Chapter I

INTRODUCTION AND BACKGROUND OF THE STUDY

Introduction and Background

ENDO or ending the unlawful practice of continuously hiring workers

on a contract-basis was among the most popular campaign promises of

President Rodrigo Duterte. It was remembered that during his campaign on

2015 election, he said that “In 6 months, the employee cannot develop his or

her skills. If they are hired, enhance their skills, you make them more

productive. Because they have the skills and placed them in a regular position,

they enjoy benefits not just for themselves but also for their family.” Duterte

also pointed out: "How can they sustain the needs of their family, feed their

children if you employ them for 3 months only? They do not have security

which results to unrest and instability back home." He also added “I will not

run a country that way. If those who have money won't accept this, then you

campaign against me. Make sure you will beat me. I will not go for it, it is not

a policy. It is not good," – (rappler.com.).

The time President Duterte won the 2016 elections, workers especially

who are under contract agreements throughout the Philippines waited for the

realization of his campaign promise to end "endo.” Prior his takeover, DOLE

or the Department of Labor and Employment had identified the number of

contractual workers at 1.3 million. The main agency in charge of this, the

Department of Labor and Employment (DOLE) headed by Secretary Silvestre

Bello III, guaranteed to stop labor contractualization (end of contract) by

2017 as part of his agenda. Because of his dedication and leadership,

Department of Labor and Employment (DOLE) was able to help around 36,

000 employees to be regularized by year-end of 2016. By 2017, 65,000

workers can assume finally to be free from contractualization scheme.

In Quezon, Super Metro Lucena or previously known as Metro Lucena

is one of the biggest businesses which hires and employs hundreds of workers

from Lucena and from nearby provinces. It is owned and run by a multi-

national corporation- Metro Retail Stores Group, Inc. which was founded by

Mr. Victor and Sally Gaisano on 1982 in Cebu City. As of today, the

corporation is being run by their 4 children namely; Edward, Jack, Frank and

Sally Gaisano together with the board of directors. Like other successful

businesses, it all started with their closest friends and families as workers.

They only had each other to do the task and selling. At present this

corporation has forty-four (44) branches already residing in both Luzon and

Visayas regions. Its branches are composed of convenience stores,

hypermarkets, pharmacies, department stores and big supermarkets. Super

Metro Lucena is the company’s 5th branch which opened last July 2003. From
then on, it has given so many opportunities to lots of the natives of Lucena.

After its boom, Lucena City becomes one of the major destinations of

jobseekers. It has employed hundreds of workers and regularized some

already.

In lieu of this, the researchers did the research to study if “No

Contractualization” policy which is mandated by the national government is

strictly followed and complied by the establishment. The researchers would

like to know also its impacts to the current employees, non-current employees

and to the company itself.

Ending of No Contractualization in this company will justify the worth

of its laborers. It will give them benefits that they deserve and boost their

morale. Workers are not mere employees of companies but they are active and

equal partners. Employees are business partners as well. Their own respective

interests and welfare are critical not only to themselves, but to the company as

well.
Statement of the Problem

The study aims to find out and helps understand more about No

Contractualization of Super Metro Lucena. It also intends to identify its

effects to the company and to its current and non-current employees.

Specifically, the researchers seek answers to the following questions:

1. What are the demographic profile of the respondents in terms of:

1.1 age

1.2 gender

1.3 marital status

1.4 home address

1.5 status of employment

1.6 business relation to Super Metro Lucena

1.7 date of employment

1.8 length of service

1.9 job title or position

1.10 salary

1.11 department assigned

1.12 hours of work

2. What is the level of awareness of Super Metro Lucena in No

Contractualization?
 3. Are employees also aware of the No Contractualization?

4. What are the level of effects of No Contractualization to:

4.1 company

4.2 current employees

4.3 non-current employees

5. Is “No Contractualization” fully implemented at Super Metro

Lucena?

Significance of the Study

The result of this study would be helpful to the following for them to

have a better understanding with the topic:

To contractual employees, terminating ENDO can mean regularization

of a contractual worker. It means that the company he is working with will

now become his second home. From this home, possibly, he will acquire some

benefits and perhaps a higher compensation. Benefits for regular ones include

mandatory pension under Republic Act 7641 or based on the company’s terms

besides SSS pension benefits, better medical insurance or coverage, vacation

and sick leaves with pay, life insurance, de minimis benefits, allowances, sales

commissions, and other forms.. The regularized worker can even have

performance-based bonuses, merit increase during salary reviews, or be

entitled to profit share.

 To regular employees, as regular ones, they should have better

understanding on No Contractualization because ending ENDO may consume

company resources and surely they may have to compete with one another in

order to move to a higher positions and opportunities. But in order to achieve

the common goal, as a human capital, regular employees should have a good

working relationship and should be effective with their performances. They

must be always inculcated that multiple regular employees would make jobs

easier and faster.

To the companies, being knowledgeable on the policy of No

Contractulaization, this study would make them more educated and they

would be able to understand the very purpose of this Act. While businesses

can add up the increased cost to customers, they have to assess and weigh up

between revenue management and market’s price sensitivity.

To the customers, as the cost production and services increases, could

expect and understand possible higher prices for the consumption of goods

and services.

To the society, No Contractualization would help create more

independent workers with higher morale and integrity which could lead to a
stronger society. Workers with secured job would help the society thru their

taxes and improved buying power.

To the future researchers, this study would provide additional

information and new ideas, should they conduct similar study.

To the researchers, this study would provide them better understanding

about No Contractualization law, its effects and implementations to Super

Metro Lucena.

Scope and Delimitations

The study is focused on studying No Contractualization in Super

Metro Lucena at ML Tagarao Street Barangay 3, Lucena City, this year, 2017.

Moreover, it aims to understand the results after the implementation. As of

present the company has 679 employees working under its roof. Out of those,

we gather data from 87 selected and available respondents who are composed

of employees from supervisory and rank and file positions coming from

agencies, consignors, and metro direct. This company is chosen because it is

one of the biggest business establishments in Lucena City employing

hundreds of workers. It is very suitable for this kind of research.

Research Paradigm

Independent Variables

Dependent Variable

Figure 1: Research Paradigm of the study “No Contractualization in Super

Metro Lucena, Lucena City”

The main purpose of the study is to determine the awareness and

effects of implementation of No Contractualization in Super Metro Lucena.

As shown in figure 1, the researchers identified the independent variables

which are composed of the demographic profile of the respondents, level of

awareness of Super Metro Lucena on No Contractualization, awareness of

employees on No Contractualization, level of effects of implementation of No

Contractualization. The data to be gathered would be analyzed and interpreted

in order to come up with the output of study; “What are the effects of

implementation in Super Metro Lucena.”

Definition of Terms

For better understanding of the topic, the following terms are defined:

Casual employees are employees who do not have regular or

systematic hours of work or an expectation of continuing work. A

typical casual employee is employed on a daily basis when the need arises.

(Retrieved 10/14/17,

www.thepeopleindairy.org.au/LiteratureRetrieve.aspx?ID=118669)

Contractualization refers to the practice of hiring employees who

would render their services for a finite amount of time, usually, for a few

months only. This is a system that has been practiced and used by many

companies, including large corporations. These enterprises often utilize this

arrangement in order to maintain their revenues (Retrieved 10/14/17,

http://asiapro.coop/contractualization-all-need-know/)
 De Minimis Benefits are facilities and privileges of relatively small

value and provided by an employer to employees merely as a means to

promote their health, good will, contentment, or efficiency. These benefits are

exempt from withholding tax on compensation (WTC) and fringe benefits tax

(FBT).Jan 8, 2015 (Retrieved 10/14/2017,

https://www.pwc.com/ph/en/taxwise-or-otherwise/)

Endo means end of contract; it is also sometimes referred to as “5-5-

5” practice. This is because some employers hire workers and then terminate

their contracts after five months, to avoid regularizing them – something that

is mandated by the law. According to the law, an employee who has been

working for a company for six months should be regularized unless the

individual is not eligible to be a regular employee. (Retrieved 10/14/17,

http://asiapro.coop/contractualization-all-need-know/)

Probationary period or probation is a status given to new employees

of a company or business. ... It also allows an employer to terminate an

employee who is not doing well at their job or is otherwise deemed not

suitable for a particular position or any position. (Retrieved 10/14/2017,

https://en.wikipedia.org/wiki/Probation_(workplace)

