Critique on Philippine 5- months Labor Contract Issue

The first time I heard the word casual was in summer of 1964 while observing my two older cousins discussing their wages at San Miguel Corporation where both of them were employed. The two of them were very insecure at that time since their work would be soon terminated because their job is temporary and their employment were considered as casual. Later, I found out that , both private companies and government institutions employed casuals in order to reduce work backlogs and terminate their jobs once work assignments were completed. After completing my college from Mapua Institute of Technology in 1976, I was employed at Stanford Microsystems Inc. as Junior Process Engineer. Right in there, I again have encountered the word casual. One lady production operator during a break time period told me that she was already working in the company for two years and still not being given a permanent employment status. She further mentioned that she was just given additional allowances so that she can continue working and be happy with her job. I found out later, that many other employees were also experiencing the same employment condition. Many years had passed and I did not experienced this casual status from my stay at Dynetics Incorporated and Integrated Microelectronics Inc. Both Electronics Companies have a solid performance appraisal systems and employees enjoyed merit increases based on their performances. I did realized during this time that merit increases were possible if wages and salary adjustments were based on labor and employee productivity. At Cavite Economic Zone in 1993, I was employed as operations manager by Best Electronics Inc. The president of the company also assigned to me the department of Human Resources and for the third time I came across the word casual. This time the word casual was replaced by the word contractual. During recruitment time, a twenty five year old lady production operator came and applied for work in the company. I noticed from her resume that she came from three companies inside the economic zone and our company would be her fourth company after only one and one half years. I have some doubts that this lady applicant was just a poor performer. I checked out other applicants and realized the same resume characteristics. I made an investigations and found out that 5-months contractual issue was very predominant in the zone. I discussed this issue to the president of the company and advised me to introduce a piece rate incentive scheme where wages were based on productivity of production worker and additional incentives were given every time a production operator surpass the maximum production output. Dr. Francisco Tahanan, my professor in Labor Economics from International University Foundation taught me that the effect of the loss of security of tenure because of the 5-months contractual issue would result in imbalance of wages that would aggravate to subsistence situation. Direct labor cost which would supposed to be a variable cost would then become a fixed cost. Direct labor cost was a variable cost since cost varies due to merits given to

outstanding performers. Merit increases provided would serve as an additional income to the workers. An increase in their purchasing power would give them the opportunity to allocate this portion for consumption. The excess would be allocated for savings. I now realized that this illegal 5-months contractual issue was an impediment to Philippine economic development. To resolve this issue, Philippine government should try to look into the value of wage productivity indexation. I believe that at this point in time the country should have an alternative available and do not depend much on wage legislation as it only results to inflation.