UPDATE 1-Broken promise: Philippines Duterte vetoes bill on short-term contracts

* Duterte says legitimate job-contracting should be allowed
* Duterte risks losing political capital - labour groups
* More than two-thirds of workers on short-term contracts

(Adds veto reason, reaction, details; paragraphs 4,5,7)
By Karen Lema
MANILA, July 26 (Reuters) - Philippine President Rodrigo
Duterte has vetoed a measure that would have ended companies'
practice of hiring workers on short-term contracts, his
spokesman said on Friday, reneging on a campaign promise that
helped put him in office.
Philippine law lets employers hire workers to meet demand at
peak times by using contracts that run five months, to avoid a
six-month rule that entails permanent job status and provision
of health and other benefits.
"Security Tenure Bill vetoed by the president," the
spokesman, Salvador Panelo, told reporters via a messaging app.
Businesses should be allowed to outsource certain
activities, particularly to boost efficiency, as long as workers
did not suffer, Duterte told the Senate in a letter to explain
his veto.
"The Philippines is currently at a disadvantage in terms of
cost and flexibility of labour use, compared to its peers," he
added. Up to 28 million Philippine workers, or about 70% of the
workforce, have short-term contracts, the labour ministry says.
Without Duterte's veto, the bill would have become law on
Saturday, but a two-thirds vote of the members of each house of
Congress is required to override it.
Opposition Senator Risa Hontiveros said Duterte's commitment
to ending the practice had been "wimpish and wishy-washy", so
his decision did not surprise her.
Labour groups said Duterte risked losing political capital
by turning away from workers.
"It really hurts us because this is the president's campaign
promise," Alan Tanjusay, a spokesman of the Associated Labor
Unions-Trade Union Congress of the Philippines, the country's
biggest such grouping, told news channel ANC.
"'He said, "I need a law to address contractualization", and
now that there is a law, he vetoed the bill'," Tanjusay added.
Both house of Congress overwhelmingly approved the measure,
despite warnings by employers' groups and business chambers that
it could do the Philippine economy more harm than good in the
long term.
Not only would it raise business costs, they said, limiting
the number of hires, but it would drive away investors at a time
when the Philippines seeks to attract foreign capital to boost
economic growth and create jobs.
Foreign direct investment of $9.8 billion into the
Philippines last year was dwarfed by that drawn by rivals such
as Thailand and Indonesia, and the government is eager to boost
the figure by slashing red tape and overhauling infrastructure.
"The bill impinges on management prerogatives anchored on
the constitution, and it excludes contract workers hired by
government agencies," more than a dozen business groups said in
a joint statement this month.