Project-based employees are workers you hire for a

specific project often work for a specific number of weeks or months until
the project is finished. ... You can set the hours, define the exact manner of

work, provide office space and facilities, and restrict employment activities to

your workplace. (Retrieved 10/14/17, smallbusiness.chron.com)

Regular employees or Permanent employees do not have a

predetermined end date to employment. In addition to their wages, they often

receive benefits like subsidized health care, paid vacations, holidays, sick

time, or contributions to a retirement plan (Retrieved 10/14/17,

https://en.wikipedia.org/wiki/Permanent_employment)

Regularization is used to describe the process of becoming a regular

employee. It means that the employee qualifies for the permanent position in

the company. (Retrieved 10/14/17, https://www.lilkuya.com)

Seasonal employees are the ones who works 120 days a year or less

for the employer. These days need not be consecutive. For example, if

an employee works only for the months of January, July, and October, then

the employee is seasonal, since that is less than 120 days. (Retrieved 10/14/17,

www.tnhealthcarereform.com/seasonal-employee)

Back-office is the portion of a company made up of administration

and support personnel who are not client-facing. People who hold jobs in back

office positions carry out functions such as settlements, clearances, record

maintenance, regulatory compliance, accounting and IT services. (Retrieved

11/08/17, https://www.investopedia.com/terms/b/backoffice.asp)

Selling-Area one of the areas where a company sells

its products or services, often an area for which a particular sales person or

particular sales people are responsible.

 Chapter II
REVIEW OF RELATED LITERATURE AND STUDIES

This chapter presents some of the facts and information gathered by

the researchers, which are related to several studies conducted by various

authors, scholars and educators.

A. Related Literature

Local Literature

“Contractual employment” has become the umbrella term for

precarious employment, and rightly so, since technically all employees are

contractual employees. Employment in the Philippines is secured by a

contract which provides for, at the minimum, the nature of work and the

corresponding compensation that the worker will receive. The concept of

“contractual” employees covering atypical employment, then, is a creation of

the current system of laws that address the need for labor flexibility.

The University of the Philippines (UP) published a list of forms of

contractualization, compiled by Kilusang Mayo Uno Chairperson Elmer

Labog in the UP Forum. The list defined “contractual workers” as fixed-term

contract workers who are directly employed through written contract based on

a particular period and type of work. Other forms enumerated include casual

workers, project-based workers, commission workers, seasonal workers,

agency workers, trainees/apprentices, on-the-job trainees, piece-rate workers,

task-rated workers, time-rated workers, part-time workers, pakyawan workers,

quota workers, temporary workers, reliever workers, emergency workers, on-

call workers and account-based workers. An underlying common element,

however, is still the lack of security of tenure.

It is believed that contractualization in the Philippines has been

accelerating since the early 1990s. On the employee side, it was reported that,

from 14 to 15% between the years 1990 – 1994, the share of contractual

workers in enterprise-based employment had jumped to 21.1% as far back as

1997.Onthe employer side, in 2004, two out of three Filipino firms utilized

some form of non-regular employment, such as temporary, casual,

probationary, or contractual employment.4 In 2010, the Department of Labor

and Employment (DOLE) reported that 10.4% of firms engaged particularly

in contracting-out work.

One manifestation of how contractualization has become prevalent is

that words like “Endo” and “5-5-5” have seeped into the vernacular. “Endo” is

the shortened version of “end of contract” and is used to refer to the definitive

end of contractual employment. It is also used to refer to workers who work

under such contracts.

Meanwhile, under “5-5-5,” workers can only work for five months at a

time, renewable for another two 5-month contracts, after which they can work

as open contract workers.8 The limit is at five months because under the
Labor Code, an employee who is allowed to work after the probationary

period of six months shall be considered a regular employee and shall be

entitled to the rights and benefits accorded such workers. The term “5-5-5”

also likens the employment to 555, a popular brand of sardines, and connotes

that the canned food is the only thing a contractual worker can afford to eat.

(De-Confusing Contractualization: Defining Employees Engaged In

Precarious Work in the Philippines by Mely Ann Emerie A. Cristobal and

Efren II R. Resurreccion, pp 346-348)

Freedom of Contracting

Various explanations for firms’ use of non-regular employment

contracts have been advanced in the literature, all of which point to cost

minimization. In order to survive in today’s increasingly internationalized

business environment, greater agility is required. Thus firms avoid being

locked in to production technologies that tie them to inflexible long-term

contracts with their workers, even when product demand is expanding. In this

situation, labor standards and job security regulations that make terminations

increase hiring costs (Lazear [1990]). Firms avoid these expenses by resorting

to employment contracts that escape coverage of existing labor laws. But as a

result, employment has become more risky and workers’ incomes increasingly

vulnerable to economic shocks. (Policy Brief Globalization, Adjustment and

the Challenge of Inclusive Growth, Issn # 2094-3342, By Emmanuel. F.

Esguerra and Kristine Laura. S. Canales, pp3-4)

Labor policies are the aspects of government policy that regulate

employment and workers’ welfare, from hiring to firing, from pre-to-post

employment. There are three major issues regarding Philippine labor policies.

One, they are based on the standards of highly developed markets, which is

not congruent with the country’s level of development. Two, labor policies are

highly regulatory and protective of workers’ rights, which is not suitable for a

country with a huge labor surplus. Thus, labor policies tend to be pro-

employment rather than employment-oriented, therefore aggravating the

unemployment problem. (Understanding Philippine Labor Policies; The

Philippine Review of Economics Vol. XLI No. 2, page 37)

Foreign Literature

Why do governments intervene in the labor market? The theory

underlying most interventions is that free labor markets are imperfect, that as

a consequence there are rents in the employment relationship, and that

employers abuse workers to extract these rents, leading to both unfairness and

inefficiency. For example, employers discriminate against disadvantaged

groups, underpay workers who are immobile or invest in firm-specific capital,

fire workers who then need to be supported by the state, force employees to
work more than they wish under the threat of dismissal, fail to insure workers

against the risk of death, illness or disability, and so on. In response to the

perceived unfairness and inefficiency of the free market employment

relationship, nearly every state intervenes in this relationship to protect the

workers.

Regulation of labor markets aiming to protect workers from employers

takes four forms. First, governments forbid discrimination in the labor market

and endow the workers with some “basic rights” in the on-going employment

relationships, such as maternity leaves or the minimum wage. Second,

governments regulate employment relationships by, for example, restricting

the range of feasible contracts and raising the costs of both laying off workers

and increasing hours of work. Third, in response to the power of employers

against workers, governments empower labor unions to represent workers

collectively, and protect particular union strategies in negotiations with

employers. Finally, governments themselves provide social insurance against

unemployment, old age, disability, sickness and health, or death. The basic

question addressed in this paper is what determines these choices of

government intervention in the labor market. (The Quarterly Journal of

Economics, November 2004; The Regulation Of Labor By Juan C. Botero,

Simeon Djankov, Rafael La Porta, Florencio Lopez-De-Silanes and Andandrei

Shleifer)
The Job as Property Right

In modern developed societies, by contrasts, the overwhelming

majority of the people in the labor force are employees of organizations… and

the “means of production” is the legal sense. But it is a “right” in the means of

production, an ius in rem, which is the old definition of real property. Today

the job is the employee’s means of access to social status, to personal

opportunity, to achievement, and to power. (The Changing World of

Executive by Peter F. Drucker, New York, 1982, pp179-181)

Employment Law

In a widely cited work, Wood (1877) argued for replacing this law

with the rule of at-will employment, where both parties can sever the

relationship whenever they wish and face no liability beyond the requirement

that the employer pay her employee the agreed-upon wage for work already

completed. Wood’s argument was a pragmatic one, based on the bad

experiences of many employers and employees with the inflexibility of

master-servant law.

As detailed in Feinman (1978), the new rule was quickly adopted by

the New York courts and remains the default rule today. In California, the

legislature adopted what is now Section 2922 of the California Labor code,

which provides that “employment, having no specified term, may be

terminated at the will of either party on notice to the other.”

