Academic journal article Journal of International Business Research

Organizational Determinants of Contingent Employment in the Philippines

Academic journal article Journal of International Business Research

Organizational Determinants of Contingent Employment in the Philippines

Article excerpt

INTRODUCTION

Contingent work pertains to a job arrangement in which workers have no long-term employment contract or one in which the workers' minimum hours of work vary randomly (Polivka & Nardone, 1989). Employment practices such as part-time work, temporary work, employee leasing, self-employment, job contracting, and home-based work may be considered contingent when the worker involved does not have a long-term employment contract. In the Philippines, work that does not provide workers with security of tenure is classified as nonregular employment. Examples of nonregular employees are contractual, casual, commission-paid, part-time, seasonal, and probationary workers (BLES, 1998, 2004).

Different forms of contingent employment have different characteristics, addressing different organizational needs. Organizations in the Philippines hire casual or temporary employees for service jobs--e.g., janitorial and messengerial--and hire project employees for professional and technical work (Supangco, 2005). The more common types of contingent workers are contractual and casual employees. The Philippine Labor Code defines casual or temporary employees as those hired to do work outside what is considered necessary for the usual operations of the employer's business, while contractual employees are those employed by a contractor or subcontractor to perform a job within a definite period (Foz, 2001).

Organizations use contingent employees for various reasons. The use of these workers provides organizations with flexibility in cost as well as in responding to demand fluctuations (Abraham & Taylor, 1996; Davis-Blake & Uzzi, 1993). In addition, contingent workers instantly provide organizations with the necessary skilled labor when developing them inside the firms would have taken a much longer time (Abraham & Taylor, 1996). However, the use of contingent employment as a strategy to enjoy numerical flexibility becomes a controversial approach when such use is accompanied by downsizing of core employees to allow for the contingent workers to perform work considered necessary for the regular operations of an organization (Esguerra, 1996; Ofreneo, 2003). Indeed, Philippine data indicate higher incidence of retrenchment in organizations that have higher intensity of use of contingent workers (Torres, 1993). To address labor union concerns against abusive use of contingent workers, specifically contractual workers, the Department of Labor and Employment issued Department Order 18-02, listing prohibitions against specific types of labor contracting and entitling these workers with the same rights and privileges enjoyed by regular employees. While hiring contingent employees enables organizations to enjoy various forms of labor market flexibility (Lagos, 1994)--cost, numerical, and functional flexibility--these employees, however, continue to be marginalized due to income and employment instability (Torres, 1993; Ofreneo, 2002).

Clearly the growing use of contingent employment in the Philippines raises important questions. This study aims to address: what organizational factors determine the use of contingent employees?

Understanding organizational factors that facilitate or retard the use of contingent workers is important in many ways. Structural characteristics of organizations enable or hinder cost benefits of hiring contingent employees (Tilly, 1992), thus this study informs management of the ways to maximize potential benefits from hiring contingent employees. Moreover, human resource management practices influence employees' achievement of career goals as well as the ways in which rewards are distributed in organizations (Davis-Blake & Uzzi, 1993). Such outcomes have significant consequences in organizational behavior, particularly performance (Pfeffer & Davis- Blake, 1992). On the other hand, it becomes a social concern and ethical issue when such practices result in underpayment of contingent employees' wages and benefits (Ofreneo, 2002) or when hiring them enables organizations to downsize (Torres, 1993; Esguerra, 1996; Aguilar, 1990; Amante, 1995; Barranco-Fernando, 1995) or phase out regular jobs altogether (Ofreneo, 2002). …

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