A culmination of my research in 2018, which I conducted with my colleagues in the

university.
Involved in research on workers in export processing zones, first encounter with the
problem of contractualization.
But in this research, I was enlightened about the nuances of working for government
-precarious work
Precarious work is currently one of the most-talked about issues today in our country,
has recently made waves in the public sector
Rarely tackled in academic research in Asia, less so in the Philippines
We begin with the following quote from Martin Luther King, Jr.

It is thus a responsibility of each one of us to “call attention to the dignity and rights of
workers.” (Laborem exercens)
Public sector workers are the lifeblood of public service, the cogs and gears that
drive public administration as it enables the attainment of national development
goals and broader social transformation in communities.
In view of this principle, work in the public sector is expected to be decent and
secure.
In the last thirty years, austerity-driven administrative reforms significantly
affected, among others, public sector employment.
One of the consequences is the increase in the number of non-regular workers,
particularly those employed under contracts of service (COS), job orders (JO)
and third-party agencies.
More than 669,347 out of around 1.7 million workers in government (CSC, 2019a;
CSC, 2019b) are COS and JO workers.

Figure does not include an undocumented number of agency-hired workers.

They are known for filling in permanent job needs of government agencies without
the benefit of security of tenure and social protection.
*Shift from permanent to contract-based employment in the public sector - an institutional
response to the move towards privatization of public services.

*Contracting out is one of the forms of privatization

------State-funded delivery of public services by a private sector provider through a contractual

agreement between the two parties.

A few theories may explain why governments turn to privatization, more specifically contracting
out as a way to make govt services more efficient:

Theories on public choice and property rights view public services provision as a means by which
government officials could assert and maintain their self-interests and political power. That service
delivery is influenced by these self-interests and use of power makes it more inefficient.

Market as an alternative; assumption that services could be isolated and performed by private
sector. The tasks remain the same whether done in-house or outsourced.

Incomplete contract theories and transaction cost theories, which put premium on cost efficiency
as the main deciding factor of whether the goods and services are to be produced and provided
in-house or outsourced.

However, while public choice and property rights theories enjoyed practical value in the New
Public Management (NPM) paradigm, critics warned against adopting a purely economic rationale
for providing public services
Contracting out affects public sector labor to a large extent.
*It depresses wages and salaries of government workers.
**Savings generated from contracting out are usually derived from reduced labor
costs, either in the form of wage cuts or work intensification.
***In the European Union (EU), governments used this strategy to stabilize public
funds.

-Clash in motives (private sector – profit)

-By shifting from bureaucratic to contract-based relationships, the public sector
loses its ability to manage employment using traditional rules-based institutional
arrangements, which usually offer greater security of tenure and social protection
for the workers.
-Worsens working conditions in the public sector. In the Philippine public sector,
precarious work has gradually become the norm

Precarious work, recognized as the denial of permanent employment rights,

absence of direct employment relationship or the lack of any of the forms of labor
security and industrial citizenship, is pointed out as one of the consequences of
privatization and was found to reduce employee welfare in the public sector.
Despite recent developments in the policy arena tackling precarious work,
academic literature linking precarious work with labor flexibilization in the
Philippine context is scarce. Nonetheless, findings of studies on private
sector employment re-echo global findings attributing negative effects on
worker welfare to contractual employment, with a few citing positive effects
but to the employer/firms.

Public personnel management studies in the Philippines highlight the use of

contractual employment as tool for corruption and patronage, as well as
harassment and union busting. Likewise, studies pointed out adverse
effects of contractual employment on welfare of temporary workers.
Hiring of non-regular workers, initially as consultants or project-based staff, to help implement
various short-term projects for the government.

Civil service rules and regulations began to normalize the practice of engaging the services of
private consultants and contractors, whose terms of employment are beyond the ambit of the EO
292 or the ORAOHRAs, even though COS and JO workers are treated as “non-government
workers.”

Memorandum Circular No. 17 (2002) - allowed subcontracting or third-party agency hiring, known
as the “institutional contract of service”
CSC-COA-DBM Joint Circular No. 1, s. 2017 - building on the 2002 guidelines, the joint circular
determines “support services” to be rendered by agency-hired workers, i.e., janitorial, security,
driving, data encoding, equipment, and grounds maintenance

Local government code

-Sec 77 – full discretion and autonomy over hiring of non-regular workers

SOCIAL RISKS
-undocumented in public sector labor
-direct employment relations with third-party agency
-multi-layered accountabilities, likely for contractor to shirk responsibility to workers
*cases of unfair labor practices within third-party agencies, not reported for fear of retaliation,
harassment, termination
● Under the Government Procurement Reform Act (RA 9184), the work of
the COS and JO employees can be classified as consulting services or
they can be treated as “non-personal contractual services,”
subsumed under “goods,” which need to be procured through
competitive bidding, where the lowest calculated and responsive bid
is prioritized. Parameters used to indicate compliance to social and labor
laws are, at best, surface-level (e.g., minimum wage, uniforms, number
of equipment, recruitment and selection criteria)
● Social risks – cost can be lowered in terms of the labor costs (wages,
salaries, equipment of workers, etc.)
Salaries, wages and other compensation of the COS and JO workers are charged to
maintenance and other operating expenses (MOOE) of the contracting government
agency, “an expenditure category/expense class for support to the operations of government
agencies such as expenses for supplies and materials; transportation and travel; utilities
(water, power, etc.) and repairs, etc.”

