Economy, Labor & employment

Why Arroyo’s P330-billion ‘stimulus’ package will not solve joblessness (Part 2)

Originally published in

Part 2 of a two-part series (See Part 1)

Photo from Getty Images

Photo from Getty Images

As Filipino workers marked Labor Day last May 1, about 400 from their ranks are being displaced daily as fallout of the global economic crisis.

By the Department of Labor and Employment’s (DoLE) own reckoning, the global crisis has already displaced almost 50,400 workers in the Philippines as of mid-March. It also reported that about 59,200 workers were affected by workday reduction, job rotation and compressed workweek.

Making the situation worse is the mass displacement taking place among overseas Filipino workers (OFWs). Official report pegs the number of retrenched OFWs at almost 6,500 in 19 countries as of January. But independent monitoring by migrant workers’ group Migrante International shows that the figures, as of February, could reach around 20,000 OFWs from 17 countries.

But government as usual wants us to believe that it is on top of the situation. The supposed resiliency of the economy and Filipino workers are once more being hyped. Government is doing what it can to preserve and create jobs amid the global recession, according to Arroyo administration officials.

In fact, one of the major components of Mrs. Gloria Arroyo’s PhP330-billion Economic Resiliency Plan (ERP) is the Comprehensive Livelihood and Emergency Employment Program (CLEEP). As a sub-program of the ERP, the CLEEP aims to hire for emergency employment and fund and supervise livelihood projects.

“Good news” or false hope?

From its earlier grim forecasts, officials have shifted to the “good news” approach when talking about the employment situation. As Labor Secretary Marianito Roque puts it when asked on the latest statistics on job losses, “We’re focused on job creation. We are not talking anymore of displacements.” Roque previously described as “abnormal” the dislocations of workers due to the global crunch.

Latest government press releases highlight opportunities awaiting Filipino workers. DoLE sees the job crisis “easing up” in the second quarter, with “fewer workers losing their jobs and tens of thousands of new jobs anticipated”. In Mindanao alone, business process outsourcing (BPO) could create half a million jobs, the Department of Trade and Industry (DTI) said.

In her Labor Day message, Mrs. Arroyo repeated her favorite theme – that the resilient economy protected us from the global crisis and allowed us to continue growing. She added that Filipino workers’ skills and talents are “confounding the gloomy forecasts of pessimists”. The DoLE, for its part, hyped its May 1 Jobapalooza which was supposed to provide 250,000 local and overseas jobs.But this (over)optimism only gives Filipinos a false hope.

For one, it ignores the dim reality of the global economy, which is facing a crisis that, according to World Bank president Robert Zoellick, “no one knows how long it will last.” With the International Monetary Fund (IMF), the World Bank said recently that “the global economic crisis is turning into a human and development calamity.” The International Labour Organization (ILO) earlier called it a “global jobs crisis”.

As a result of the global crunch, the ILO said unemployment in Asia will jump to 97 million in 2009 – 7.2 million higher than last year. While no country-specific estimates were given, the ILO expects the number of jobless workers in Southeast Asia to grow by 2-3 million this year. It also noted that the Philippines, Pakistan and Cambodia have the fastest expanding labor force in the region and thus are among the most vulnerable.

Already in worst jobs crisis

These gloomy prospects come at a time when the backward and pre-industrial Philippine economy has been undergoing its worst jobs crisis. Lack of genuine industrialization and land reform has made the economy incapacitated to produce and expand gainful and sustainable jobs. Worse, rapid globalization since the 1990s has destroyed countless jobs and livelihood and further debilitated domestic employment generation.

From 2001 to 2007, the average annual unemployment rate is pegged at 11.3 percent with almost 4 million jobless workers every year. In the Aquino years (1987-1992), the averages were 9.5 percent and 2.3 million and have progressively climbed during the Ramos (1992-1998), Estrada (1998-2001) and Arroyo (2001-present) administrations. (Note that since its April 2005 Labor Force Survey (LFS), the NSO started to use a new definition of unemployment, which excluded discouraged workers and those not willing or available for work from the labor force. The shift had a net effect of “statistically” reducing the number of unemployed. For 2007, for instance, the LFS showed only an annual unemployment average of 2.6 million workers under the new definition, or around 1.4 million less than the unemployment average using the old definition. This paper used the old unemployment definition but the NSO has not yet released official data comparing unemployment under the old and new definitions for 2008.)

Notably, the unemployment rate has remained at double-digit despite a period of relatively high economic growth. The gross domestic product (GDP) grew by an average of more than 5 percent a year in 2001-2007, and peaked at a 30-year high 7.2 percent in 2007. Also significant is the increase in number of poor Filipinos (by almost 4 million between 2003 and 2006) during that period of high economic growth.