 Should a firm mistreat a worker, or have high standards for

performance or number of hours worked, the firm will have to pay relatively

high wages or else the worker will leave. Similarly, if a worker demands a

higher wage or better working conditions, the firm is free to search for another

worker who will abide by the current arrangements. In equilibrium, all firms

and workers are satisfied with their lot relative to the alternatives. (Great

Expectations: Law, Employment Contracts, and Labor Market Performance

by W. Bentley MacLeod, pp13-14)

B. Related Studies

Local Studies

Fille Saint Merced Cainglet, Thea Elyssa Vega, and Jerome Albert T.

Zapata clearly stated in their study; “A Social Representations Study of

Contractualization” that contracting has the potential to offer flexibility to the

worker as well as the firm. Rather than being locked into keeping the hours

designated by the employer, some contractors are able to vary their hours of

work in desirable ways. Kunda et al. (2002) found that control over time was

an important theme in contractors’ accounts of entering contracting.

Traditionally, subcontracting was confined mainly to activities

incidental to the operations of the business such as security, janitorial and

maintenance service. In recent years however, subcontracting has evolved into

complex arrangements and has encroached into areas of work regularly

performed by regular employees such as the production process and related

activities (Macaraya, 1997).

Emancipated social representations refer to perceptions shared by two

groups involved. The employer and the agency refer to contractualization as a

means for economic practicality, complex processes of outsourcing; loyalty of

the worker is towards the employer, avoiding unions. The emancipated social

representations regarding contractualization between the contractual workers

and the employers are as follows: presence of fly by night agencies worsen

work conditions, professional relationship between employer and worker. No

emancipated social representations were found between the worker and the

agency.

From Mindanao State, a faculty member, Pamela F. Resurreccion, did

a case study to answer if the retail industry is avoiding the law through

implementing a less than 6 months contract period. Furthermore, it was

discussed in the study the Philippine Laws in relation to labor contracting.

Because subcontracting allows for flexible arrangements and lesser

employee benefits costs, this has been the easy lure for investors. While the

constitution recognizes the role of the private sector, the incentives for

investments may not necessarily involve subcontracting. It is in this light that

the 1987 Philippine Constitution becomes vulnerable to differing

interpretations.
 In the practice of subcontracting majority of their employees by most

retail establishments, particularly by, but not limited to, department stores, it

appears that these establishments have observed a subcontracted employee

engagement period of less than six months. This certainly elicited cynicism

from among the labor advocates since six months is the maximum prescribed

probationary period preluding a regular tenure.

Considering that a subcontracted employee voluntarily enters into a

contract with a principal with the knowledge of the employment period of less

than six months, such contract is deemed valid and void. (Less-than-six-

months contract periods: Is the Retail Industry Circumventing the Law? The

Philippine Case Pamela F. Resurreccion, Faculty, Department of Marketing,

Mindanao State)

Vicente Paqueo and Aniceto Orbeta stated in their research study that

there is little doubt that the “endo” practice is illegal. Therefore, to uphold the

majesty of the law, the government is obligated to end the practice. This fact,

however, should not prevent citizens from questioning the wisdom of the

current worker regularization law and from examining the need for its

amendment. More crucially, the outrage against illegal “endo” practices

should not blind politicians and voters to the potential adverse consequences

of further curtailment or prohibition of temporary employment and job

outsourcing. On this, researchers are concerned that the anti-contractualization

rhetoric, using “endo” abuses as evidence, has so demonized job outsourcing

and temporary employment contracts that systematic public information

campaign has become necessary for making informed decisions about labor

regulatory reforms. To summarize the study, the following are the

observations:

Temporary employment contracts and job outsourcing play a valuable

role in keeping an economy efficient, competitive and inclusive. Arguably,

further TEC curtailment and outsourcing are likely to result in worsening the

already inefficient and rigid regulatory environment governing Philippine

labor markets. First, it would disproportionately reduce good formal sector job

opportunities for disadvantaged workers. Second, the impact of a costly and

rigid regulatory environment worsened by additional labor market restrictions

is expected to be more pronounced over the long run. This is especially true

with the imminent Fourth Industrial Revolution which is foreseen to bring

about widespread jumps in the use of robots and automation of other devices

due to advances in artificial intelligence, digital technology as well as life and

other sciences.

The concern for endo appears overblown. Available data suggest that

an overwhelming proportion of workers employed by job contractors,

including practitioners of endo, are satisfied by their current jobs. This result,
which needs further confirmation, is consistent with data showing that by and

large, those workers receive mandated minimum wages, SSS, Pag-Ibig and

PhilHealth coverage, overtime/holiday pay, and other benefits. This is not to

deny that many of those workers do not have guaranteed job security and may

not have received some benefits they are entitled to. We believe, however,

that this issue is less urgent than the need to facilitate, rather than impede,

expansion of formal sector employment opportunities that much poorer and

more disadvantaged workers in the informal sector can take advantage of.

Meeting this challenge, we emphasize again, is the central challenge of

Philippine development today.

The current one-size-fits-all regularization policy makes it more costly

and difficult for temps to become permanent employees and for small

enterprises to survive and grow. This policy means that a disproportionate

number of disadvantaged workers would be prematurely excluded from

permanent employment. On this point, a good number of them would

eventually be pushed to low income informal employment where they would

not have SSS, Pagibig, PhilHealth and other benefits currently enjoyed by

formal sector workers. As mentioned, the policy would also likely push many

small enterprises with serious financing and survival issues to stagnate or fail.

(Beware of the “End Contractualization!” Battle Cry by Vicente Paqueo and

Aniceto Orbeta)
Foreign Studies

Hillary Thomas Wandera of St. Paul University studied “The Effects

of Short Term Employment Contract on An Organization: A Case of Kenya

Forest Service.” From her research, it was concluded that short term

employment results to: unscheduled turnover in an organization, low staff

morale and low productivity. 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. To cope with the effects of short term employment,

the study found that Kenya Forest Service was implementing the following

measures: gradually absorbing the temporary employees to permanent

employment whenever suitable openings arose, provided on job trainings to

short-term employees to equip them with skills so that they could be more

productive and frequently reviewed the compensation and benefits terms for

staff under short term contracts. The study found that in Kenya Forest Service

and Kenya in general, the use of temporary workers was on the increase due

to the need to cut down on costs of doing business as a result of difficult

economic situations facing the country and to competitively do business

globally.
 In Ireland, “Temporary Employment Contracts and the Application of

Real Options Theory: A Case Study in the Irish Third Level Academic Sector

by Anthony Briody” discussed that the Irish Government has introduced a

moratorium on recruitment in the public service in March 2009. While the

moratorium is generally around monetary savings related to the public service

pay and pension bill, its aim is to restrict the filling of posts across the public

service including the higher education sector in which an employment control

framework was put in place to provide for the application of the cessation to

third level institutions. The moratorium also applies to temporary

appointments on a fixed-term basis and to the renewal of such contracts.

For example, France and Germany appears to have also implemented a

practice of restriction in the form of utilization of temporary employment

contracts long before any moratorium was implemented, and well ahead of the

current economic meltdown.

While permanent employment is always an option for an organization,

outsourcing can bring in the context of flexibility, irreversibility and

uncertainty which makes it significant. The research sits in the area of

strategic human resource management and what adds additional significance

is, a key element is the exploration undertaken to identify the most appropriate

and applicable theory of the firm within which to frame the purpose of the

research.
 The encompassing of the key characteristics of real options theory -

flexibility, irreversibility and uncertainty - into the strategic human resource

management area adds a very tangible strategic element to the area which

adds further significance.

Flexibility is of major importance to organizations in uncertain times

in order to cope with unforeseen contingencies. Such flexibility can be

achieved by using strategies that involve low commitments, with a high

degree of reversibility. Folta (1998) suggests organizations should avoid

internalization (for example, permanent employment contracts - the

transaction cost economics approach) at an early stage due to uncertainty. Van

de Vrande et al. (2006) advice flexibility and reversibility are more important

when uncertainty is high (for example, temporary employment contracts or

outsourcing). (Temporary Employment Contracts and the Application of Real

Options Theory: A Case Study in the Irish Third Level Academic Sector by

Anthony Briody, BA (Hons), MBS, Dip. Emp Law, pp13-14, 26-27)

As in other European countries, there are concerns in Denmark

whether temporary agency work traps workers in poor-quality jobs, or

whether it might act as a bridge into regular employment – especially for

individuals otherwise at risk of marginalization. Up to the present day, little

research has been done on temporary agency employment in Denmark.