Legal basis and rationale for creation of positions

● -workload
● -similar filled positions
● -cost charged to personnel services

Section 325a of the RA 7160 set limitations on the use of provincial, municipal, and city
funds for personnel services per year; that is, 45% for 1st-3rd class municipalities and
cities, and 55% for 4th-6th class municipalities (RA 7160, Sec. 325a).

-Needed or not needed position?

-NOSCA (regular positions) or formal letter (casual, contractual positions)
-Personal Services Itemization and Plantilla of Personnel (PSIPOP) provided by DBM to GA
every year

-Scrap-and-build policy – aggravates tedious process of creating and funding new positions in
government; vacant funded positions are considered for abolition, paving way for creating other
additional positions that will more likely be filled up in other offices or units
Tax compliance of COS and JO workers would follow this classification. In the
Revenue Memorandum Circular No. 130-2016 issued by the BIR in 2016, COS
and JO workers, are required to pay either value-added tax (VAT), for
professionals earning more than PhP1.92 million in payments from the
government, or percentage tax equal to 3% of their payments. However, on top
of these taxes, professionals hired under COS or JOs are required to pay
withholding tax equal to 10% or 15% of their “professional fees,” as well as per
diems, allowances, and other income payments

Social risks/dilemmas:
whether the workers need to register as business,
to file percentage tax or VAT returns and other reports,
to issue official receipts to the government,
to file income tax returns, and
to submit audited financial statements on top of their tax returns.

TRAIN Law – whether or not to exempt own-account workers?

Constitutional right to full labor protection across sectors
Antagonistic approaches to decommodification – labor market rules overly restrict and alienate
contractual workers
Legal divisions imposed among workers are used to justify contracting out
-Privileged-insider construct – all-too generous benefits for regular workers, and restricting the
scope of collective bargaining

Weak checks and balances

-No clear accountability of state and employer/agency (in case of agency hiring)
-Lack of social clauses/labor protection clauses

● Lack of complementarity
-Different grievance mechanisms, entitlements

● Lack of representation in unions

-Some orgs now organized to address non-regular workers’ concerns (COSEA), Kawani Laban
sa Kontraktwalisasyon (Employees Against Contractualization)
-Union-busting in manpower agencies
-Regressive policies governing PSLR, vs. relatively more progressive private sector policies
(EO 180 guides labor relations in government, not yet amended)
-Many issues governing public sector employment are not yet addressed by policy
-Jurisprudence than policy to assert job security and social protection

● Commodification of labor
-Workers as commodity, economic costs, even though government work has a much wider
scope and outcomes are difficult to measure
The Philippine government needs to keep up and set the stage for progressive
reforms in public sector employment

● Granting security of tenure after 6 months; RA 6850 – granting civil service

eligibility to provisional/temporary government employees
● A possible response would be to reexamine current parameters for determining
merit and fitness, granted that most COS and JO workers, even without
possessing civil service eligibility, had been fulfilling regular functions in their
respective government offices for several years.
May cause reverse discrimination against regular employees who obtained their civil
service eligibility through exams. But it was made possible in South Korea.
● Unions as alternative voice and accountability mechanism
● EO 180 – amendments to favor or at least acknowledge COS and JO workers as
part of the workforce; and greater representation I the PSLMC by the
government unions
Institutional obstacles in creating a policy towards regularization of non-regular
public sector workers, such as legislative and political barriers, not to mention
the possible divisive and reverse discrimination effects that the proposed
regularization reforms may have on the current pool of regular government
workers, imply that, while the reforms may work, they remain inadequate in
addressing structural problems in labor and employment. How the public
sector should adapt to the challenges of a predominantly neoliberal regime and
a globalized economy remains a primary concern. That being said, both the
state and the public sector workers can and should derive from the long history
of the Philippine labor movement and civil service to critically examine and
collectively seek reforms in public sector labor policies. To this end, they need
to understand the history of privatization of public services in the Philippines
and its impact on public sector employment. This paper hopes to assist in a
broader effort to translate the confined, seemingly compartmentalized issues
of precarious work into matters of public concern.