This again exposes the hollow optimism of government based on some projections that the Philippine economy is among the few that will not contract this year. If almost 4.1 million workers were jobless in an economy that grew by 7.2 percent in 2007, how many will be jobless when economic growth decelerates to, say 4.4 percent (government’s most optimistic scenario) this year?

Will the ERP mitigate the displacements?

In response to the massive dislocations of OFWs and local workers, the Arroyo administration came up with the CLEEP to “save and create jobs.” Government estimates that the program could generate at least 800,000 jobs. (See Table)

ERP table 3

As of February, Malacañang reported that the CLEEP has already created 70,000 jobs nationwide. But even if government achieves its target of 800,000 jobs under the CLEEP, it will still fail to even mitigate the rapid displacements of workers. Note that the labor force grows every year by an average of 900,000 while the number of jobless workers, even before the global recession, grows by 90,000 a year.

Statistically, they may “mitigate” job losses as reflected in the Labor Force Survey (LFS) of the National Statistics Office (NSO). The LFS simply asks if a worker is employed or has a livelihood but does not probe the duration of employment. More, CLEEP’s temporary jobs will cater, theoretically, to those who are displaced by the global crisis, not to the usual 4 million plus jobless workers the country has in the pre-recession years.

Overall, the ERP does not modify, but in fact continues, the flawed basic orientation in job generation of current and past administrations. Out of 800,000 target jobs under CLEEP, for instance, more than 500,000 will come from infrastructure projects of the Department of Public Works and Highways (DPWH). Most of these jobs and the other CLEEP targets, meanwhile, are aligned with the priority projects of the Super Regions.

The Super Regions, first unveiled by Mrs. Arroyo in her 2006 State of the Nation Address (SoNA), aims to attract foreign investments for export zones, mining, BPOs, agribusiness, etc. Thus, in terms of long-term employment, it will further undermine domestic job generation as local industries and producers are further marginalized.

Unreliable, insecure jobs

Meanwhile, the domestic job crisis is mitigated only through labor export, which under Mrs. Arroyo has been officially proclaimed as government policy for job generation. OFW deployment has now already reached one million per year, or almost three times the volume of annual deployment during the Aquino administration.

Despite its vulnerability as a means to generate jobs as shown by the current recession, the Arroyo administration continues to promote labor export. In fact, it is one of the job creation/preservation tools of the ERP. DoLE is mandated under the ERP to assist displaced OFWs by redeploying them to other emerging markets and identifying and developing new market niches, among others.

For affected workers in the export sector, the DoLE has established quick response teams (QRT) in its regional offices to devise an early warning system on possible displacements. It has been busy as well in organizing job fairs in various parts of the country such as the Jobapalooza last Labor Day.

But because jobs created by the economy are in the main dictated by foreign investments like BPOs and tourism, available employment at these job fairs are usually detached from the actual needs of the domestic labor market. While government hypes the number of potential jobs, it does not report how many workers were actually hired in these job fairs and how many were turned away due to jobs and skills mismatch.

If the Jobapalooza turnout is any indicator, it appears that a very small portion of the supposed available jobs translates to actual employment. Initial media reports say only 7,000 workers were hired on the spot during the Jobapalooza. If accurate, that figure is only less than 3 percent of the much-advertised 250,000 jobs that the activity was supposed to provide.

Worse, DOLE, unable to create a reliable job generation plan, has further legitimized labor flexibilization in the guise of preserving jobs. Under the ERP, it is actively promoting shortened work shifts, rotating forced leaves and other flexible labor schemes. These are contained in DoLE’s Advisory No. 2 which gives all employers more leeway to undermine the job security of their workers.

Flexible work arrangements must have the consent of affected workers, according to the said advisory. The issue however is that existing policies have already created an environment favorable to employers. The DOLE, by promoting flexible work, even if based on certain conditions, reinforces such environment that is hostile to workers.

The same argument holds true in terms of a substantial wage hike. The Bangko Sentral ng Pilipinas (BSP or Central Bank of the Philippines) declared as early as February that there is no need for a wage increase since the inflation rate is slowing down. This bolstered the excuse of companies, which Malacañang officials echo, that because there is a global recession, wage hikes will only further destroy jobs.

These preempt the initiatives of workers to negotiate with their employers for a wage increase. Besides, a review of past retrenchments and shut downs shows that unfair foreign competition, overdependence on a volatile global market and lack of government support, among others – and not wage hike – are behind the woes of most local firms.

In summary, the ERP of the Arroyo administration aims to create and preserve jobs through temporary, insecure and externally-driven (i.e. labor export and foreign investment) employment with even more measly pay. It is no longer new; such has been the case of employment in the Philippines for decades. But the ERP is pushing it to a new and higher level, at a greater expense, oppression and exploitation of Filipino workers.