 The theoretical impact of agency employment on the employment

outcomes of the unemployed is not clear a priori. On the one hand, temporary

work may improve workers’ human capital and also provide them with labor

market contacts that can later lead to stable employment In this case,

temporary agencies may reduce the time job-seekers spend looking for a new

job and may facilitate rapid entry into regular employment. This holds the

more if client firms use temporary staffing arrangements to screen workers to

fill open posts.

On the other hand, it can be argued that any human capital effects

arising from temp work cannot be strong due to the primarily short-term, low-

skilled nature of temp jobs, which are often below the worker’s qualifications

(Segal & Sullivan 1997). These jobs may even be dead-ends since firms may

not plan to fill these jobs permanently, thus limiting the temp worker’s regular

employment prospects (Heinrich et al. 2005). Consequently, temporary

agency work might not provide significant opportunities to develop

productive job search networks, and it may even crowd out direct job search,

inhibiting longer-term labor market advancement.

Although the majority of job-seekers probably accept temp work to

avoid or escape unemployment, there may be also unemployed job-seekers

who choose temporary agency employment as a career choice, to obtain or

prolong eligibility for unemployment benefits, or to combine family

responsibilities with labor market participation

In tight labor markets, companies have more job openings, fewer

qualified job applicants, and they may find it too costly to assess the

productivity of the workers still in the pool of unemployed job-seekers. As

temp agencies face lower hiring and firing costs than conventional direct-hire

employers do, they may choose to hire individuals, who would otherwise have

difficulties finding regular employment. By this means, job-seekers can

overcome the negative stigma associated with an extended unemployment

period or certain educational or cultural backgrounds

It is a well-known fact that the demand for temp workers moves pro-

cyclically. If the labor market tightens, client firms use temp agencies not only

to screen potential candidates to fill vacancies but also to buffer core workers

in case demand declines in an economic downturn Consequently, agency

workers are the first to be laid off in a recession. (Looking Beyond the Bridge:

How Temporary Agency Employment Affects Labor Market Outcomes by

Elke J. Jahn And Michael Rosholm)

 Chapter III
RESEARCH METHODOLOGY

This chapter consists the research method used, research locale,

research respondents, research instruments, procedure for gathering data, and

statistical treatment of the data that were used by the researchers.

Research Method Used

This study is descriptive type of research that would be used by the

researchers in determining the level and effects of implementation of No

Contractualizaton in Super Metro Lucena, Lucena City.

Research Locale

The researchers decided to conduct their study in Super Metro

Lucena, located at M.L. Tagarao Street, Barangay 3, Lucena City for it is

highly accessible and that the respondents are knowledgeable of the research

topic.
Research Respondents

At present, Super Metro Lucena has a total of 679 workforces; 108 are

regulars, 125 are under probationary period, 39 are under labor contracts from

Easy Link Agency, 10 are seasonal employees, 357 are consignors (promos

and merchandisers) and 40 are from janitorial and security agencies.

From 679 employees, the researchers were able to get the sample size

of 87 respondents through the use of Slovin’s formula with the maximum 10%

error of tolerance and 90% confidence level.

A confidence level tells how reliable a measure is. Common standards

used by researchers are 90%, 95% and 99%. Margin of error tells you how

much error surrounds a measure. It’s a percentage that describes how much

the opinion and behaviors of the sample you survey are likely to deviate from

the total population. (help.surveymonkey.com)

 Since it is not possible to study the entire population, a smaller sample

size was taken using the Slovin's formula which allowed the researchers to

sample the population with a desired degree of accuracy. It gave the

researchers an idea of how the sample size was identified.

Computation of sample size through Slovin’s formula;

Where: n = Number of samples, N = Total population, e = Error tolerance

n = 87.16 round off to make it 87

Research Instruments

In accomplishing the study, the researchers used a self-structured

questionnaire to determine the personal profile of the respondents and the

effects of No Contractualization to the company and to its employees.

The first part of the survey form is the demographic profile of

respondents in terms age, gender, marital status, home address, status of

employment, business relation to Super Metro Lucena, date of employment,

length of service, job title or position, salary, department assigned and number

of hours of work. The next part is composed of questions about company and
employee’s awareness of No Contractualization and what is the level of its

implementation. Moreover, this part would help to know if the

implementation of No Contractualization became beneficial and how many

were benefited. Definitely, this part also would make the researchers

understand the level of effects of its implementation to company in terms of;

turnovers, tardiness, absenteeism, productivity/ performance, salary, work

force, and benefits.

Prior to the survey, the questionnaires attached to permit letter were

submitted to QCRS, IM and were approved by the School Administrator, Ms.

Rona T. Lobos last October 17, 2017. Thereafter, the researchers explained to

the respondents the very purpose of the study before letting them answer the

guide questions.

Procedure for Gathering Data

After the approval of the research topic and problems, the researchers

with the guidance of their professor came up with a set of questionnaires

which will help them to get the results resolving the statement of the

problems. Then, letters to conduct survey in Super Metro Lucena were duly

approved by the authorized signatories. Afterwards, the survey followed.

Aside from getting data through survey, the researchers also gathered
information from library and internet to make this research more informative

and effective. Finally, all the data were carefully collected and interpreted.

Statistical treatment

After gathering all the answered questionnaires, the researchers

interpreted the results with the use of statistical tools. Surveyed answers were

evaluated by using frequency percentage.

Formula:

i. Percentage (%)

P = f x 100
N
Where:

P = Percentage distribution

f = frequency

N = Total number of respondents

To compare the proportion and distribution of the first and second part

of the questionnaire, frequency and percentage distributions were used as a

statistical tool.
 Chapter IV
ANALYSIS, PRESENTATION AND INTERPRETATION OF DATA

This chapter presents the gathered data which were tabulated and

analyzed for the purpose of presenting data in clearer form, for finding the

responses and understanding the problems that are presented.

Figure 1. The profile of respondents in terms of age

Table 1 presents the age distribution of 87 respondents. Most of the

respondents were 44 or 50.57% of the total sample or aged 30 years and

above. Age bracket aged 22 to 25 years old has the second most numbers of

respondents which is 18 or 20.69%. The third bracket which is composed of

respondents aged 26 to 29 years of age has 15 respondents with a percentage

distribution of 17.24%. And the last age group which has the least distribution

is the 18 to 21 years of age bracket which only has 10 respondents having

11.49% only. The data presented showed that most of the employees of Super

Metro Lucena are experience already and have a long tenure. They have been

loyal to the company for a long time that’s why they became pioneers. Most

of the respondents are matured enough to handle the job assigned to them

since their records show that they have been employed since the establishment

of the business in 2003.

Table 2. The profile of respondents in terms of gender

Table 2 shows that out of the eighty-seven (87) respondents, fifty of

them were male which has percentage distribution of 57.47% and thirty-seven

of them were female which has a percentage distribution of 42.53%. As the

table shows, there’s a big difference in number between male and female

respondents. Generally, men are in majority because Super Metro Lucena

requires more physical effort in maintaining and piling of stocks. In logistics,

all of the employees except the supervisor and one encoder are male because

of unloading anf loading of products. In selling areas and Supermarket, males

are very much needed also in transporting and piling of heavy products.
Table 3. The profile of respondents in terms of civil status

The civil status of 87 respondents is presented in Table 3. Majority of

the respondents were married, 43 or 49.43%, 42 or 48.28% were single and

only 2 or 2.3% were widow/ widower. There is only a slim difference in

single and married respondents because nowadays both the single and married

people are the family’s breadwinner. Because of greater responsibilities for

their families, singles remain singles. This is also an indication that single

employees that were hired earlier got married during their employment in

Super Metro Lucena.

Table 3. The profile of respondents in terms of residency.

R
RESIDENCY
E 80
67
S
P 60
O
N 40
D
E 20
N 7 8
1 1 3
T 0
S BATANGAS LUCENA PAGBILAO SAN SARIAYA TAYABAS
FRANCISCO

RESIDENCE

The table shows that the most number of respondents or 67 or 77.01%

out of 87 total respondents reside in Lucena City, followed by respondents

residing in Tayabas, Pagbilao and Sariaya which are towns next to Lucena

City. They have a total number of respondents of 8, 7 and 3 respectively. And

the least town having one (1) respondent each is Batangas and San Francisco.

