Bu-lat-lat (boo-lat-lat) verb: to search, probe, investigate, inquire; to unearth facts

Volume 3,  Number 23              July 13 - 19, 2003            Quezon City, Philippines


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Special Report

Contractualization, Job Layoffs Widespread in the Visayas

Many companies in the Visayas, central Philippines, are shutting down or are claiming financial losses as a pretext for introducing new labor arrangements under the system of contractualization later. But among those rehired and newly-hired, the labor scheme is creating false hopes given the lack of job security and other reasons. Meanwhile, job lay-offs are creating a different wave: many of those terminated join the underground revolutionary movement, both labor and military reports said.

By Karl G. Ombion

BACOLOD CITY - The practice of hiring workers on contractual basis - or hiring the worker’s labor only for a small price - has deprived workers of their right to job security, benefits, right to organization and grievance.

The growing practice of contractualization of workers in the country can no longer be ignored or concealed. Estimates from Department of Labor and Employment (DoLE) offices in the Visayas reveal that the number of contractual workers between 1992 and 2001 soared to 80-85 percent. Alarmed by this trend, progressive legislators have asked the House committee on labor to look into the issue.

Studies by the Center for Women’s Resources (CWR) also reveal that one of the worst practitioners of contractualization in the country is the Henry Sy-owned ShoeMart whose 15 malls nationwide employ around 20,000 contractual employees and only around 4,000 regular workers. CWR said that the SM management has been hiring and firing contractual workers, with employment contracts lasting for three to five months only.

In Negros and Cebu, contractualization is just as rampant and worse as in other regions.

In Negros, Bulatlat.com research found that one in every three medium- and big- companies, and one in every five small commercial establishments with less than 20 workers, engage in contractualization and other labor flexibility schemes. There are about 105 big companies and 8,860 medium and small companies in Negros, mostly retailers, according to government sources.

Victorias Milling Company

A case in point is the Victorias Milling Company (VMC), the biggest sugar refinery in Asia. Some of its active and retrenched workers have confirmed to Bulatlat.com that only 1,606 of the company’s more than 4,000 workers are regular, while more than 3,000 are contractual spread in almost all of the 20 departments of VMC and its subsidiary companies like the Victorias Food Processing Corp. and Victorias Quality Packaging Corp. In big departments and subsidiary companies, the ratio of contractual workers to regular workers is 75-25.

Today, one or two contracting agencies now lurk in every department of VMC and subsidiary company.

VMC’s claim of irreversible financial loss in 1996 did not result in the company’s shutdown but the “re-energization” of the company, noted Guillermo Barreta, a former VMC worker and a leader of VMC Industrial Workers Association (VIWA). The big retrenchment that followed the declaration gave birth to new employment schemes characterized by massive contractualization, he added.

Juan Dolorosa, a former worker at the company’s mill and broiler department and now chair of VMC Integrated Retrenched and Terminated Workers Association (VIRTWA), an association of laid-off VMC workers, said that the management had effectively used financial losses as a scapegoat to carry out massive retrenchments, enforce new labor arrangements, and sabotage the workers union.

He said that the claim about company losses is a myth saying that while there had been some cases of graft and corruption in the previous management of VMC, the company remains in active business and continues to reap superprofits. Aside from the sugar mills and business from sugar by-products, the VMC has big swine dispersal projects, cutflower farms, ranches, commercial fertilizer production, and company-owned haciendas all over Negros island, he added.

Barreta said that as a result of labor flexibility schemes, the workers union in VMC has been rendered weak and ineffective in defending the workers rights and negotiating for CBA. He admitted that more workers now are hard to organize for reason of being contractual and for simple fear of management reprisal.


Naldo dela Puesta, another terminated skilled worker said that when he joined the company years ago, he was promised a good future as the company is a profitable international company and a leader in sugar industry. But now he felt so bad and betrayed, for while he dedicated so much for the company, he virtually lives today a hand-to-mouth existence.

Meanwhile, both media and military reports have revealed that several retrenched VMC workers have joined the revolutionary underground movement. The reports appear as not surprising at all as the revolutionary movement is said to be strong in the district of VMC.

Negros Navigation

Another case of rampant contractualization is that of Metro Pacific-owned Negros Navigation Company (NN), one of the Philippines’ oldest shipping companies.