People’s Fighting Demands

The ERP clearly shows that the Arroyo administration is not only unable but is also unwilling to deal with the global crisis outside the framework of its flawed economic program. We are thus challenged to put forward an alternative set of policy reforms and measures that will serve and protect our interests as a people and as a country struggling to achieve real and sustainable economic development.

On a positive note, the crisis is offering a unique opportunity for all vulnerable, oppressed and neglected segments of society – from the basic sectors to the marginalized Filipino businessman/woman – to unite and advance a common agenda for deeper economic reforms.

Such reforms must provide urgent economic relief as well as give an opening for a more substantial policy shift in terms of long-term direction and paradigm for the economy. With this in mind, the Bagong Alyansang Makabayan (Bayan or New Patriotic Alliance), through consultations with various sectors, has come up with the People’s Fighting Demands for Immediate Economic Relief and Long-Term Reforms. (See Annex)

The Fighting Demands builds on the people’s ongoing campaigns to establish a pro-people, pro-Filipino and nationalist economy. As a concrete alternative to the defective ERP, it outlines a set of short-term or urgent relief measures to truly mitigate the impact of the global crisis on ordinary Filipinos.

More importantly, the Fighting Demands advocates medium and long-term reforms that aim to gradually reorient and redesign the domestic economy towards the path of self-reliance and genuine industrialization. Needless to say, it would not materialize without a great and broad movement that will campaign and work hard to translate these proposals into actual national policies.


People’s Fighting Demands for Economic Relief and Long-Term Reforms: Ensuring a Pro-People and Nationalist Response to the Global Financial and Economic Crisis

I. Protection and Promotion of Jobs and Immediate Provision of Benefits and Assistance to Affected Workers

  • Ensure that due process are accorded to all workers, including overseas Filipino workers (OFWs), who are facing retrenchment or dislocation to prevent unreasonable termination.
  • Review all the cases of displaced workers with the employer citing the global financial and economic crisis as the reason behind such termination to determine if due process was observed and the reason cited was legitimate.
  • Ensure the easy access of all workers to all the benefits accorded to them by their social security and insurance systems.
  • Ensure that all claims due to the displaced workers such as separation pay and other entitlements must be given without delay by their employers.
  • Provide immediate relief, including but not limited to, direct cash assistance grant to all workers displaced by the global financial and economic crisis.
  • Ensure that displaced OFWs obtain from their employers the immediate provision of full compensation including separation pay, payment for the unexpired portion of their contracts, and reimbursement of air transportation fare.
  • Stop the imposition of onerous and additional fees on workers leaving the country to look for employment opportunities abroad.
  • Ensure that all benefits due to OFWs from their contribution to the funds of the Overseas Workers Welfare Administration (OWWA) are easily accessible and readily provided.
  • Stop contractualization and all forms of labor flexibilization schemes.
  • Stop the massive and systematic retrenchment of all public sector workers by scrapping all so-called “rationalization plans” such as Executive Order (EO) 366 and EO 102, and all privatization programs for various government agencies, government-owned and controlled corporations (GOCCs), and other public enterprises and institutions.
  • Stop the ejection of peasants from their land
  • Provide substantial and immediate government assistance to farmers in areas hit by natural or man-made calamities that affected farm production.
  • Suspend the clearing operation of the Metro Manila Development Authority (MMDA) against sidewalk vendors.

II. Provision of Sufficient Social Services

  • Provide sufficient social services especially public education (excluding military education), public health, and public housing by substantially increasing their national budget allocation and increasing public spending on them.
  • Reduce substantially the national budget allocation for the military and debt servicing and redirect the savings to allocation for public education (excluding military education), public health, and public housing.
  • Stop the privatization and commercialization of all public schools and state colleges and universities, public hospitals, and public housing to ensure that the services they provide are accessible and available especially for the poor and ordinary income earners.
  • Stop the demolition of urban poor communities and provide decent and secure housing for the poor.

