4 Human Rights FORUM

THE CALM

More job losses expectedas the global economiccrisis continues

BEFORE THESTORM

Another day at work: Youngscavengers in Baguio City.Photo: PEPITO FRIAS

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AS THE economies of developed countriesplunged one-by-one into recession, Presi-dent Macapagal-Arroyo boldly assuredthe public that the country’s economy,though not totally immune, would be

less vulnerable to the massive impact of the economiccrisis unravelling globally. In her speech during thePhilippine Economic Briefing held in September, Presi-dent Arroyo claimed that because of the sound fun-damentals as well as the ’tough economic reforms’implemented by her administration, the country’seconomy is equipped to withstand the effect of theUS-led financial crisis.

n By VANESSA RETUERMA

While government and analysts have yet to agree if it isjust a mere economic slowdown or a recession the countryis facing ahead, the initial impact of a bigger economicstorm are already being felt by workers across the nation......................................................................................................................

The President’s statement,bold and convincing as it mayseem, may not stand longenough to downplay the poten-tial massive impact of the glo-bal economic turmoil and allaythe public’s fears of a loomingeconomic crisis. As reports andfigures on layoffs, cuts in workhours, forced leaves and repa-triation of migrant workers in-creasingly made their way intothe daily news, and economicbriefings became frequent, ithas become clear that the im-pacts of the global economic cri-sis have already started to be feltby the local economy. The localbusiness sector as well as eco-nomic analysts have alreadybecome increasingly cautiousover the current economicenvironment, warning thatthe impacts may actually beworse than anyone couldhave predicted.

In a survey done bythe Makati BusinessClub (MBC) betweenOctober 24 to No-vember 7, 2008among its 738members, 87 per-cent of respondentsexpressed pessi-mism, saying thePhilippine economywill likely go into re-

cession in 2009.Given this gloomy reading

of the economic environment in

early 2009, it is most likely thatbusinesses would “contract theirworkforces” and “drop theircapital expenditures.”

Paul Quintos, executive direc-tor of the Ecumenical Institute forLabor Education and Research(EILER) and a London School ofEconomic (LSE)-trained econo-mist, said in an interview that theUS financial crisis could result,among other things, injob losses in thePhilippines.Accord-i n g

At least 18,000workersnationwide havebeen laid off and33,000 havebeen affected bycompressedwork hours.

Construction work: Risky andunderpaid. Photo: PEPITO FRIAS

Photo: PHILRIGHTS PHOTOBANK

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to Quintos, it is inevitable for thePhilippines to be affected by thecurrent financial crisis given itseconomic ties and dependence onthe US market. “Neoliberal poli-cies of liberalization of trade,investment and finance; deregu-lation, privatization, and othershave exacerbated the country’svulnerability to the crisis of theglobal capitalist system,”Quintos said.

One does not need to go intoelaborate calculation to predictthe potential impact of the cur-rent global economic crisis:around 18 percent of Philippineexports go directly to the US, aswell as European Union markets,while up to 70 percent are indi-rectly dependent on the US; 90percent of the Business ProcessOutsourcing (BPO) revenuescome from the US market; and51 percent of remittances comefrom US-based Filipinos.

Indeed, even a slight eco-nomic tremor in the US directlyimpacts on the country’s alreadyvolatile economy. The effect onthe local economy this timewould be more serious, given thatthe US has plunged into recessionin the last two quarters of 2008.

The worst is yet to comeAs the economies of core

developed countries continue toslip deeper into recession, thiswould most definitely result,among other things, in massivejob losses in the peripheraleconomies such as that of thePhilippines. A looming massivejob loss would be a multipleblow to a country like the Phil-ippines who has alwaysstruggled with high unemploy-ment rates and deterioratingworking conditions.

Even before the onset of theglobal financial crisis, the Phil-ippines had already one of thehighest unemployment rates inthe Southeast Asian region. Asof October 2008, some 2.5 mil-lion (6.8%) Filipino workerswere unemployed, while an-other 6 million (17.5%) were un-deremployed, according to theNational Statistics Office. On topof the stock of unemployed andunderemployed, some 1.5 mil-lion workers join the labor force

every year. The Philippine gov-ernment is perennially facedwith the task of creating jobs toabsorb the rapidly expanding la-bor force - a task it is unable toaccomplish.