Majority of the workers are from Lucena City since Super Metro is situated in

the same area and is giving more opportunities to the city’s natives or locals.
Table 4. The profile of respondents in terms of employment status

Table 4 states the employment status distribution of 87 respondents. It

shows that there were 44 regular employees or 50.57%, 35 casual employees

or 40.23% and 8 under probationary period or 9.20%. The majority were

regulars because of loyalty and long tenancy. Super Metro has been

established in 2003 and along with its growth were these employees who help

the business sustained and in the long run became regulars. Due also to the No

Contractualization law implemented by National government, more

employees were regularized.

Table 5. The profile of respondents in terms of business relation to Super

Metro Lucena

Table 5 shows the business relation of respondents to Super Metro

Lucena. The data gathered shows that the 43 respondents or 49.43% were

directly employed, then 20 or 22.99% were from agencies, 19 or 21.84% were

consignees and 5 or 5.75% were project- based. It clearly shows that the

workforce which is composed mainly of outright employees has the vital role

in the company performance.

 Super Metro top management had decide to keep certain activities in-

house especially back-office task such as accounting, payroll, marketing or

technical support. While it is common for some companies to outsource those

divisions, Super Metro maintained flexibility in those operations by keeping

them in-house. Additionally, it may allow the business to exert higher levels

of control over the actions of the divisions by keeping the services and

personnel under direct control. It may also pose fewer security risks

depending on the kinds of data that would have to be supplied to an outside

party should the activity be outsourced.

Table 6. The profile of respondents in terms of date of employment

Table 6 shows the date of employment date of 87 respondents. It is

clearly illustrated that most of the respondents 18 or 20.69% of the total

distribution were recently employed in 2017. In 2016 there 11 or 12.64% were

employed. In 2015 and 2003, 10 or 11.49% each year were employed. In

2012, numbers of respondents employed were 8 or 9.20% of the total

distribution were hired. In 2013 6 or 6.90% were employed while in 2014, 5

or 5.75% were also hired. In 2007, 4 or 4.60% started their employment while

from 2009 to 2011, there were 3 or 3.45% hired each year. 2 respondents or

2.30% were deployed in 2004 and 2005 and in 2006 as well as in 2008; there

was only 1 each or 1.15% of the total distribution employed. This illustration

merely presents that most of the employees were new in the business. Due to

some circumstances and personal reasons, most of the regular employees who

started since the opening of Metro resigned and chose other field of work or

better career paths. Due to decreasing numbers of regulars who fill essential

vacant positions, many were hired and trained this year.

Table 7. The profile of respondents in terms of length of service

In relation to table 7 which stated the profile of respondents in terms of

length of employment, it is noticeable that 11 or 12.64% of the total sample

has tenure of 1 year, followed by 2 years and 14 years with 10 or 11.49%,

then 5 months and below with 9 or 10.34%, 6 moths to 11 months has 8 or

9.20% distribution. Next are 4 and 5 years of tenure with both 7 and 8.05%,

followed by 3 years with 6 or 6.90%. 7 years and 10 years both have 4 or

4.60% respondents and 6 years with 3 or 3.45%. When it comes to 8, 12 and

13 years length of employment, there were 2 or 2.30% who were surveyed, in

9 years of tenure there was 1 or 1.15% same with 11 years with 1 or 1.15%

also.

With regards to length of service or employment, the illustration

shows that there were more new employees who were being hired and

deployed this year. Some of them filled- in the positions that were vacated by

regular employees upon their resignation. One reason why the employees

chose not to stay in the company is the lack of benefits and salary increase.

There were no more back pays or separation pays once a personnel has

resigned. This is an indication that after all the efforts and hardships resigned

employees will have nothing to start with their new lives. Another reason why

more regular employees resigned is mismanagement.

Table 8. The profile of respondents in terms of job title/position

Table 8 shows the different job titles of respondents and their

percentage distribution. Majority of it were 30 or 34.48% from rank and file,

promo/ merchandisers ranked second with %. 24 or 27.59%, 18 or 20.69%

were from supervisory positions, 10 or 11.49% were utilities and 5 or 5.75%

were securities. At present, there are about 33 supervisors in Super Metro

Lucena plus 2 managers which means that most of its workforces were really

composed mainly of rank and files.

Table 9. The profile of respondents in terms of salary range

The salaries of respondents are reflected in table 9. There were 62 or

71.26% receiving salary that ranges from ₱9,000-₱12,000 followed by those

13 or 14.94% receiving ₱12,001-₱15,000. 11 or 12.64% were receiving

₱15,001-₱18,000 and only 1 or 1.15% of the total respondents was receiving

₱18,001 above. In connection to table 8; Profile of respondents in terms of job

title/ position, it was noted that 34% were in rank and file positions and 28%

were promos/ merchandisers which explain why price range of ₱9,000-

₱12,000 top the data. This means that most of the employees were minimum

wage earners.
Table 10. The profile of respondents in terms of department assignment

In table 10, different employee assignments were shown. Majority of

the respondents, 44 or 50.57% surveyed were from supermarket, 18 or

20.69% were from back office, 11 or 12.64% were from housekeeping, 9 or

10.34% were form department store and 5 or 5.75% were from security

department. The data shows that Supermarket had the most numbers of

employees because of more customers’ traffic created by the type of goods

being sold. Since food is the basic necessity of people, supermarket creates

more transactions and customers, thus needed more manpower

Table 10. The profile of respondents in terms of number of hours work

Data in table 10 shows the distribution of respondents in terms of

numbers of hours work. Most of the employees, 84 or 96.55% surveyed

rendered 8 hours of duty while 3 or 3.44 % only rendered 12 hours of duty.

Those 3 who worked for 12 hours a day were the security guards.

It is a common practice for employees to render 8 hours of duty per

day. But in the status of security personnel, they render 12 hours of duty but

according to them were paid accordingly.

Part II

This section shows the collected data on the level of awareness on No

Contractualization, its effects and benefits.

Figure 1

Figure 1 aims to answer the question if the respondents are aware of

the No Contractualization law implemented by the National government. As

illustrated; among the 87 respondents 84 of them or 96.55% acknowledged

that they were aware of the law and only 3 or 3.44% admitted that they were

not aware of it. Because of television, social media, and newsprints, many

became knowledgeable of the new implementations and changes governed by

the government.
Figure 2

This data illustrates if No Contractualization is being discussed or

disseminated in the work organizations. It is clearly stated that 56 or 64.37%

of the total respondents agreed that they discussed this new policy inside their

work group. However, 31 respondents or 35.63% of the total distribution said

that they did not discuss nor disseminate it.

Being aware of the law will make workers be knowledgeable about

their rights, allowing them not to be abused and to be treated equally as

working citizens of the Philippines

Figure 3

LEVEL OF IMPLEMENTATION OF THE LAW

50 (52.87%) 46
R
E 40 36
S
P 30
O
N 20
D
10 ( 5.75%) 5
E
N 0
T FULLY IMPLEMENTED PARTIALLY NOT IMPLEMENTED
S IMPLEMENTED
LEVEL OF IMPLEMENTATION

Level of implementation of the company on No Contractualization is

shown in this figure. According to the 46 or 52.87% respondents, the

company partially implemented it while 36 or 41.38% believed that No

Contrcatualization was fully implemented. However, there were still 5 or

5.75% who believed that it was not yet implemented. One proof of partial

implementation of Super Metro is the use of Easy Link agency to outsource

workers because employing regular employees in favor of casual workers

entails a lot of expenses perhaps more than double than what a contractual

employee will get without benefits.

Figure 4

This figure answers the question if No Contractualization is beneficial

to company itself. From 87 respondents, 46 of them or 55.87% distribution

believed that they are not certain if it is beneficial to the company. 29 or

33.33% from the total surveyed employees answered yes, it is beneficial to the

company while only 12 or 13.79% believed that this new implementation is

not beneficial to the establishment.

As of now benefits to company is really hard to ascertain because the

implementation just took effect this year and some of the employees were still

under probations and some were just new regulars.