III. Generating Resources While Easing the Undue Burden Caused by Taxes and Debt

  • Stop the automatic appropriation for debt servicing through the repeal of Presidential Decree (PD) 1177 or the Budget Reform Decree of 1977 and Executive Order (EO) 292 or the Administrative Code of 1987 to free up resources for social services spending.
  • bDeclare a moratorium on foreign debt servicing and review all foreign debts to determine which are odious and illegitimate and therefore shall no longer be repaid.
  • c. Remove the 12% value added tax on oil, power, water, and other basic consumer goods and basic services to lower prices and stretch the budgets of ordinary households.
  • d. Provide tax breaks for all minimum wage earners in the private sector and their equivalent in the public sector. Review all pertinent laws and policies to ensure that such tax breaks are appropriately enjoyed by targeted workers and employees.
  • Provide tax breaks and other forms of financial assistance to Filipino-owned small and medium enterprises (SMEs) to boost their viability. Various forms of fiscal incentives accorded to transnational corporations (TNCs) and other foreign businesses operating in the country must be redirected to Filipino-owned SMEs.
  • Re-impose tariffs on imported goods that have been cut back or eliminated under past and present trade liberalization programs and international trade agreements to generate revenues for the national government.
  • Implement a serious crackdown against government corruption, bureaucratic wastage, and smuggling that take away much-needed public resources.

IV. Mitigating the Cost of Living and Controlling the Prices of Basic Goods and Services

  • Implement the demand of all private and public sector workers for a substantial increase in their wages through legislation.
  • Impose price control mechanisms on basic consumer goods and provide state subsidy to mitigate sudden increases in prices. Review all pertinent laws and policies to ensure that price control mechanisms are properly implemented and are actually beneficial to consumers.
  • Repeal Republic Act (RA) 8479 or the Oil Deregulation Law of 1998 and RA 9136 or the Electric Power Industry Reform Act (EPIRA) of 2001 to stop and reverse the privatization and deregulation of the oil and power sectors that have led to increasing petroleum prices and electricity rates.
  • Stop all new increases in water and power utilities caused by various automatic rate adjustment mechanisms under privatization contracts forged by past and present administrations.
  • Stop all new increases in mass transportation fares. In the case of public utility jeepneys, buses, and taxis, government must provide considerable assistance to drivers and small operators including, but not limited to, subsidies on petroleum and spare parts. Onerous and additional fees imposed by government agencies on the public transport sector must be scrapped as well.
  • Freeze the increases in tuition and all other fees imposed by public and private schools, colleges, universities, and other educational institutions nationwide. Stop the deregulation of tuition and other fees by repealing the Education Act of 1982.
  • Ensure the availability of affordable food, especially rice. Make available to the general public the P18.25 per kilo rice subsidized by the National Food Authority (NFA), which is currently restricted to holders of family access cards (FACs). The privatization of the NFA must be stopped and its mandate to ensure food security must be promoted, including its procurement of at least 25% of domestic rice production. At the same time, it must maintain its palay support price of P17 a kilo for palay farmers.
  • Review all relevant laws and policies to ensure that affordable, essential, and safe medicines are available and accessible to the people.

V. Ending and reversing the liberalization of trade and investment

  • Reverse all trade and investment liberalization policies to support and promote domestic production. All previously removed and reduced tariffs, quantitative restrictions, foreign equity limits, and other forms of control and regulation must be restored and strengthened to check the undue competition posed by foreign goods and capital on Filipino producers.
  • Stop the implementation of existing bilateral, regional, and multilateral free trade agreements (FTAs) such as, but not limited to, the Japan-Philippines Economic Partnership Agreement (JPEPA) and the various trade deals under the World Trade Organization (WTO). All ongoing negotiations for new bilateral and regional FTAs as well as talks for new liberalization commitments in the WTO must be immediately discontinued.
  • Stop all moves to further liberalize the investment regime in the country such as, but not limited to, House Resolution (HR) 737, which calls for 100% foreign ownership of land and resources in the country through Charter change (Cha-cha).

VI. Orienting the Domestic Economy Towards Self-Sufficiency and Self-Reliance

  • Promote local industries by providing government support and incentives that will allow them to expand and create jobs inside the country.
  • Reorient the import-dependent and export-oriented design of light industry in the country towards the production of basic consumer goods as well as basic producers’ goods to meet the needs of Filipino consumers and domestic economic sectors.
  • Undertake a program for national industrialization including developing the country’s capability to produce industrial goods. Effective state control over strategic sectors and economic activities such as energy, raw material production, utilities, etc must be ensured.
  • Establish and implement a genuine agrarian reform program in the country and undertake rural industrialization to spur development and deal decisively with unemployment, poverty, and hunger.

VII. Addressing the Roots of the Armed Conflict in the Country

  • Considering that poverty and marginalization are the roots of decades-old armed conflict in the Philippines, it is vital to address these issues head-on instead of the current militarist approach, including military operations cloaked under so-called poverty alleviation initiatives. There is a need to resume the stalled peace negotiations, including the talks between the Government of the Republic of the Philippines (GRP) and the National Democratic Front of the Philippines (NDFP), as well as with the Moro Islamic Liberation Front (MILF) to allow discussions on comprehensive and extensive social and economic reforms that the Filipino people urgently need especially amid a worsening global economic condition.

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