and the different
 19

effects of the implementation of labor code series of 2011 to the operations of business entities.

These secondary data were used to support results. These were also added in the first chapter of

this paper that will support the succeeding parts and procedures of this study.

Thematic Analysis

In this research, thematic analysis was used by the researchers to analyze and make

judgements based on the observed groups and the gathered results.

Thematic analysis (TA) is a widely-used qualitative data analysis method. It is one of a

cluster of methods that focus on identifying patterned meaning across a dataset. The method has

been widely used across the social, behavioural and more applied (clinical, health, education,

etc.) sciences. (The University of Auckland., n.d).

The results that were produced after the collection and analysis of the data helped the

researchers in the organization and development of the data.

This theme captured participants perceptions about the effects of the arising issue of

abolishing contractualization to the business. Thematic analysis suit best the study because the

information gathered is qualitative data.

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RESULTS AND DISCUSSIONS

This chapter will present the results gathered after conducting the interviews on the

effects of abolishing contractual employment on the financial aspects of the business.

Company Profile

Company A is one of the 119 electric cooperatives in the Philippines. It was incorporated

on February 24, 1975 in Bacolod City, in the Province of Negros Occidental. At this time,

Company As generating units were hard-pressed to keep up with the load demand of its

coverage area. The power barge from the National Power Corporation on June 16, 1981 was

stationed along Bacolod's Reclamation Area Project and augmented Company A's electric power

supply. The passage of R.A. 9136, otherwise known as the EPIRA 2001 or the Electric Power

Industry Reform Act, has restructured the power situation in the country. This act has, among

others, allowed the participation of the Independent Power Producers, the privatization of the

National Power Corporation, and required the cooperatives and private distribution utilities to

unbundle their power rates. As of January 2016, there are 385 employees in the company of

which 308 (80%) are regular employees and 77 (20%) are contractual employees.

Company B was created by virtue of PD 198 and was implemented by virtue of City

Council Resolution #4460 Series of 1973. Company B became a Government-Owned and

Controlled Corporation (GOCC), by virtue of a Supreme Court decision. Currently, there is an

estimate of 400 employees in the company of which 260 (65%) are regular employees and 140

(35%) are contractual employees.

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Company C is a chain of neighborhood grocery stores under the Food Retail Group. The

mid-size food retail store has been on an expansion mode amid the competition from old and new

players in the retail business. In less than two decades since it opened its first store in Riverbanks,

Marikina in 1998, Company C has expanded to 130 stores nationwide as of Sept. 30, 2015. These

company stores are located outside a parent mall to bring the shopping experience closer to

where shoppers live and work. Company C Markets tagline is At your Service! As it takes pride

in excellent customer service and in providing the shoppers daily needs. Currently, there is an

estimate of 500 employees in the company of which 200 (40%) are regular employees and 300

(60%) are contractual employees.

Company D offers world-class hair dressing, fueled by Filipino passion. With the vision

of bringing Fine European hairdressing to the Philippines, the CEO and the Company D's brand

has made a name for itself by offering a wide range of hair and beauty services to a wide range

of customers. It is a name that has been admired and followed by many Filipinos since its first

salon opened in 1989. It is now the biggest chain of salons in the Philippines, with over 200

branches all over the country. Currently, there is an estimate of 20 employees in the company of

which 10 (50%) are regular employees and 10 (50%) are contractual employees.

Company E serves over a million pizzas a day in more than 15,600 restaurants in 90

countries making it the No.1 pizza brand in the world. In the Philippines, Company E began in

1984. It is now the country's most popular pizza chain serving Metro Manila and surrounding

provinces, as well as Visayas and Mindanao with its Dine-In Restaurants, Delivery Units and

Express Counters. Currently, there is an estimate of 30 employees in the company of which 17

(55%) are regular employees and 13 (45%) are contractual employees.

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Company F is the seat of the provincial government of Negros Occidental. In July 2001,

rehabilitation of the Company F was initiated and it was inaugurated on 23 June 2004. On 19

July 2004, the National Historical Commission of the Philippines under Resolution No. 9,

declared the Company F as a National Historical Landmark. Currently, there is an estimate of

500 employees in the company of which 287 (57.4%) are regular employees and 213 (42.6%) are

contractual employees.

Company G. Currently, there is an estimate of 150 employees in the company of which

94 (62.67%) are regular employees and 56 (37.33%) are contractual employees.