Figure 5

BENEFITS OF THE THE NO CONTRACTUALIZATION

TO EMPLOYEES
R
E
50 ( 45.98%) ( 43.68%)
40 38
S 40
P
O 30
N
D 20
( 10.34%)
E 9
10
N
T 0
S YES NOT CERTAIN NO
IS THE LAW BENEFICIAL TO THE CURRENT
EMPLOYEES?

While figure 4 states if the employees believed if No

Contractualization is beneficial or not to the company, figure 5 on the other

hand shows whether it is beneficial to the current employees or not. This

figure shows that most of the respondents answered yes. Among all of them,

40 or 45.98% believed that this new implemented law by the government is

beneficial to the current employees while 38 or 43.68% are uncertain and 9 or

10.34% definitely answered NO.

Upon the implementation of No Contractualization some of current

employees were given a chance and became regulars. They were given

opportunities to have a long tenure.

Figure 6

BENEFITS OF THE NO CONTRACTUALIZATION

LAW TO NON-CURRENT EMPLOYEES

50
44
R 45
E 40 37
S 35
P 30
O
25
N
20
D
15
E
10 6
N
T 5
S 0
YES NOT CERTAIN NO
IS THE LAW BENEFICIAL TO NON-CURRENT
EMPLOYEES?

Figure 6 states if the law is also beneficial or not to non-current

employees. In this figure, it is shown that 44 or 50.57% of the total

respondents answered YES, it is beneficial while 37 or 42.53% are not certain

and 6 or 6.90% are said that it is not beneficial to non-current employees. For

non-current employees, they will have greater opportunity to land in new jobs

and get regularized already. Unlike before, it will take years before you

become a regular employee. For the record, there were current employees who

did not accept regularization which gave opportunity to non-current

employees.
Figure 7

TOTAL NUMBER OF BENEFICIARY OF THE NO

CONTRACTUALIZATION LAW
R 60
E (55.17%)
48
S 50
P
40
O
N (25.29%)
30
D 22 (19.54%)
E 20 17
N
T 10
S 0
25 EMPLOYESS BELOW 26-50 EMPLOYEES 51 EMPLOYEES ABOVE
HOW MANY ARE BENEFITED OF THE LAW?

When asked if how many were benefited with the implementation of

No Contractualization, respondents have different calculations and point of

views. Figure 7 showed that 48 respondents or 55.17% believed that there

were 51 employees and above who were being regularized and benefitted with

the implementation, 22 or 25.29% of the total surveyed samples believed that

there were only 25 employees and below who were regularized and 17 or

19.54% also believed that there were 26 – 50 employees who were befitted

with No Contractualization. According to Human Resource data, there were

about 125 employees who were put under probations. As of now some of

them were already regulars because they already passed their training and

probationary period.
Figure 9

EFFECTS OF THE LAW IN TERMS OF TURNOVERS

50 (50.57%)
44
45
R
E
40 (36.78%)
S 35 32
P 30
O 25
N 20
D
(12.64%)
15 11
E
10
N
5
T
S 0
INCREASED NO EFFECT DECREASED

THE LEVEL OF EFFECTS OF THE LAW IN TERMS OF

TURNOVERS

Figure 9 shows the effects of No Contractualization in the company in

terms of turnovers, whether if it they increased or decreased or if

implementation had no effect at all. This table shows that 44 respondents or

50.57% believed that there was no significant effect when it comes to

turnovers while 32 or 36.78% believed that turnovers had increased and 11 or

12.64% believed that turnovers had decreased since implementation.

Figure 10

EFFECT OF THE LAW IN TERMS OF TARDINESS

50 (49.43%)
R 45 (42.53%) 43
E 40 37
S 35
P 30
O 25
N 20
D 15 (8.05%)
E 10 7
N 5
T 0
S INCREASED NO EFFECT DECREASED
THE LEVEL OF EFFECTS OF THE LAW IN TERMS OF
TARDINESS

Effects of No Contractualization in the company in terms of tardiness

are presented in figure 10. From the data gathered it is noticeable that the

implementation of No Contractualization in Super Metro Lucena has neither

increase nor decrease in numbers of tardiness. Based on the survey, 43 or

49.43% of respondents answered no effect while 37 or 42.53% said that there

was an increased effect in tardiness and 7 respondents or 8.05% of the total

percentage said that tardiness had decreased since the implementation.

Figure 11

THE EFFECTS OF THE LAW IN TERMS OF

ABSENTEEISM
60
R (55.17%)
48
E 50
S (39.08%)
P 40 34
O
30
N
D 20
E (5.75%)
N 10 5
T
0
S
INCREASED NO EFFECT DECREASED
THE LEVEL OF EFFECTS OF THE LAW IN TERMS OF
ABSENTEEISM

When it comes to absenteeism, Figure 11 stated that 48 or 55.17% of

the total respondents claimed that the implementation of No

Contractualization has no effect to absenteeism but 34 or 39.08% agreed that

there is an increased while 5 or 5.57% answered that there is no significant

decrease in terms of absenteeism. Absenteeism is very common to both

regular and casual employees. So whether or not No Contractualization is

implemented, the truth remains that it will not affect absenteeism.

Aside from this, knowing that employees would easily get another job

and be regularized due to No Contractualization, they would not hesitate to

absent.
Figure 12

THE EFFECTS OF THE LAW IN TERMS OF

PRODUCTIVITY / PERFORMANCE
60 (59.77%)
52
R
50
E
S 40
P
O 30 (25.29%)
22
N (14.94%)
20 13
D
E 10
N
T 0
S INCREASED NO EFFECT DECREASED
THE LEVEL OF EFFECTS OF THE LAW IN TERMS OF
PRODUCTIVITY / PERFORMANCE

In figure 12, respondents were asked whether if No Contractualization

has an increased, decreased or no effect when it comes to productivity. From

the data gathered, 52 or 59.77% of the total respondents said that the

implementation had no effect in the productivity or performance of employees

while 22 or 25.29% agreed that the productivity of manpower had increased

and 13 or 14.94% of the total respondents said that performance had

decreased after the realization of No Contractualization. This is the same with

the tardiness. Employees nowadays are not afraid to be late at work because

they are still young they could easily get jobs after whenever they have not

been regularized.
 One of the common arguments against regularizing staff is that

employees turn lazy and only deliver the bare minimum once they are

regularized. With this the company will suffer. But when employees know that

the company cares about them and their welfare and that the employer

genuinely wants them to do well, they give the best of themselves and go over

and beyond the call of duty in order to help the company succeed.
Figure 13

THE EFFECTS OF THE LAW IN TERMS OF SALARY

90 (91.95%)
R 80
80
S
E 70
S 60
P 50
O
40
N
D 30
E 20 (8.05%)
N 7
10
T 0
0
S
INCREASED NO EFFECT DECREASED
THE LEVEL OF EFFECTS IN TERMS OF SALARY

Figure 13 shows the answers for the question what are the level of

effects of No Contractualization in terms of salary. There are none who

answered decreased but there are 80 respondents or 91.95% of the total

distribution who said that since the implementation of No Contractualization,

there is no merit increase given to them. Almost all of the respondents

answered that there is no effect when it comes to salary. This is an implication

that No Contractualization has no effect when it comes to salaries or wages.

However, there are still 7 or 8.05% of the total surveyed employees who said

that there is an increased in the salary after the implementation. This is

perhaps a salary increase given to promoted or transferred employees.

 Compensation is one of the important factors that affect the

satisfaction of the employees. If an employee feels that the salary given to

him/her is not enough that is the time that he/she will change his amount of

duty based on the salary he/she received.

Figure 14

THE EFFECTS OF THE LAW IN TERMS OF WORK

FORCE/PLANTILLA
(51.75%)
50 45
R 45 (42.53%)
E 40 37
S 35
P 30
O 25
N 20
D
15
E (5.75%)
10 5
N
5
T
0
S
INCREASED NO EFFECT DECREASED
THE LEVEL OF EFFECTS OF THE LAW IN TERMS OF
WORK FORCE/PLANTILLA

From figure14, effects of new law regarding New Contractualization

in the company in terms of workforce or plantilla are stated. According to 45

or 51.72% of the total respondents, the company had decreased its manpower

since the implementation of the new law. But according to 37 or 42.53%

respondents, there was neither a decrease nor increase in the number of

employees in the company; No Contractualization had no effect the

company’s workforce. But there are still 5 or 5.75% of the total surveyed

employees who believed that there is an increase in manpower since the

execution of the law.

