Economy, Labor & employment

Despite P330-B stimulus package, job losses to hit around 1.2 M in 2009

layoffs-graphWith the entry of fresh graduates and first time workers into the labor force, the number of unemployed Filipino workers could increase by around 1.2 million by yearend. While this is bad news enough, the worse news is that the Arroyo administration could not adequately handle the worsening jobs crisis despite its much-touted P330-billion economic stimulus package.

Rapid pace of dislocations

The additional 1.2 million jobless Filipinos this year assumed that the labor force will grow by 900,000 this year, the annual average since 2001. The National Economic and Development Authority (NEDA), meanwhile, projected job losses could reach as high as 800,000 by the end of 2009. Assuming an optimistic scenario that the stimulus package could create 500,000 jobs this year, and then the job creation deficit will still be around 1.2 million by December.

Add to this the expected massive displacements of overseas Filipino workers (OFWs); of which at the rate they are being retrenched could reach at least 21,000 by yearend. The number could be much higher in reality because 575,000 OFWs are directly and immediately vulnerable to displacements due to the crisis including some 268,000 factory workers in Taiwan, Macau, and South Korea.

Such estimate is also supported by the fact that foreign direct investment (FDI) and commodity exports, main drivers of local job creation in the country, are contracting due to the financial and economic crisis. Thus, except perhaps for a few thousands of contractual jobs from the outsourcing business, there is no expected significant expansion in jobs this year that could make a dent on the rapid pace of unemployment.

As of January, the official tally by the Department of Labor and Employment (DOLE) pegged the cumulative number of retrenched workers at 40,000 and that of displaced OFWs at 5,404.

The rapid pace of dislocations will aggravate the perennial job scarcity facing the Philippines, where an average of almost 4 million workers, or more than 11% of the labor force, are unemployed every year since 2001 – based on official surveys.

Consider that even before the recent wave of massive displacement of Filipino workers here and abroad, the growth in the number of jobless was already alarmingly high at more than 90,000 per year under the Arroyo administration.

Temporary, flexible jobs & labor export

The main response of the Arroyo administration is emergency employment through the so-called stimulus package. Around 500,000 jobs could be generated from it mainly through pump priming on infrastructure projects, according to the NEDA. But these jobs, which also include street sweepers hired by the Metro Manila Development Authority (MMDA), are highly temporary, lasting for a couple of weeks and will have no meaningful impact on the accelerating pace of displacements.

Aside from temporary employment, labor flexibilization is the other “solution” that the government offers. Labor flexibilization has long characterized domestic employment and has compounded the problem of job insecurity and scarcity in the country. But the situation is sure to deteriorate as the DOLE has further legitimized labor flexibilization in the guise of responding to the crisis.

Under DOLE Advisory No. 2 series of 2009, the labor department has issued guidelines on compressed workweek arrangements; reduction of workdays; rotation of workers; forced leave; broken time schedule; and flexible holiday schedules.

Alas, the guidelines just create more room for the intensified abuse and exploitation of Filipino workers. At the expense of the workers, many firms, even the ones that are not hit hard by the crisis, will take advantage of the guidelines to implement flexible work arrangements to maximize profits. The guidelines also send the unmistakable message that the workers alone should bear the brunt of the crisis.

But while labor flexibilization may jack up the profits of some companies, it will in general fail to keep many local businesses afloat as long as key issues behind the jobs crisis, such as overdependence on foreign markets and capital, are not dealt with. Thus it will fail to even moderate the massive job losses.

Finally, labor export continues to be the principal job “creation” strategy of the Arroyo administration. Reintegration and retraining programs have been set to re-export displaced OFWs to other potential labor markets. At the same time, aggressive “marketing missions” and facilitation are being carried out by the Philippine Overseas Labor Offices (POLOs) in 30 so-called strategic host destinations worldwide. The 1.4 million-jump in global deployment of OFWs last year further boosted the bullish outlook of the Philippine Overseas Employment Administration (POEA) on government’s labor export policy.

This optimism is however oblivious to recent developments in the global labor market. The International Labor Organization (ILO) has projected the number of jobless worldwide to increase by as much as 50 million as the economic crisis deepens. Mounting demand from workers abroad to protect and generate domestic jobs will limit opportunities for OFW deployment. Countries like Macau and Malaysia have already started efforts to curb the entry of migrant workers in certain jobs. Industrial unrest is sweeping Europe with British workers protesting the entry of foreign workers amid rising unemployment.

Responding to the “supercrisis”

Experts have described the recession as a “supercrisis” and could be long and deep. Its impact on poor and underdeveloped economies like the Philippines is just starting to unfold. Obviously, emergency employment through a stimulus package as well as labor flexibilization and export will not do the trick. A total overhaul of the economy’s orientation must now be started – shifting from an externally driven growth and job creation to a one driven by internal sources of economic expansion and employment.

This requires the creation of a medium- to long-term comprehensive development plan for local industries especially the small and medium enterprises (SMEs) that will primarily cater to the domestic market. Indispensably, this means refocusing the decades-old colonial bias towards foreign goods, capital, and market to a nationalist bias for local investment and commodities. SMEs account for more than 60% of total employment in the country.

Deeply related to this is genuine and lasting agrarian development, which must be pursued with real land distribution to the tillers at its core. Schemes that will further dispossess the tillers of land must be abandoned such as extending the flawed Comprehensive Agrarian Reform Program (CARP) and 100% foreign ownership of land through Charter change (Cha-cha). The Genuine Agrarian Reform Bill (GARB) pending at the House of Representatives must be passed as it could set off the process for genuine and lasting agrarian development to take place.

A highly developed agricultural sector, instead of catering to the First World markets like it has been doing since time immemorial, should supply the needs of local industries and form crucial linkages in the domestic economy. It must be noted as well that the agricultural sector directly and indirectly accounts for more than 70% of domestic employment.

Immediately, the government must desist from further opening up the domestic economy to foreign competition – an economic policy which for decades has pushed thousands of Filipino firms into bankruptcy and dislocated millions of Filipino workers, farmers, and farm workers. More liberalization of trade and investment through bilateral, regional, and multilateral free trade agreements (FTAs) and economic partnerships must be stopped.

Instead, a host of readily available and accessible support package such as tax breaks and exemptions and other privileges must be exclusively extended to Filipino SMEs and other local direct producers such as the farmers and their organizations. This will spur domestic production and consumption, invigorate the economy and create more jobs at home.

But these important reforms will not materialize without a movement of people clamoring for change. The raging crisis confronting the country and the rest of the world is providing fresh opportunities for progressive social movements to present alternative economic policy frameworks and programs that will challenge the current flawed paradigm of development.

Amid the economic gloom, there is reason to be hopeful.


9 thoughts on “Despite P330-B stimulus package, job losses to hit around 1.2 M in 2009

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