The Shin Sun workers – a test case for DO 174

May 27, 2017

by IBON Foundation

IBON Features – The Korean-owned Shin Sun Tropical Fruit Corp. in Brgy. San Miguel, Compostella Valley has approximately 287 agency-hired banana workers employed under ECQ Serve Human Resources for different jobs such as harvesting, fruit care, plantation, and delivering services. Most of the workers had been working for the company for two to seven years and should have been regularized already as per the Labor Code. Instead, the banana workers remained contractuals under the aforesaid labor agency. For several years, ECQ has been engaged in various forms of unfair labor practices including non-compliance with mandated benefits and the legislated minimum wage rate in Region XI.

Violation of labor rights

The legislated minimum wage rate in the Davao Region which covers Compostela Valley is Php307 but most Shin Sun workers received lower. The latest basic pay in the agency is pegged at Php291 pesos. This measly compensation diminished further through salary deductions for supplies, work tools, and mandated contributions for welfare benefits. With the total deductions, the workers actually received only Php135 daily.

Even their 13th month pay which is supposed to be given in full as mandated by law was deducted by the agency. Later on, the Shin Sun workers also found out that their agency has never remitted their contributions for SSS, PhilHealth, and Pag-ibig.

Recognizing the urgent need to end the unfair labor practices in Shin Sun, the banana workers unionized and urged the Regional Office XI of the Department of Labor and Employment (DOLE) to conduct a joint assessment both in Shin Sun and ECQ to evaluate the compliance of both parties with labor laws. The assessment was conducted on February 23, 2017 and Labor Laws Compliance Officers noted the following:

For Shin Sun:

  • Principal gives instruction to workers through ECQ;
  • Supervisors of the principal work alongside with the supervisor of ECQ
  • Principal has power to transfer assignments of workers through ECQ
  • Principal provides personal protective equipment to workers (apron, hairnet, gloves, boots); and
  • Principal provides work premises including machineries, tools, and chemicals.

For ECQ:

  • Agency workers received instructions from the principal’s supervisor;
  • Agency supervisors give schedules and assignment based on principal’s instruction;
  • Workers use principal’s equipment, tools and machineries;
  • Agency workers work alongside with the principal’s workers;
  • Agency workers are required to comply with principal’s policies, rules and regulations; and
  • Agency workers perform tasks at principal’s work premises.

This assessment exposed the illegal contracting scheme utilized by the principal company to circumvent the law on regularization and remove the venue for the banana workers to demand better wages and assert their rights. The DOLE thus declared that the ECQ Serve Human Resources was engaged in the prohibited practice of Labor-only Contracting (LOC) with respect to the workers deployed in Shin Sun. The labor department ordered the immediate absorption of the 287 workers previously employed under the agency.

On the contrary, however, the management illegally terminated the contract of 81 long-time contractual banana workers, including thirty-four 34 unionized workers who demanded for the inspection. The termination order was issued without due notice to the workers. The management only notified the workers after the retrenchment attributing it to “overmanning”. The workers, however, disproved this claim and argued that the principal actually hired new contractuals through another manpower agency Human Pros to replace the workers who have been retrenched.

Following these events, the Shin Sun farm workers went on strike last month. The retrenched thirty-four workers were organized under Shin Sun Workers’ Union-National Federation of Labor Unions-Kilusang Mayo Uno (SSWU-NAFLU-KMU). It was the first in the country since the implementation of the Labor department’s DO No. 174.

The bane that is DO 174

Workers demand to put an end to the prevalence of jobs that are insecure, low-paying, and lacking in benefits but deliver superprofits for capitalists. President Rodrigo Duterte meanwhile promised to end contractualization in his campaign when he ran for presidency during the national elections in 2016. In one of his speeches, he boldly told employers that he is not open to any compromise with them saying that the said policy is anti-people and must be repealed absolutely.

Prior to his inauguration as head of the Republic, President Duterte gave the incoming Labor secretary a marching order to work on ending contractualization. Instead, however, the department in connivance with the Employers’ Confederation of the Philippines (ECOP) and the Philippine Association of Local Service Contractors, signed and implemented a “win-win solution” branded as DO No. 174 that is merely an affirmation of the anti-worker practice of contractualization.

Similar to past guidelines issued by DOLE on permissible subcontracting, the order purportedly intends to ban labor-only contracting and ensure the regularization of workers in third-party manpower agencies. History has proven, however, that this ban is hollow as contractual labor arrangements and violation of labor rights as in the case of the banana workers still proliferate across all economic sectors in the country.

Due to lack of sufficient employment opportunities in the country, tens of millions of Filipino workers and peasants are left with no option but to enter the country’s reserve army of labor. Swelling unemployment intensifies competition for jobs within the reserve army of labor, hence contractualization thrives. This scheme deprives workers of their rights to bargain for higher wages and better terms of employment, and also forces them to accept unreasonable wages and comply with unfair contractual labor arrangements.

The latest available data from June 2014 indicates that over one out of three (34.5%) rank and file workers are employed under non-regular employment contracts. Based on the 2013/2014 Integrated Survey on Labor and Employment (ISLE), the rate of contractual employment is highest in the construction sector (59%), agriculture, forestry and fishing sector (42%), and in administrative support activities (40%).

This points to the urgency of real measures by the government to address the problem of pro-business yet anti-worker contractualization, and the absence of a long-term plan for national industrialization which is crucial in creating stable jobs for the Filipino people–IBON Features