The Philippine Labor Situation
Prepared by EILER, July 2008
As the global economic crisis reaches new lows this first half and with worse to follow in the coming months or even years, the Philippine labor force is being battered by one gut-level whammy after another. While the effects of the surge in prices of petroleum products, rice and electricity are indeed being borne by all sectors of society, the country’s 36-million labor force is taking the lion’s share of the beating by virtue of its ever-growing abundance in an ever-shrinking economy.
The highly-unpopular government under President Gloria Macapagal-Arroyo is trying to handle the situation by instituting populist policies designed to take the heat off its governance, while conveniently avoiding crying solutions that could make significant inroads towards addressing the roots of the problem. Labor and general public unrest fulminates as the regime continues to hedge on its social obligations, while faithfully observing policies it deems required to keep it in good terms with foreign and local big business interests, as well as with multilateral funding institutions (MFIs) that grant its perennial request for loans. What’s in store for Philippine workers the rest of this year and beyond is foretold by the following objective reading of the local labor situation.
By its own minimalist computation, the Arroyo government pegs the family living wage (or daily-cost-of- living/DCOL for a family of six) to be P894; on the other hand, the current nominal minimum wage (including ECOLAs) is only P382 in the National Capital Region (NCR), translating to a wage gap of P512. This also means that the nominal wage is only 42.7% of the living wage.
Real minimum wage is at P243.31 with 2000 as the baseline year. While nominal minimum wages across regions are higher now on the average by 39% as compared with those in 2001, the year that Mrs. Arroyo took over as President of the country, real minimum wages are now lower by 7% than those at the start of her term.
In the face of such an “indecent” disparity, the current administration still refuses to legislate a P125 across-the-board wage hike as long demanded by militant labor unions under the Kilusang Mayo Uno (KMU) and the broad alliances of the Wage Increase Solidarity P125 in 1999-2000 and the Unity for P 125 at present., and on the basis of social justice. At the very least, doing so would have raised the nominal minimum wage to P507, still in deficit when compared with the living wage but certainly providing some immediate relief and better elbow room for minimum wage earners to weather out the crisis, until the necessary next round of increases. But since Arroyo’s assumption of power, she has only approved an accrued measly basic wage hike of P62 and with the rest as incremental increases in cost-of-living- allowances (COLA), including the P15 and P5 NCR increase last June 14.This has hardly made a dent on the wage gap of P260 then existing in 2001 and the P384 increase in the family living wage (or DCOL) that has piled up on top in the last 7 years, leading up to the current wage deficit of P512.
Hiding unemployment, “globalizing” jobs
Stymied by worsening landlessness in the countrysides and a chronically backward industrial sector, job generation under Arroyo’s watch has failed to keep up with a constantly growing labor force, currently at 36,450,000, of which 33,536,000 are officially “employed”. The country’s unemployment rate worsened from 9.58% in 1996-2000 to 11.4% in 2001-2005.
After arbitrarily redefining “unemployed” beginning in April 2005 to exclude own-account, domestic household and unpaid family workers, the Arroyo government was able to magically reduce subsequent unemployment figures by 1.8 million. The current joblessness statistic of 2.9 million was derived using this manipulative computation, easily rectified by using the old definition, which puts the country’s real unemployment rate in double-digits and makes it the highest in Asia. Underemployment, on the other hand, is at 6.6 million individuals.
State-sponsored schemes to sop up the country’s surplus labor have reached new heights, with the Arroyo government throwing its full weight behind such services-oriented solutions as labor-export and business-process outsourcing (BPO), twin mantras for “development” under neoliberalism aggressively promoted by MFIs such as the IMF-WB and the ADB. While these stop-gap measures do give some temporary relief to a regime beleaguered by social pressures of its own making, they have only further exposed Filipino workers to violations of core labor standards here and abroad while drawing the economy farther away from a much-needed comprehensive and strategic industrialization program.
Last year, the number of documented overseas Filipinos have reached 8.7 million. Around 5 million of these are contract-based workers, while the remaining 3.7 million are permanent residents or immigrants. Their remittances, amounting to $17 billion in 2007, have grown by an annual average of 16% since 2001 and now comprises 10% of the current GDP.
On the other hand, the BPO “industry” has burgeoned not only in the NCR but also in outlying regions such as Central Luzon, Central Visayas and Southern Mindanao. Centered mainly around contact centers (or “call centers”), BPO has been touted by the Arroyo government as a “recession-proof” alternative for the upper-scale job market, and most certainly a boon for MNCs abroad eager to save up on peripheral operations cost. Accounting for 2.5% of the gross domestic product (GDP) in 2005 and employing around 163,000 workers (70% of whom are in call centers), the BPO industry is optimistically projected to employ some 1 million workers by 2010. sector. But this seeming oasis of employment opportunity is now under scrutiny from trade unionists for being extremely exploitative, anti-union, and generally hazardous to workers’ health. On the average, local call center employees receive only one-fifth of the salaries of their counterparts in subcontracting countries such as the US and UK. Majority of these local workers also suffer from a host of work-related health problems, most of which are lethal in the short- or long-run.
