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The Institute for Labor Studies (ILS) examines the issue of contracting/subcontracting arrangements in the country through the 2016 research paper titled “Examining the Suspension of Registration of New Contractors and Subcontractors: A Regulatory Impact Statement.”

Co-authored by Joyce Anne S. Lumactud and Ivan Cassidy F. Villena of the ILS Labor and Social Relations Research Division, the research explores the impact of the suspension of registration of new contractors and subcontractors and explore alternative options through the conduct of a cost-benefit analysis.

Among its specific objectives are the following: a) describe the current situation of contracting and subcontracting in the Philippines; b) describe the effect of the suspension of registration of new contractors and subcontractors to the labor market in terms of employment; c) analyze the compliance of contractors and subcontractors with labor laws and related social legislations; d) explore options to current regulations and its effects to the labor market through the conduct of a cost-benefit analysis; and e) recommend interventions at different levels, including policy, program and institutional components of the current regulation on contractualization.

The prevailing law on contracting / subcontracting is presently being implemented by DOLE Department Order 18-A, series of 2011. The issuance strikes a balance between the need of business for numerical and flexibility and the need to protect the workers by

observing labor standards. Notably, the said Department Order prohibits contractors and subcontractors from engaging as private recruitment and placement agencies to clearly establish employer-employee relationship in a legitimate subcontracting arrangement with the subcontractor.

In 2016, due to the mandate of President Rodrigo R. Duterte to end “endo” or end of contract, DOLE Department Order No. 162, series of 2016 was issued to suspend the registration of new contractors and subcontractors. The issuance also reiterated the prohibition of labor-only contracting.

With the policy thrust of the new administration seen as impacting the labor market, the research aims to look at these effects through the conduct of a cost-benefit analysis, along with the costs and benefits of legislative proposals as alternatives to the suspension.

The Institute for Labor Studies (ILS) is the policy research and advocacy arm of the Department of Labor and Employment. For more information on this story, please contact the Advocacy and Publications Division at 527-3490.