Government Contractualization: Employment Opportunity or Exploitation?

 Jovelyn O. Guillermo

Divine Word College of Laoag

Abstract

Workers engaged under contractual, temporary, and other non-standard employment arrangements play a critical role in the operations of Philippine government agencies. Among these, Contract of Service (COS) and Job Order (JO) workers perform essential functions similar to those of regular employees, yet their employment status and benefits remain legally and practically distinct. Despite their contributions, these workers often lack job security, social protection, and access to the benefits enjoyed by regular government employees, leaving them vulnerable to exploitation.

The legal and policy framework governing COS and JO workers clarifies their status and limitations. Under CSC Memorandum Circular No. 40-98, workers under contracts of service and job orders are employed for short durations not exceeding six months on a daily or project basis. These arrangements cover lump-sum work or specific services where no formal employer–employee relationship exists. Although these workers are subject to oversight by the Commission on Audit (COA), they are not entitled to the same benefits and protections as regular government employees. Jurisprudence, including CSC Resolution No. 020790, confirms that job order workers are not considered government employees, and the services they render are not regarded as government service.

In response to the growing number of COS and JO workers and the associated issues of unequal benefits, lack of social protection, and unclear accountability, the Civil Service Commission (CSC), Commission on Audit (COA), and Department of Budget and Management (DBM) issued a joint circular in 2017. More recently, Joint Circular No. 1, series of 2025, provided clearer guidelines on the rights, benefits, and responsibilities of COS and JO workers, aiming to enhance transparency, accountability, and worker protection.

This article examines the working conditions of COS and JO workers in comparison with private sector employees, highlighting systemic challenges and recent policy reforms. By analyzing these issues, the study underscores the urgent need for reforms to ensure dignity, fairness, and security for non-standard government workers.

Keywords

Contractualization, Contract of Service, Job Order, Government Workers, Exploitation, Employment Benefits, Public Service

Introduction

Contract of Service (COS) and Job Order (JO) workers are the backbone of government operations, yet they remain among the most overlooked employees in the public sector. These workers perform essential tasks, observe office hours, report to supervisors, and deliver outputs critical to public service. Despite their indispensable contributions, they are routinely denied job security, benefits, and basic labor protections.

Originally intended as temporary arrangements, COS and JO positions have, in practice, become permanent roles. Policies of the Civil Service Commission (CSC), together with budgetary practices under the Department of Budget and Management, allow agencies to maintain a flexible workforce while avoiding obligations to these workers. This unequal treatment constitutes a systemic form of discrimination within government employment.

The scope of the issue was highlighted during the CSC’s 2026 budget briefing before the Senate Finance Committee. Senate Committee chair Sherwin Gatchalian revealed that over 900,000 government workers—nearly one in every ten employees—are either Job Order or Contract of Service personnel. To date, the Philippine civil service workforce exceeds 2 million, comprising 1,873,504 career professionals and 225,439 non-career professionals, including elected officials. Among them, 70% of career professionals work in national government agencies, while 20% serve in local government units (LGUs). Conversely, 63% of non-career professionals are employed in LGUs, and 25% in non-government agencies. (RG Cruz, 2025)

Gatchalian further noted that, while many permanent positions remain unfilled, professional services expenses have risen sharply, suggesting that agencies increasingly rely on Job Orders or Contracts of Service instead of filling permanent posts. This situation underscores the urgent need for labor reforms and stronger protections for this largely invisible workforce. (RG Cruz, 2025)

The Nature of Exploitation

COS and JO workers perform the same duties as regular government employees—they report daily, follow office rules, meet deadlines, and answer to supervisors—yet they are denied formal recognition and security. They can be terminated at any time without due process and are deprived of essential benefits such as leave credits, retirement plans, and protection during illness. This arrangement allows the government to reap the productivity and commitment of a permanent workforce while avoiding its obligations as an employer. Such systemic control without protection is not merely unfair—it is exploitation, turning dedicated public servants into a disposable workforce. The scale and persistence of this practice underscore the urgent need for policy reforms that ensure fair treatment, social protections, and recognition for those who sustain government operations.

Why the System Persists

The continuation of COS and JO arrangements is largely driven by convenience for government agencies. These arrangements allow agencies to bypass hiring restrictions and budget ceilings, a practice legitimized by regulatory definitions and gaps within Civil Service Commission policies. Critically, there are virtually no plantilla positions available for rank-and-file workers—most regular positions exist only at the managerial or head level. This leaves essential operational roles filled by temporary workers on short-term contracts. Coupled with limited budgets, agencies often prioritize short-term professional services contracts over investing in human capital, sometimes allocating funds to questionable projects rather than addressing workforce needs. Consequently, COS and JO workers often remain on short-term contracts for five to fifteen years, repeatedly renewed without regularization or access to benefits and protections afforded to permanent employees. This perpetuates a cycle of instability and exploitation, allowing the government to maintain a flexible workforce at minimal cost while shifting the burden of job insecurity entirely onto the workers themselves.

Impact on Workers and Public Service

COS and JO workers face constant uncertainty, as they have no security of tenure and can be terminated at any time without due process, often under “endo” or coterminous arrangements tied to projects or funding cycles. This precarious situation prevents them from planning for the future or accessing social protection programs such as health benefits, retirement plans, and leave entitlements. The resulting stress, reduced productivity, and lower morale directly affect the quality and efficiency of public service. Moreover, the divide between permanent staff and contractual workers undermines teamwork, collaboration, and a sense of fairness within government offices. The reliance on temporary labor not only exploits workers but also weakens the institutional capacity of public agencies, exposing the systemic inequities and vulnerabilities embedded in the current employment framework.