Workers who do find jobs in the Philippines find that they face another big hurdle after being hired: contractualization. Big businesses, whether foreign or local, have long mastered the fine art of labor flexibilization in employment, assisted no end by a President and a government that is thoroughly sold out on the scheme. Based on the 2003 admission of Donald Dee, President of Employers Confederation of the Philippines (ECOP), 7 out 10 firms in the country practice contractualization. Some of the worst “contractualizers” among companies are also among the biggest, such as Eduardo “Danding” Cojuangco’s San Miguel Corporation (SMC) conglomerate (1,100 regulars out of its 26,000 total workforce); Henry Sy’s SM Shoemart (1,300 regulars of 20,000); and Manny Pangilinan’s Philippine Long Distance Telephone Company (4,100 of 10,000). Such widespread destruction of tenurial security in labor has had a profound impact on Philippine workers’ freedom to exercise their trade union and other democratic rights. Most of all, massive contactualization has greatly reduced the variable capital for wages, with the monopoly capitalists seeking ever-increasing superprofits in the face of the current world capitalist crisis of overproduction.
Crippled unions, no unions
More than at any other period in its history, institutionalized trade unionism in the Philippines has become a sham. The Arroyo government’s all-out rush to attune the local labor market to the demands of the neoliberal agenda has run roughshod over core labor standards, seemingly leaving no option to workers but to adopt an independent and militant form of advocacy.
While local laws such as the Labor Code exist that formally guarantee the right of workers to unionize, the finer print and state actions themselves say otherwise. Laws that constrain or even prohibit the formation and actions of workers’ organizations abound, foremost of which are those that allow “qualified” contractualization like Articles 106-109 of the Labor Code, the Herrera Law and the Department of Labor and Employment’s (DOLE) D.O. 18-02; mandatory 30-day notice in the filing of strikes; the Marcos-era strike provision that allows ingress and egress of company goods and scabs; and the indiscriminate issuance of Assumption of Jurisdiction (AJ) orders by the DOLE that covers even non-strategic or non-vital industries.
Among the anti-union legislation and practices arrayed against Philippine labor, contractualization is especially destructive. Whereas there are no explicit provisions in any law against unionizing of contractuals, their concrete circumstances itself becomes the prohibition. No employer would consent to them being part of a union’s bargaining coverage, since they only have 5-month contracts at the most. For the same reason, no union composed mostly or exclusively of contractual workers in a firm would be able to obtain a CBA with management or even to uphold one in a practicable period of time. Under this situation, contractualization is turned into a benign-looking but immensely effective tool by big business to block nascent unionism or to bust existing unions.
Those that persist and succeed in forming unions immediately become targets of persecution by big capitalists and the state, who seem to find common ground in fostering a “no union, no strike” environment particularly in the country’s special economic zones. To cite a dramatic case, Gerardo Cristobal, President of the EMI-Yazaki Garments union in Imus, Cavite was fatally shot last March 10 after having survived a previous attempt last year. Also a leader of broad-based labor alliance Solidarity of Cavite Workers (SCW), Cristobal became the 80th in a list of trade unionists killed for political reasons under the Arroyo government. None of these killings have been satisfactorily prosecuted to date.
Given such hostile conditions, it comes as no surprise that the number of genuinely unionized workers in the Philippines has sharply declined. While in 1995 14.6% of the labor force were still unionized, 2007 data shows a much reduced 5.6%, or 16,861 unions with a total membership of 1,893,000 workers. But even this is not reflective of the real picture, since DOLE does not monitor the status of unions on a regular basis and includes even those in firms that have closed down over the past few years. A more accurate benchmark would be the number of existing CBAs and their workforce coverage, which now counts 1,573 agreements covering some 222,000 workers all over the country. These figures portray the true state of union-building in the country, and is a damning record of big capitalist-state collusion in the suppression of Philippine workers’ democratic rights under “globalization” .
Renewed bases for struggle and unity
There are two major reasons that make the big business ideal of “cheap and docile labor” in the Philippines a temporal victory at most. Firstly, the current global economic crisis is projected by analysts to last even longer than the previous ones; and secondly, the labor movement’s core of independent and militant labor are not known for taking such periodic crises lying down.
In the midst of the recent alarming slew of price hikes, militant and independent labor organizations quickly formed themselves into an alliance called the “Unity for P125″. It aims to build a broad mass movement among private sector workers that will leverage not only for an immediate and substantial wage increase but for the scrapping of regional wage boards (RWBs) that are being used by government to regulate wage fixing in favor of big capital.
Workers’ organizations are also in the thick of multisectoral networks and alliances that seek to bring down the prices of oil, electricity and rice. Among the concrete public measures urgently being sought are the scrapping of 12% value-added tax on petroleum products, repeal of the Oil Deregulation Law, lowering of systems-loss charges in power rates, and subsidized pricing in rice. More strategic calls, however, are also being floated to deal with price spikes in the long term and address their systemic roots, such as nationalization of the oil and power industry and genuine agrarian reform. Hit hard by crisis engendered locally and abroad, the Philippine labor sector gathers its strength to fight not only for its own welfare but for those of other marginalized sectors as well. #
Ecumenical Institute for Labor Education and Research (EILER)
The date posted here is due to our website rebuild, it does not reflect the original date this article was posted. This article was originally posted in Yonip in Oct 1st 2008