Figure 15

THE EFFECTS OF THE LAW IN TERMS OF BENEFITS

R 80 (77.01%)
67
E
S 60
P
O 40
(20.69%)
N 18
D 20 (2.30%)
E 2
N 0
T INCREASED NO EFFECT DECREASED
S
THE LEVEL OF EFFECTS OF THE LAW IN TERMS OF
BENEFITS

Figure 15 stated that 67 or 77.01% of the total respondents said that

No Contractualization had no effect in benefits while 18 or 20.69% believed

that there was an increased in benefits since the implementation and there

were only 2 or 2.30% who believed that the benefits had decreased since its

execution.

Benefits are considered an “extra” aside for having monthly salary.

Benefits are non-financial form of compensation that serves as an addition to

enrich the employees’ lives. As the researchers interviewed the participants,

the company provides vacation leave, sick leave, health care, SSS, Pag-ibig

fund, 13th month, insurance to its employees. No additions were noted.

 Chapter V
SUMMARY OF FINDINGS, CONCLUSIONS AND
RECOMMENDATIONS

Summary

This study aimed to determine the implementation of No

Contractualization as imposed by the law in Super Metro Lucena, which is

one of the biggest businesses in Lucena City. This paper attempted to

ascertain the demographic profile of the respondents in terms of age, gender,

marital status, home address, status of employment, their business relation to

the company, their date of employment, length of service, job title or position,

salary, department assigned and total numbers of work per day. This also

sought to get data if the employees were aware of the new No

Contractualization law, or if it was clearly disseminated or discussed within

their organization. What is the level of implementation and if it is beneficial to

the company itself, current employees or non- current employees were also

answered. Aside from these, the respondents were also requested to answer if

how many in their work organization were benefited with the implementation

of No Contractualization and what were the level of effects to the company in

terms of turnovers, tardiness, absenteeism, productivity, salary, workforce and

benefits.
 The study was conducted in Super Metro Lucena at ML Tagarao

Street, Barangay 3, Lucena City. The researchers surveyed 87 respondents

who were composed of 24 merchandisers, 30 employees from rank and file

position, 5 security personnel, 18 supervisors and 10 utility personnel.

Findings

Based from the data gathered, the following were the findings:

1. When it comes to demographic profile;

1.1 Majority of the respondents are 30 years and older with 44 or

50.57% followed by 26 to 29 years old with 18 or 20.69%, 22 to

25 years old with 18 or 20.69% and 18 to 21 years old with 10 or

11.49%.

1.2 When it comes to gender, male got the highest number which was

50 or 54.47%. The percentage distribution of female was 37 or

42.53%.

1.3 As to civil status, married and single status almost got even.

Married respondents were 43 or 49.43% of the total sample size,

while single were 42 or 48.28% and the least is widow which was

2 or 2.30%.

1.4 It is noticeable in this study that almost all of the employees of the

company were natives of Lucena. There were about 67 or 77.01%

 from Lucena, 8 or 9.20% from Tayabas, 7 or 8.05% form

Pagbilao, 7 or 3.45% from Sariaya and 1 or 1.15% both from

Batangas and San Francisco Quezon.

1.5 For the status of employment, majority of 44 or 50.57% were

regular employees, followed by 35 or 40.23% casuals, and there

were still 8 or 9.20% who were under probationary period.

1.6 Most of the interviewees were outright employees consisting of 43

or 49.43% of the total sample, from agencies, there were 20 or

22.99%, there were also 19 or 21.84% consignors and 5 or 5.75%

project-based employees.

1.7 In terms of employment date, employees hired in 2017 were 18 or

20.69%, 11 or 12.64% in 2016, 10 or 11.49% both in 2003 and

2015, 8 or 9.20% in 2012, 6 or 6.90% in 2013, 5 or 5.75% in

2014, 4 or 4.60% in 2007, 3 or 3.45% in 2009 to 2011, 2 or 2.30%

in 2004 and 2005 and lastly 1 or 1.15% both in 20016 and 2008.

1.8 When it comes to length of service there were 11 or 12.64% who

were working for 1 year already, there were 10 or 11.49% both for

2 years and 14 years. 9 or 10.34% were just new because they

were 5 months and below, followed by 7 or 8.05% both for 4 and

5 years, 6 or 6.90% for 3 years, 4 or 4.60% both for 7 years and 10

years, 3 or 3.45% for 6 years, 2 or 2.30% for 8, 12 and 13 years

 already. Lastly there was 1 or 1.15% both for 9 years and 11

years.

1.9 As for their job titles or positions, majority of 30 or 34.48% were

from rank and file positions, 24 or 27.59% were merchandisers or

promos, 18 or 20.69% were supervisors, 10 or 11.49% were utility

personnel and 5 or 5.75% were security agents.

1.10For their salary, 62 or 71.26% has a salary range of 9,000-12,000,

followed by 13 or 14.94% who has 12,001-15,000 salaries, then

11 or 12.64% who has wage of 15,001-18,000 and lastly there was

one who earns 18,001 above.

1.11When it comes to their department assignments, 44 or 50.57% of

the total respondents were from supermarket, 19 or 21.84% were

from back-office, 10 or 1.49% were from housekeeping same as

department store and 5 or 5.75% were from security department.

1.12As to number of hours work, there were 84 or 96.55% who said

that they were working 8 hours a day while the remaining 3 or

3.44% claimed that they were working for 12 hours a day.

2. Part 2 of the questionnaire;

2.1 Respondents were asked if they were aware of the No

Contractualization Law, 84 or 96.55% of the total respondents

 answered yes while only 3 or 3.44% answered no, they were not

aware of the law.

2.2 If the law was clearly discussed or disseminated in their work

environment, there were 56 or 64.37% who answered yes while

there were 31 or 35.63% who answered no.

2.3 In terms of the level of implementation of the law, 46 or 52.87%

said that it was partially implemented only while 36 or 41.38%

stated that it was fully executed and there were still 5 or 5.75%

who answered that it was not implemented yet.

2.4 The data gathered if No Contractualization was beneficial to

company, 46 or 52.87% were uncertain, 29 or 33.33% were sure

that it is beneficial to the company and 12 or 13.79% clearly stated

that it is not beneficial.

2.5 If beneficial to current employees, 40 or 45.98% answered yes,

while 38 or 43.68% were not certain and 9 or 10.34% said no.

2.6 In terms of non-current employees, 44 or 50.57% said yes it is

beneficial, while 37 or 42.53% respondents were not certain and 6

or 6.90% said that the implementation was not beneficial to non-

current employees.

2.7 To give better understanding how many were benefited with No

Contractualization, 48 or 55.17 of the total surveyed personnel

 said that there were 51 employees and above who were benefited

while 22 or 25.29% said there were only 25 employees and below

and the remaining 17 or 19.54% believed that there were about

26-50 workers who were regularized.

2.8 To identify better the results of No Contractualization,

respondents were asked what the levels of effects are after the

implementation in terms of turnovers. Form the 87 samples 44 or

50.57% of them said that it did not affect the number of turnovers

while 32 or 36.78% agreed that staff resignations had increased

and 11 or 12.64% believed that it had decreased.

2.9 In terms of tardiness, there were 43 or 49.43% who believed that it

had no effect while 37 or 42.53% acknowledged that tardiness had

increased and there were still 7 or 8.05% who said that tardiness

had decreased since implementation of the law.

2.10As for absenteeism there were 48 or 55.17% who said that there

was no effect, 34 or 39.08% said that there was an increased effect

and the remaining 5 or 5.75% believed that there was a decreased

effect.

2.11In terms of productivity or performance, 52 or 59.77% answered

no effect while 22 or 25.29% believed that there was an increased

 effect and there were 13 or 14.94% who believed that performance

of employees had decreased.

2.12When it comes to salary, majority of 80 or 91.95% strongly

believed that there was no significant effect in their wages, only 7

or 8.05% believed or experienced increased in their salary while

none said that there was decreased in the salary.

2.13For number of workforces, 45 or 51.72 which is almost half of the

respondents believed that manpower had decreased since

implementation. There were also 37 or 42.53% who believed that

it had no effect in plantilla while there were still 5 or 5.75% who

said that workforce had increased.