The global economic crisishas slowed down demand in Ja-pan, the United States and West-ern Europe — large markets forPhilippine export goods, ser-vices and migrant workers.With the contraction of thesemarkets, the demand for Phil-ippine labor is most likely toshrink as well. The workers be-ing in the last chain of the pro-duction line are the ones thatwould take the hardest blow inthe current global economic tur-moil.

Analysts say that the mostvulnerable are workers in ex-port-oriented industries such aselectronics, automotive, gar-ments and furniture sectors, aslocal companies are expected tolay off and cut working hoursof their workforce to avoid pos-sible shutdown. Labor SecretaryMarianito Roque said weaken-ing export demands in tradi-tional export markets such asthe US, Europe and Japan have

severely affected local manufac-turing firms. Roque declaredthat some local companies arealready removing overtimepay, reducing shifts and evenreducing work hours of theirworkers, and are expected toeventually resort to layoffs.

Even a slight downfall inthese industries would havedetrimental impact on theeconomy and the lives of Fili-pino workers. Based on govern-ment records, the electronicssector accounts for about 58 per-cent of the Philippines’ exportand employs about 480,000workers. Meanwhile, the gar-ments sector employs around120,000 workers, while the au-tomotive industry, particularlythe wiring harness sector, em-ploys 35,000 people.

As early as November, com-panies in these sectors have al-ready started to lay off some oftheir workers.

The labor group Partido ngManggagawa (PM) reported inNovember that layoffs have al-ready started in export-orientedfactories in the Mactan ExportProcessing Zones and other in-dustrial estates in the Visayas.

It noted that seven (7) compa-nies in Cebu – Altamode,Cosonsa Manufacturing Inc.,Arkaine Industries, Giordini delSole, Paul Yu, Maithland Smith,and Neostone - have laid offworkers or reduced workinghours due to the decreasing de-mands from the US and Euro-pean markets. It is estimatedthat around 1,690 workers, manyof them women, have been af-fected by retrenchments, shut-downs, and work rotation be-ing implemented by employers.

In December, Texas Instru-ments, one of world’s biggestsemiconductor manufacturers,announced that it is laying off400 workers in its Baguio City

“We need abnormal solutionsin these abnormal times.”

Students’ fears: Even a college degree these days cannot guarantee adecent job. Photo: PEPITO FRIAS

Shooting the breeze:A group of joblessmen while away thetime playingcheckers. Photo:PhilRights PHOTOBANK

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plant. Texas Instruments hasbeen operating in the Philip-pines for 28 years and was oneof the pioneers of the electronicindustry which has become thebiggest export sector in the coun-try. TI is reportedly employinga total of 2,300 people in itsBaguio operation.

Most recently, Intel Corp, theworld’s largest maker of micro-processors and the second larg-est exporter next to Texas Instru-ments, announced that it is clos-ing its manufacturing plant inGeneral Trias, Cavite and offer-ing severance package to 1,800employees.

Even the local Business Pro-cess Outsourcing (BPO) sector,

touted as one of the few brightspots of the Philippine economy,is expected to feel the full bruntof the current economic crisis.

The call center industry isconsidered the biggest sector inthe Philippine BPO industry,generating the biggest revenueand employing the most work-ers. In 2007, contact centers ac-counted for 73 percent of theindustry’s US$4.8 billion rev-enue and its employees ac-counted for 60 percent of the300,000 BPO workers.

Local BPO firm AffiliatedComputer Services (ACS) wasreported to have recently dis-missed 889 employees or one-fifth of its workforce after losinga major US-based client that hadgone bankrupt. It was indicatedin the report that from Januaryto September 2008, the companyhad a net loss of P100 million onrevenues of P1.48 billion.

In the latest tally of the De-partment of Labor and Employ-ment, at least 18,000 workersnationwide have been laid offand 33,000 have been affected bycompressed work hours beingimplemented by companies asa way of coping with the globaleconomic crisis.