Reasons of Businesses for Engaging in Contractual Employment

The participants are engaging in contractual employment in order to lessen costs

especially when it comes to salary expenses. However, 4 out of 7 of the interviewees answered

that one of the reasons they engage in contractualization is that, employees tend to perform less

when they become regular in the company because they are relying on the fact that they cannot

easily be fired anymore. While, 3 out of 7 of the participants answered that it is flexible to hire

employees per project because if there is launching of a major project or preparing for a seasonal

change in business, hiring contractors allows them to add employees to their workforce to satisfy

specific needs. Furthermore, if there is an unexpected downturn in business, the employers are

not obligated to renew the contract once it expires and utilizing contractors effectively allows the

business to remain lean when budgets are of concern.

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Differences between Contractual and Regular Employees

The most common difference between contractual and regular employees are the benefits

they are receiving. Contractual employee benefits do not level with regular employee benefits.

First, contractual employees, being new to the job, do not perform as well as regular employees,

although this is not always the case. They lack the experience which makes for their lower pay

and fewer benefits than have regular employees. Contractual employees do not have

contributions for SSS, PAG-IBIG, and PhilHealth. Regular employees have vacation leave as

well as sick leave which allow them not to work for a several number of days but still earning a

salary. On the other hand, contractual employees are in no work, no pay basis.

Advantages of Abolishing Contractual Employment

For the employers, one advantage of abolishing contractual employment is that,

employees would be more familiar or experienced when it comes to their jobs and would be able

to produce better quality of products and service for the consumers. This would let the business

gain the loyalty of the employees and the clients. Managers believe that regular employees tend

to have better knowledge of the jobs theyre doing compared to the contractual employees.

Disadvantages of Abolishing Contractual Employment

The disadvantages of abolishing contractual employment includes an increase in the costs

of the company since the employers will have to add benefits to the salary expenses that they

will be paying to their employees. If contractual employees would be regular employees of the

company, there would be higher risk of absenteeism and tardiness. Some employees might abuse

the vacation and sick leaves given to them that can compromise their work and may cause loss

for the company. Another disadvantage is the possibility of laying off employees because of the
 24

incapability of the employers to pay them the proper amount of salary they should gain based on

law. These employees may include those people who have the best skills when it comes to their

jobs that greatly contribute to the success and profitability of the business.
 25

CONCLUSIONS

This chapter covers the conclusions drawn from the results. It also discusses the

recommendations of the proponents based on the results of the study conducted.

To a great extent, it can be concluded that the study achieved its objectives as outlined in

the Introduction. It is noted that most of the participants have greater percentage of regular

compared to contractual employees composing their workforce based on the business profile

given by the company.

The study concludes that the main reason of businesses for engaging in contractual

employment is to lessen expenses. Also, entities hire contractual employees for the reason that

regular employees tend to perform less and are abusing the benefits they are receiving. The main

difference between regular and contractual employees is the benefits they receive depending on

the companys standards.

Abolishing contractual employment would be beneficial for the employers because

temporary employees would be more aware and knowledgeable of their jobs that would

contribute to the success of the company. However, regularization of these employees would

increase costs of the company in terms of wages and may also cause tardiness and absenteeism.

The study also concludes that in the employers perspectives, the disadvantages outweigh

the advantages of abolishing contractual employment. Therefore, this would not totally be

beneficial to the businesses because it would either decrease their income due to the increase in

salary expenses or would cause them to lose potential employees that contribute greater to the

success of the company.

 26

Lastly, the study concludes that in order for businesses to gain a higher income, they

choose to compromise the rights of the employees and somehow disregard the laws.

Based on these conclusions, the researchers would recommend that employers should be

aware of the different laws especially when it comes to the rights of the employees. They must

provide proper compensations based on the labor code. Also, they should think of other

strategies to increase their income instead of cutting off the benefits of the workers just to reduce

costs.

On the other hand, contractual employees must be aware of their rights and the different

compensation policies of the companies they either plan to work for or currently involved in.

They also have to prove their worth to their employers in order to gain higher positions and

receive higher salary but at the same time maintain proper working behavior.

Finally, the proponents recommend that future researchers of this related study be fully

aware of the different situations involved in their chosen topic including laws and regulations. It

would also be more beneficial if they include more respondents and focus on the financial aspect

that shows the specific effects of abolishing contractual employment to the income of the

businesses.
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APPENDICES
 28

Interview Schedule

1. What is your business profile?

2. How many employees does your company/company branch have?

3. What percentage of the total employees are regular?

4. What percentage of the total employees are contractual?

5. What made you decide to practice contractual labor?

6. How is contractual employment beneficial to your business?

7. Do the contractual employees have benefits? If so, what are these benefits?

8. What are the difference of the contractual employees to the full-time employees?

9. If the contractual employment continues, what are the positive effects to your company?

10. What would be the positive effects of abolishing contractual employment to your

company?

11. What would be the negative effects of abolishing contractual employment to your

company?
 29

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