The Philippine Labor Situation

Published on August 31, 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.

BY THE ECUMENICAL INSTUTUTE FOR LABOR EDUCATION AND REASEARCH (EILER)
LABOR WATCH
Posted by Bulatlat
Vol. VIII, No. 30, August 31-September 6, 2008

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.

Criminally-low wages

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 ($19.466 at an exchange rate of $1=P45.925); on the other hand, the current nominal minimum wage (including ECOLAs) is only P382 ($8.535) in the National Capital Region (NCR), translating to a wage gap of P512 ($11.148). This also means that the nominal wage is only 42.7 percent of the living wage.

Real minimum wage is at P243.31 ($5.297) with 2000 as the baseline year. While nominal minimum wages across regions are higher now on the average by 39 percent 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 percent 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 ($2.72) across-the-board wage hike, 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 ($11.039), 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 ($1.35) and with the rest as incremental increases in cost-of-living-allowances (COLA), including the P15 ($0.326) and P5 ($0.108) NCR increase last June 14.This has hardly made a dent on the wage gap of P260 ($5.66) then existing in 2001 and the P384 ($8.36) 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 percent in 1996-2000 to 11.4 percent 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 percent since 2001 and now comprises 10 percent 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 percent of the gross domestic product (GDP) in 2005 and employing around 163,000 workers (70 percent of whom are in call centers), the BPO industry is optimistically projected to employ some 1 million workers by 2010.

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