2.14Lastly, when it comes to benefits, majority of the respondents or

67 or 77.01% strongly believed that there were no effect or

movement in their benefits while 18 or 20.69% still believed that

the benefits had increased and 2 or 2.30% affirmed that the

benefits had decreased since the implementation of No

Contractualization in Super Metro Lucena.

Conclusions

Based from the findings, the following conclusions were drawn.

1. From the demographic profile; Most of the respondents were regular male

and company outright employees who are already married aged 30 years old

and above and residing in Lucena City. Majorities also are the respondents

with almost 1 year of tenure and belong in rank and file positions receiving a

salary range of ₱9, 000 to ₱12, 000. Big numbers of surveyed employees were

from Supermarket department working 8 hours of duty in a day.

2. When the National government implemented No Contractualization, it is

expected that all businesses should conform. This study will show how Super

Metro Lucena addressed the call for “Endo” abolishment and identify its

benefits or repercussions. Based on the gathered data, 84 out of 87

respondents were aware of the law implemented by the government. This

means that social media, televisions and even print ads had help employees to

be aware and become knowledgeable of the social and political issues in the

Philippines which gave them also the ability to discuss or disseminate it inside

their work organization. From the respondents, it was learned that the

company had partially implemented No Contractualization. Ending of

contracts is not fully abolished but instead the company used manpower

agency as its leeway. Since the implementation just took over just recently, it
is still vague for the employees whether No Contractualization is beneficial to

the company or not. According to them, they were still uncertain if the law

was beneficial to the company but guaranteed that it was beneficial to current

and non-current employees. One proof of being beneficial to current and non-

current employees was the 51 workers and above who were about to be

regularized this year.

When complying with new regularizations like this, the company and

its employees are the ones who are directly affected. The effects of this new

directory to the company are seemingly not quite ominous. Implementation in

Super Metro Lucena had no effect or impact when it comes to employee

turnovers, absenteeism, tardiness and productivity. But when it comes to

salaries and benefits, it is noticeable that the company was tying knot to

reduce its expenses, no more merit increase and additional bonuses for them.

Another seemed to be the problem when No Contractualization was

implemented was that the number of workforces had decreased which means

that the new regularized workers tend to be more burdened by heavier and

tedious work. Aside from this, unemployment would increase and become a

bigger problem in the near future. That would be another and foregoing issue

to be addressed by our government.

Recommendations

Based on given conclusions, the following recommendations were

drawn;

1. Super Metro Lucena should conduct job interviews not just within Lucena

City. It should explore outside provinces in order to give opportunities to

other natives. When it comes to status of employment, even though almost

half of the employees were regulars, it should still increase its regulars or

better yet do not rely on outsourcing by the used of Easy Link Agency in

order to comply fully with Government’s policy. As for the security of

tenure, since most of Super Metro’s employees now are new while some old

and competitive employees are abandoning their posts, the company should be

alarmed and extend effort to regain their trust and loyalty. The business had

invested so much for the trainings in order to make them more skillful and

competitive. For the new employees, make sure to train them well and

inculcate in their minds the value of their work, trust and loyalty. Perform

trainings and seminars to increase their potentials. Change the management

style and check their benefits and wages.

As an employee approaches longer tenancy, it is understood that his

salary would also increase. According to the data gathered, most of the

workforces are receiving 9, 000 to 12, 000 which means even though you
have been in the company for such a long time; your salary is not increasing.

Or if it is increasing, it has little difference only from the minimum wage

earners. Maybe this is one of the reasons why some regular employees are

vacating their positions.

2. As for the awareness of law, it is good that the employees are aware of No

Contractualization. This means that they are also conscious of their rights and

benefits. To be more aware and knowledgeable, the company should conduct

orientations and seminars to teach them the value, benefits and essence of No

Contractualization. The employees must be reminded about the company’s

mission and vision plus the core value in order for them to become happy.

General assemblies and awarding of gift certificates must be continuously

done for employees who got perfect attendance and consistently punctual.

Merit increases should be awarded yearly. It should be a win-win situation.

While the company gets higher profits, the employees must also have higher

take home pay. Happy workers are productive. And productive staffs create

less, less absences, less tardiness, and less turnovers.

.
Appendices

History of Labor Laws in relation to Contractualization in the

Philippines

The practice of hiring “contractual employees” in labor-only

contracting arrangements emerged with the decline of the cabo system. Cabos

first emerged during the Spanish Regime. A cabo is an arrangement between a

shipping company and a labor organization whereby the latter, as an

independent contractor, engages its members, who are paid through union

payrolls, to provide arrastre and stevedoring services to the company. At

present, the cabo system is prohibited under the Implementing Rules of the

Labor Code.

In the Philippines, the contemporary trend of contractualization

started in the export processing zones in the 1970s. The first export processing

zone was created in Bataan in 1969. In 1972, President Ferdinand Marcos

enacted Presidential Decree (“P.D.”) No. 66, which created the Export

Processing Zone Authority. Section 13 allowed the Authority to establish a

merit system governing the recruitment, transfer, promotion and dismissal of

all personnel, including temporary workers. It also provided that the Civil

Service Law and regulations of the Wage and Position Classification Office

would not be applicable to the workers, effectively exempting them from the

ambit of labor laws.

 1997, DOLE Department Order (“D.O.”) No. 10-97 was issued,

amending the Implementing Rules of Books III and VI of the Labor Code. It

prohibited labor-only contracting but allowed subcontracting, provided that

the contractor or subcontractor carried on a distinct and independent business

and had substantial capital, and the agreement between them and the principal

assured the contractual employees’ right and benefits. 22

Four years later, in 2001, the said department order was modified by

D.O. No. 3-01, which added the element of a direct business relation, such

that employees recruited, supplied or placed by such contractor or

subcontractor must not be performing activities which are directly related to

the main business of the principal; otherwise, the scheme would be deemed

labor-only contracting, which the same issuance still prohibited.23

In 2002, the DOLE again exercised the power granted to it under

Article 10624 of the Labor Code by issuing D.O. No. 18-0225 which

interpreted Articles 106 to 109 of the Labor Code. It provided for a trilateral

relationship in contracting arrangements, with the principal, contractor or

subcontractor, and the workers as parties thereto.

D.O. No. 18-02 declared the practice of contractualization as legal for

as long as it did not fall within the category of “labor-only contracting,” which

is measured by the amount of capital and control of the supposed employer. It

also equated security of tenure with having a definite contract, instead of the
regular and permanent status previously enjoyed by workers who have worked

for more than six months. D.O. No. 18-A-11, the latest interpretation to Art.

106, superseded D.O. No. 18-02 but did not propose substantial changes. It

merely added more prohibitions under labor-only contracting.

Under the new order, DOLE Secretary Silvestre Bello III said that

terminating the service of a worker after the expiration of his service

agreement with his employer is no longer allowed. With the new policy,

expects the regularization of more workers and the end to illegal contractual

employment schemes. “What we are envisioning is that assuming that we

continue with the contractual operations as provided by law, regular workers

will continue to become regulars and those being outsourced by service

provider will also attain the status of a regular employee,” Bello pointed out.

To ensure only legitimate contractors can engage in permissible

contracting arrangements, DOLE has set higher capital requirements for such

enterprises, from P3 million to P5 million.

A contractor shall also maintain a working capital requirement

equivalent to 50 percent of the total salary of all employees to ensure workers

shall be paid even if there are collection difficulties.

 DOLE also requires contractors to post P100, 000 cash bond and

additional bond amounting to 50 percent of the salary of 10 percent of its

employees. Contractors must also provide financial assistance to employees

waiting for new assignment, for a maximum of three months. If the three-

month period lapses without the worker getting new employment, the

contractor should give him or her separation pay. Violators of the new DO

face cancellation of registration as well as fines ranging from P10, 000 to

P50,000.

He said the new DO ensures that workers in legitimate contracting

arrangement can enjoy their right to security of tenure as well as just and

humane working conditions.

Figure 1
 Above shows that after the implementation of No Contractualization,

there were about 125 personnel who were put under probationary period.

There were no more casual employees who were directly employed this year.

And it can be noticed that Super Metro Lucena hired some of its employees

thru agency- Easy Link.