These figures may alreadybe alarming, but what is moreworrying is that the full impactof the current economic crisis isyet to unfold. Businessmen andeconomists warn that initial lay-offs could just be a prelude todeeper job cuts as unemploy-ment figures are expected to getworse in 2009.

Labor Secretary Roque hasalready warned that should theeconomic crisis get worse, thecountry’s unemployment rateswill definitely shoot up with250,000 to 300,000 people likelyto lose their jobs.

As figures and realistic inter-pretations on the current globaleconomic crisis have just startedto surface, it appears that we areinching closer to the beginningof the labor market downturn.

Shorter work hours and paycuts

Aside from increasing lay-offs, a host of cost-cutting mea-sures are expected to be adopted

Jobless and homeless: A scavenger, with all his worldly possessions all in apushcart, takes a rest in a sidewalk in Quezon City. Photo: JAY AZUCENA

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by companies as they struggleto keep businesses open andprevent massive retrenchmentsas an economic downturn takeshold.

International Labor Organi-zation (ILO) labor economistSteven Kapsos warns that evenif massive layoffs have yet to beseen in the Philippines, the cur-rent crisis is “likely to affectworkers in other ways that aresomewhat more difficult tomeasure, such as declininghours of work, increase in part-time work, pressure for lowerwages, and less job security.”

The Makati Business Club(MBC), for its part, says that cost-cutting measures are alreadybeing done in some industries.Based on the survey they con-ducted among their members,only 8 percent of companies saythey are not affected by the cri-sis. 64 percent say they areslightly affected and wouldlikely implement compressedwork hours, while 32 percent areheavily affected and wouldimplement pay cuts and jobsharing.

In the midst of the unfoldingeconomic crisis, business leadershave called on the governmentand labor unions to be moreopen and flexible to cost-cuttingmeasures such as cut-backs onwork hours and work rotationthat firms may have to resort toas an alternative to layoffs.

Edgardo G. Lacson, Presi-dent of Philippine Chambers ofCommerce and Industry (PCCI),told the media that the proposalfor labor flexibility is a laudablemove as it sought to protect jobs.“We need abnormal solutionsin these abnormal times... It willmean a reduction in pay. But thisis just temporary and it has tobe done to save the economy andsave jobs,” he said.

University of the PhilippinesSchool of Labor and IndustrialRelations professor Rene E.Ofreneo is quick to point outthat the law already allows forsuch flexibilities like com-pressed work weeks, staggeredwork hours, and job rotation.But what is critical, according toOfreneo, is that there should bean agreement between the man-

agement and the workers.However, in as much as the

objective is to protect jobs andavoid massive retrenchment ofworkers, the proposal for morelabor flexibilities are feared toexacerbate the already deterio-rating quality and condition ofwork in the country.

Aside from the perennialhigh rates of unemployment andunderemployment, conditionsof many of workers, particularlythose in skilled and semi-skilledcategories, have increasinglydeteriorated as businesses andemployers have continuouslytaken steps to increase labormarket flexibility in their driveto become more competitive inthe global market. As a result,casualization of labor, job con-tracting, and subcontractinghave increasingly become anorm, consequently weakeningentitlements for workers andcreating more job insecurity.

The practice ofcontractualization has increas-ingly become a standard practisein doing and maintaining busi-ness in the country, further en-dangering workers’ welfare andjob security. Compared to a regu-lar employee, contractual work-ers do not have job security and

are not entitled to a wide rangeof employment protection andbenefits such as wage increase,overtime pay and membershipin labor unions. Miguel Maga,Jr., National Coordinator ofTrade Union Rights Project Phil-ippines, pointed out in an inter-view that one detrimental impactof contractualization is that it“kills organized workers’ move-ments.” Such impact is clearlyreflected in current statistics onorganized labor. According toMaga, “from the 37 millionworkforce nationwide, only 5percent is organized as regularemployees are now outnum-bered by contract basis workers,i.e. contractual, casual, trainees.”

Government contingency plan:will it suffice?

