EO on endo to hurt Philippines manufacturing industry

CEBU, Philippines — As the Philippines still needs to boost its manufacturing muscle, prohibiting end-of-contract or endo now may hurt the manufacturing sector, a renowned economist warned.

Raul V. Fabela, professor Emeritus at the UP School of Economics said while ending endo would strengthen the rights and security of tenure of the working community, the timing is just not right for the Philippines to do it now as the economy needs a good balance between services and manufacturing.

The Philippines, which is still a developing country, should build two strong foundations of services and manufacturing in order to strike a good balance and achieve healthy economic growth.

The Executive Order (EO) which was signed by President Rodrigo Duterte last Monday, prohibiting illegal contracting, or subcontracting, and strengthening workers’ rights to security of tenure or to end illegal endo, signals the country's inhospitable environment for assembly plants or seasonal manufacturing operations.

Or even the small businesses like a bakery chain for instance, these kind of operations can't counter the EO by raising prices because of tight competition.

Fabela, who is also a national scientist, cited that if the Philippines want to settle poverty reduction first, it has to increase its manufacturing share.

Compared to Indonesia, Vietnam, taking into consideration great economic success of China, the economies of these countries are being ushered up with two legs — services and manufacturing.

The Philippines on the other hand is only growing with one leg, while the other leg (manufacturing) is still crippled.

In 1980s, the share of manufacturing in the Philippine GDP, it further slide to 21 percent in 2018.

Indonesia on the other hand has been gaining on manufacturing, at the same time strengthening its services sector.

"If the EO becomes a law, manufacturing sector can no longer hire contractuals. This in turn, raises the cost of companies [all the more]," the economist added.

Likewise, Filipino economist Bernardo Villegas also believes that in order for fair economic distribution, attracting manufacturing investments should be on top of the government's priority.

Philippines should seriously consider attracting manufacturing investments to solve its unemployment problem, and balance the job opportunity distribution that will include the grassroots.

But, the EO which was supposed to boost the morale of the non-degree holder employees, it is also facing another dead-end, the possibility of employment opportunities for the same group of workers.

Fabela was in Cebu Wednesday to hold an economic briefing hosted by the Ayala Business Club, as part of the Ayala-UPSE lecture partnership.

The briefing dubbed "Towards Inclusive Capitalism in the Philippines," was attended by business community, students, and the academe.