Cartelizing the supply of labor

BACKBENCHER
Rod Kapunan
5/14-15/2011



If labor-only contracting is a new shade of slavery, then this new form of exploitation promises to be more cruel and painful for it seeks to effectively destroy the current system of employment. The conventional mode where the workers are free to find employment under the open labor market system, and employers equally free to hire workers of their choice would soon be a thing of the past.

As labor-only contracting widens to cover all industries and businesses, and qualitatively train their manpower to cater to every specialized and technical field of undertaking, such could not only result in the virtual enslavement of the workers done through the misplaced leasing of human services, but could eventually destroy the universally accepted mode in labor relations anchored on that concept of “employer-employee relations.”

Labor-only contracting has already evolved from its generic nomenclature of being called “manpower or employment agencies” to one styling as “manpower specialists.” Hence, from their traditional line of merely offering janitorial and messengerial services, they have evolved to offer manpower that have the educational qualifications, skills, technical specialization, and experience needed by wide range of industrial, commercial and business establishments. Many now style themselves as management and legal specialists, accounting and financial analysts, computer experts, and even medical technicians. Their objective is to completely debase companies of employees working on the principal business for which they were hired.

Notably, once labor-only contracting gain widespread acceptance, the first thing that will be affected is the practice of direct hiring, which is possible only under an open labor market system. Under this, workers directly apply to companies in need of their services, and get hired if they are qualified. Under this conventional mode, there is a meeting of the minds between the two on the terms of employment, amount of wage, benefits, and the assurance of becoming permanent after hurdling the six months probationary period. It is direct hiring that gives rise to the term “employer-employee relations” because the contractual relation is between the employee and the employer.

With the advent of labor-only contracting, direct hiring will slowly be replaced by the system of “indirect hiring.” Invariably, the open labor market system will be replaced by the closed labor market system because workers could no longer apply for a specific job, except through a specialized manpower service agency. In that case, employers will more and more rely on labor-only contractors for their specific manpower requirements until they finally do away with the practice of directly hiring workers beginning with the scrapping their personnel or human resources development or HRD. This modification to slavery was never anticipated by Karl Marx despite his extensive treatise about the exploitation of the workers by the capitalists.

One must bear it in mind that indirect hiring came about because there no longer exists a direct relationship between the workers and the employers. Employers under this new mode are now called “employer-beneficiaries” because they benefit from the services rendered by workers supplied by labor-only contractors carried out under the unorthodox method of leasing out human services. Employer-beneficiaries now stand as lessees of human services, while labor-only contractors stand as lessors of human services. The workers, which are the object of their misplaced lease agreement, stand as leased-out or for-hire workers, not contractual workers because they are not really a party to the contract of employment.

Because of this new arrangement, the term “employer-employee relations” now becomes meaningless. What will prevail is the contractual relation between the lessor and the lessee. In that sense labor relations becomes an empty subject because there is nothing to conciliate, negotiate or arbitrate under that situation. For that matter, labor unions and trade federations that contributed to enrich the concept of labor relations would no longer exist much that labor-only contractors would now play the role of “negotiators” for their for-hire workers. We are already seeing the withering of trade unions, and sadly enough the emergence of labor-only contracting is rooted on that defective system of regulated wage which they blindly supported.

As the system of direct hiring is gradually phased out, workers could only find employment through their labor-only contractors. So, the workers, whether blue- or white-collar ones, and even those aspiring for managerial positions, to find employment will have to enlist first with the labor-only contractor or specialized manpower agency, like Job Street. It is only after an employer-beneficiary finds interest in their educational qualifications, skill or experience would they will be able to find a job, and that can only to be concluded after the interested employer-beneficiary has agreed to the terms demanded by their agency.

Considering that labor-only contractors are organized and operate on a different plane often favorable to the interest of their clients, their evolution will eventually alter the entire landscape in labor relations. From their original objective of aiding employer-beneficiaries reduce the cost of wage, they could then metamorphose to one of labor cartel once they reach that level of operating on a near monopoly. They could then dictate the price for the services of their for-lease workers, and easily they could do that in a manner no different from the oil and rice cartels which have proven to effectively operate under all systems of closed market.

In that we will be witnessing the emergence of a cartel exclusively engaged in the supply of labor. The unholy alliance now between the employers and the labor-only contractors to reduce the cost of wage would only be good for as long as labor unions exist. Once they have been eradicated, the contradiction will be between the employer-beneficiaries and the labor-only contractors, and not between the workers and the capitalists as anticipated by the stereotype Left.

Right now, big companies are putting up their front specialized manpower agencies to justify indirect hiring. Even if the cost is higher than the prevailing labor market cost, they would still be glad to engage their services because they would no longer be saddled into giving their leased-out workers the array of benefits corollary to their becoming regular employees, more so if their exists a union.

rodkap@yahoo.com.ph