As a response to the wors-ening global economic crisis,President Arroyo announced inOctober that her administrationwill implement a comprehen-sive livelihood emergency pro-gram to protect the poor fromthe impact of the global eco-nomic crunch. Latest reportsunveil further details of theplan, stipulating that the gov-ernment will spend at least P1.7billion to create 250,000 jobs

within the first two months of2009, and one million before theend of July 2009, through re-gional livelihood programs.

National Anti-Poverty Com-mission (NAPC) chairmanDomingo F. Panganiban said theprograms will be implementedstarting January 15, 2009. Amongthe jobs to be created are for streetsweepers, construction workersfor government-owned drugstores and irrigation projects,producers of organic fertilizers,soap and hollow-block makers,and livestock producers.

In addition, President Ar-royo early on laid down heradministration’s plan of settingup a P250 million livelihoodfund to aid retrenched OFWs.

According to the president,the government’s contingencyplan would offer an expandedlivelihood and business forma-tion program to returning ex-patriates. The contingency planis said to include ‘“a 24/7 height-ened monitoring of displace-ments, monitoring job ordersand redeploying of displacedOFWs to emerging labor mar-kets as well as assistance in re-patriation.”

In the meantime, PresidentArroyo claims that retrench-ment of OFWs would not pose acritical problem since her ad-ministration is confident thatthere are still more jobs avail-able abroad and that overseasjobs held by OFWs are less sen-sitive to recession. Most Filipi-nos employed in severely af-fected countries like the US, Eu-rope and Japan are somehowemployed in indispensable ar-eas of the workforce, such ashealth care and education.

President Arroyo is confi-dent that should there be re-trenchment of OFWs in affectedcountries, there are other coun-tries with booming economiesthat could absorb them. Oil-richcountries in the Middle Eastsuch as Saudi Arabia, Dubai andOman that are currently invest-ing in heavy construction arebeing targeted by the govern-ment as possible major destina-tions of OFWs. Moreover, thepresident claims that there aremore jobs waiting for Filipino

Bringing home the junk: An elderly woman, with her grandchildren and apedicab full of junk scavenged in the waste bins of a university.

Photo: PEPITO FRIAS

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migrant workers; there wouldbe a demand for 500,000 OFWsin Europe; 30,000 in Australia;10,000 in New Zealand; and20,000 in Guam.

However, migrant and la-bor groups remain unimpressedand critical of the government’sresponse to the deepening eco-nomic crisis. They are scepticalboth with the figures as well aswith the policy framework onwhich the government seeks toaddress the economic challengesahead. The government’s con-tinuous aggressive promotionof its labor-export programs andheavy reliance on remittancesis nothing more than a reflec-tion of the government’s inabil-ity to create quality and decentjobs at home.

According to Ellene Sana, co-ordinator of the Center for Mi-grant Advocacy (CMA), “they arenot against migration per se. Butit should not be a forced migra-tion. The problem is that the gov-ernment is the one selling ourworkers by targeting to send amillion OFWs every year.”

Connie Bragas-Regalado,chair of Migrante Internationaland Secretary-General of theHong Kong-based InternationalMigrants Alliance, warns thatthe global economic crisis willmake the situation worse forOFWs as “employers will usethe crisis to cut salaries and ben-efits further, exploit migrants’desperation for work by offer-ing lower pay as it is, and gen-erally pass on the crisis to mi-grant workers through moreabuses.”

In the end, it is no doubt thatthe workers are the ones in thefirst line to bear the heaviestburden of the global economiccrisis. Despite declarations andefforts of the government to laydown plans that would compen-sate for the impact of the crisisand cushion workers from itsattendant hardships, the ques-tion still remains: will theseplans and the dismal economicachievement that the Arroyoadministration boastfully de-clared be enough to weather thestormy days ahead?

The events of the last threemonths may have been a fore-

taste of the economic turmoilthe country would be facingahead, but the coming monthsor even years may just provethat the impact of the crisis isfar more severe than what any-one could have expected or pre-dicted.

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Back-breaking: Itogon Mines, Benguet. Photo: PEPITO FRIAS