The table below shows the updated benefits comparison of COS/JO based on Joint Circular No. 1, series of 2025 vs. Private Sector employees:

Benefit / Protection	Government COS/JO Workers (Under JC No. 1, 2025)	Private Sector Employees
Security of Tenure	Temporary contracts; not covered by Civil Service laws; no security of tenure	Regular employees have security of tenure; termination requires cause and due process
Leave Benefits	Not provided (no sick, vacation, maternity/paternity leave) as not covered by Civil Service law	Entitled to statutory leave benefits under the Labor Code
Retirement / Social Security	Contributions to social security programs (SSS, PhilHealth, Pag‑IBIG) may be provided through a premium up to 20% of wage/salary, where funded; still not credited as government service under Civil Service laws	Mandatory SSS, PhilHealth, and Pag‑IBIG contributions with full access to benefits,   including retirement, sickness, and death benefits
Health Insurance / PhilHealth	Agencies must ensure access to social security and healthcare, often via funded premiums up to 20% of pay	Employer‑paid PhilHealth contributions with full benefit access
Hazard Pay / Allowances	Not specifically mandated for COS/JO; overtime pay may be given, subject to availability of funds; outside typical allowances given to regular government employees	Entitled to hazard pay, night differential, overtime pay, and other allowances
Bonuses / Incentives	Generally not entitled to 13th-month pay, representation and transportation allowances, PERA, and other bonuses under JC No. 1	13th-month pay is mandatory; performance and productivity incentives may also apply
Pay Level	COS may be paid the prevailing market rate or equivalent government salary; JO workers receive a daily wage of comparable government positions, plus an optional premium of up to 20% depending on funds	Wages and salaries are determined by the employer with statutory minimums; a regular payroll structure
Job Security and Career Progression	No promotion/pension credit as government service; CCS, COA, DBM encourage agencies to consider absorption into plantilla positions where qualified	Opportunities for promotions, salary increments, training, and career advancement
Coverage under Civil Service Law	Not covered; services not creditable as government service (no Civil Service benefits)	Covered under Civil Service Law (public) or Labor Code (private)

This comparison highlights the inequality in benefits and protections between COS/JO workers and private sector employees, emphasizing the urgent need for reforms. While the government mandates that private sector employers provide these required benefits as per DOLE regulations, it paradoxically fails to ensure the same protections for its own workers. COS/JO employees, despite having rendered satisfactory service beyond the standard probationary period, are often denied these benefits on the grounds of not holding a regular position—effectively institutionalizing exploitation within the public sector.

Recent Policy Reforms

In Joint Circular No. 1, series of 2025, the Civil Service Commission (CSC), Commission on Audit (COA), and Department of Budget and Management (DBM) issued revised guidelines on the engagement of COS and JO workers. The reforms aim to regulate contractual employment, establish clearer standards, and limit the overreliance on short-term arrangements. Notably, the circular introduces a strict cap on the number of COS and JO hires, with no increases allowed in subsequent years, preventing agencies from using temporary contracts to indefinitely replace regular positions. It also mandates additional benefits for contractual workers, including a 20% premium to cover employer and employee contributions to SSS, PhilHealth, and Pag-IBIG, proper compensation for overtime work, reimbursement for travel expenses incurred in the performance of official duties, flexible work arrangements to support work-life balance, and opportunities for regular positions where applicable. Agencies are also directed to review staffing and consider qualified COS/JO workers for appointment to vacant permanent (plantilla) positions, subject to merit selection plans. Another possible approach to mitigate reliance on individual contracts is the adoption of institutional COS arrangements, where projects or offices hire contractual workers collectively, which can streamline hiring, ensure standardized benefits, and reduce administrative inefficiencies compared to multiple individual contracts. Furthermore, under the Government Optimization Act, agencies are required to factor their existing COS/JO workforce into long-term organizational restructuring to reduce "contractualization."

Conclusion

While the reforms introduce caps, additional benefits, opportunities for regularization, and planning measures, they cannot fully address the structural gaps that perpetuate insecurity, exploitation, and instability among contractual personnel. Until permanent positions are created and funded for rank-and-file roles, the reliance on COS and JO workers—and the inequities they face—will continue. At the core, COS and JO workers are human beings whose dignity must be respected. This article underscores that while government agencies may contract services under civil service rules, such authority must not be used to mistreat or mismanage these workers. Upholding their rights is essential—not only for justice—but for building a competent, fair, and effective public service.

References

CSC Memorandum Circular No. 17, series of 2002. CSC Resolution No. 020790. https://www.csguide.org/items/show/1125

CSC Memorandum Circular No. 40, series of 1998. Revised Omnibus Rules on Appointments and Other Personnel Actions. chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://csc.gov.ph/phocadownload/userupload/irmo/mc/1998/mc40s1998.pdf

CSC-COA-DBM Joint Circular (JC) No. 1, s. 2017. Rules and Regulations Governing Contract of Service and Job Order Workers in the Government. chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.dbm.gov.ph/wp-content/uploads/Issuances/2017/Joint%20Circular/CSC-COA-DBM%20JOINT%20CIRCULAR%20NO.%201%20(1).pdf

RA 12231 (2025) An Act Optimizing the National Government for Efficient Public Service Delivery. https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/2/99481

RG Cruz (2025). ABS-CBN News. 1/3 of government workers have no security of tenure, CSC data shows. https://www.abs-cbn.com/news/nation/2025/10/13/1-3-of-government-workers-have-no-security-of-tenure-csc-data-shows-1953

CSC-COA-DBM Joint Circular No. 1, s. 2025. Revised Rules and Regulations on the Engagement of the Contract of Service (COS) and Job Order (JO) Workers in the Government. chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.dbm.gov.ph/wp-content/uploads/Issuances/2025/Joint-Circular/CSC-COA-DBM-JOINT-CIRCULAR-NO.-1,-s.-2025.pdf

 

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