Some terminated ship crew and workers belonging to the Iloilo-Negros Employees Labor Union of Negros Navigation have said that that they were victims of massive retrenchment and contractualization schemes.

In an interview with Bulatlat.com, they said that the all the ships’ canteens, maintenance,  janitorial work, cabin attendants, including some licensed deck and engine crew  have been contracted to private businesses based in Bacolod and Manila, with foreign stocks. Leading contractors for the NN are the Negros Galleon Inc. , Stars Disco/La Café, Bascon Corporation, all owned by Negros business groups, and the Hans Gourmet and Unicol reportedly owned by subsidiaries of Australian and Dutch companies.

These companies supply contract workers as either “regular contractuals” or as “relievers” to NN ships. These contract workers do not enjoy wages, benefits and rights that regular workers normally expect to enjoy. Applicants are also charged for all their pre-employment tests used by contracting agencies.

Informants claimed that several of the remaining 359 regulars, especially those active in union activities have been placed on floating status, a move they perceived as a prelude to termination or forced resignation.

The company has been claiming all along that it is in the red, yet how come they continue to acquire new ships, an old-time worker asked. It is clear, he added, that the company has been using false claims of financial losses in order to carry out new labor arrangements that would help ensure its superprofits.

Recent reports said that NN has posted a net income of P103 million in 2002, a significant turnaround from the company’s claim of financial loss the previous year.

Saddest of all, retrenched and active union members said however, is that the schemes used by the management have led to the cooptation of the union leadership. “The union is virtually inutile in defending workers rights,” said a worker currently placed on floating status.


In Cebu, the labor situation is just as bad as in Negros.

Jaime Paglinawan regional spokersperson of AMA-Sugbu-KMU in Central Visayas confirmed to Bulatlat.com that contractualization has already taken a great toll on the Cebuano workers and the workers movement.

In Cebu island, contractualization is rampant not only in almost all manufacturing companies, but in the service sector industries as well. Reports gathered by Bulatlat.com revealed that in Mactan Export Processing Zone (MEPZ) alone, almost all of the 108 companies in the zone use various forms of contractualization and labor flexibility.

Generally in Cebu, 90 percent of the top 600 big companies are said to be engaged in contractualization with around 75 percent for some 16,000 medium- and small-scale enterprises.

For instance, the Japanese-owned Mitsumi Corporation in Danao City which produces computer and software peripherals have 2,000 regular workers only out of its 16,743 employees. 

The rate of contractualization is still increasing, Jaime added, saying that more companies are shutting down but are reopening after a while under a new management and new labor arrangements. Most of these companies immediately hire new workers under various contractual schemes.

AMA-Sugbu-KMU also said that in the shipping industry, considered one of the backbones of Cebu’s economy, most commercial shipping companies are into various forms of contractualization. Nick, a local AMA-Sugbu organizer, confirmed that top shipping companies based in Cebu like the Aboitiz-controlled WG&A, Go’s Sulpicio Lines and Cebu Ferries, Lorenzo shipping, Sy’s TransAsia lines, and Cokaliong Lines, practice contractualization schemes.  

WG&A Shipping Lines

Photo by Karl Ombion

Gang rule

Nick added that what makes the shipping workers’ condition worse is that they are under the gangster rule of the traditional labor groups, who usually use terrorism to tame and cripple the militant workers unions and their organizers.

Bulatlat.com also learned that in the first quarter of 2003 alone, 430 establishments have shut down in Central Visayas, resulting in the disemployment of 27,000 workers, an increase of 85.7 percent from last year’s record. Of the displaced workers, 64 percent were from manufacturing industry, 27 percent from service sector, and the rest from agricultural sector.

Furthermore, the capitalists’ rampant use of contractualization and labor flexibility schemes have also caused the disbandment of hundreds of unions.

 KMU studies show that only 528,000 or 13.5 percent of the total organized workers in the country, are covered by collective bargaining agreements (CBA).

In Negros Occidental, only 14 percent of some 750,000 employed workers are unionized and among them 15 percent are covered by good and questionable CBAs. In Central Visayas, of only 138,000 unionized, only 22,000 are covered by CBA. Bulatlat.com 

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