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.

Oil deregulation

Firms controlling 92% of LPG market making identical price hikes is clearly dubious

Oil companies have announced identical increases in the retail price of LPG (Photo from Luis Liwanag/AFP/Getty Images)

Something is clearly dubious when four companies that together control almost 92% of the domestic market for liquefied petroleum gas (LPG) implement identical price hikes. Last week, Petron, Shell, Liquigaz, and Total separately announced the same increase of P4 per kilogram in the retail price of their LPG. These same companies have also separately announced identical LPG price hikes of P2 per kg in the second week of January. The rounds of price increases came amid reports of supposed shortage in LPG supply and allegations of overpricing.

Petron controls 37.8% of the domestic LPG market, followed by Liquigaz (24.6%); Shell (20.5%); and Total (8.7%). Only through their collusion can a supposed “shortage” in LPG supply occur and rake in windfall profits from higher retail prices. The greed for profits of these oil companies becomes even more deplorable considering that they have yet to adequately answer allegations of abusive pricing. Bayan, for instance, has earlier estimated that LPG prices should be rolled back by almost P61 per 11-kg cylinder tank to offset the oil firms’ overpricing last year. Even the Department of Energy (DOE) has been saying that LPG retail prices should not exceed P500 per 11-kg tank.

Threats of sanctions from the DOE are apparently not enough to check the abuses of the oil companies, especially the local units of the world’s largest oil transnational corporations (TNCs). Despite “strong warnings” from the DOE and the existence of a DOE-DOJ task force, created under the Oil Deregulation Law to purportedly curb abuses in the industry, not a single oil company has been punished for preying on the consumers. The problem is not simply the proper implementation of the Oil Deregulation Law because this policy by design creates conditions for price abuses to take place.

With thousands of Filipino workers here and abroad being displaced everyday due to the global financial and economic crisis, such abuses, tolerated by the government under the pretext of free market, become increasingly unforgivable. Worldwide, the raging economic crunch, bankruptcies, and economic dislocations have profoundly discredited the so-called free market implemented through policies such as the Oil Deregulation Law. Even the most ardent proponents of free and deregulated markets including the US government are now gradually reining unrestricted economic activities in hope to address what is now widely described as the worst crisis of global monopoly capitalism.

Price control, including effective regulation of oil price adjustments, is among the package of immediate measures that can help mitigate the impact of the global crisis on ordinary Filipinos. As more workers become jobless and underemployed, reasonable prices and affordable cost of living through effective state intervention become more imperative. Indeed, the massive economic dislocation, which even labor officials concede is happening at an alarming pace, further justifies the people’s demand to repeal the Oil Deregulation Law.

Oil deregulation

LPG issues

(Photo from AFP)

Amid reports of a supposed “shortage” in supply of liquefied petroleum gas (LPG) in the country, the House of Representatives committee on energy chaired by Rep. Mikey Arroyo has scheduled a probe (on Feb 3) on the issue. Meanwhile, the Department of Energy (DOE) has warned LPG dealers that they will be charged with profiteering if they retail their 11-kilogram (kg) cylinder tanks at more than P500.

But these efforts of the House and the DOE are futile in the context of a deregulated downstream oil industry. For one, the de facto “price cap” imposed by the DOE on 11-kg LPG tanks contradicts the spirit of deregulation, which is to allow the so-called market forces to determine the prices of oil products.

Interestingly, a quick check at the price monitoring of the DOE posted at its website will show that several LPG brands are in fact being retailed by more than P500. As of January 21, the Caltex LPG retails by as high as P520 in Metro Manila; Catgas, P525; and Philgas, P520. If the DOE is serious with its threat to penalize profiteering LPG retailers, then it only needs to look at its own price monitoring and punish the guilty firms. Then again, how can the DOE penalize oil firms retailing LPG at more than P500 when they can conveniently argue, as they have done many times in the past, that they have simply considered supply, demand, competition, and other market factors in their pricing?

Secondly, any investigation on the reported “shortage” of LPG supply will only meet a brick wall if the House committee on energy will not recognize how deregulation has only strengthened the monopoly existing in the LPG market. Its apologists claim that because of deregulation, “new players” have significantly cut into the LPG market monopolized by the Big Three (Petron, Shell, and Chevron).

But despite the entry of the so-called “new players” under the deregulation regime, almost 92% of the domestic LPG market is still monopolized by only four companies: Petron accounts for 37.8% of the local LPG market, followed by Liquigaz (24.6%), Shell (20.5%), and Total (8.7%). Petron acquired the LPG retail business of Chevron in June 2007 and now retails the “Caltex LPG”brand. Total, on the other hand, has a 15% stake in Shell Gas Eastern Inc. through a joint venture with Shell. Liquigaz is a local subsidiary of SHV Gas, the world’s largest retailer of LPG based in The Netherlands.

Any issue about “shortage” should be adequately explained by these four companies. Any probe on lack of LPG must start on an investigation of these firms, which overwhelmingly control depots, terminals, and refilling stations and hold the widest network of dealers in the country. But will Rep. Arroyo and DOE secretary Angelo Reyes go after them or will they merely pin the blame on the small retailers such as the members of the LPG Marketers’ Association (LPGMA)? But going after these big companies is tantamount to an admission that deregulation has failed, the same policy that Mrs. Gloria Macapagal-Arroyo has vehemently defended against all odds.

As long the downstream oil industry is deregulated, Filipino consumers will have no security in LPG and oil supply. Worse, consumers will continue to be hapless prey to abusive oil companies that charge overpriced petroleum. As of this writing, the country’s four biggest LPG retailers (Petron, Liquigaz, Shell, and Total) have already implemented an identical P2 per kg hike in LPG prices. They claim that the international (Saudi Aramco) contract price of LPG has jumped from $336.5 per metric ton in December 2008 to $380 this month.

But using the Dubai crude price movement as well as changes in the US dollar-peso exchange rate, oil companies should actually still rollback the retail prices of LPG by P60.81 per 11-kg cylinder tank The amount represents the “overpricing” that the oil firms have implemented for the entire 2008.(END)

Oil deregulation

Oil products still hugely overpriced

Despite the continued rapid decline in global oil prices last month, petroleum products in the country remain hugely overpriced as oil firms refused to implement substantial rollbacks in domestic pump prices.

gas-station1Latest estimates by the Bagong Alyansang Makabayan (Bayan) show that as of December 2008, diesel is still overpriced by P9.56 per liter; kerosene, P12.60; unleaded gasoline, P3.57; and liquefied petroleum gas (LPG), P60.81 per 11-kilogram (kg) cylinder tank.

The December average of Dubai crude, the country’s benchmark in pricing oil products, further declined to $40.53 per barrel (bbl), down 18.7% from its November average and 69.1% lower from its peak level in July. Overall, the price of Dubai crude fell by 5.1% a month last year, with steep cuts in the second half offsetting the huge increases posted in the first half of 2008.

On the other hand, the peso weakened against the US dollar last year. It started the year at P40.90 in January, showed slight appreciation in February before depreciating progressively for the rest of 2008. By December, the foreign exchange (forex) rate was pegged at a monthly average of P47.98 per US dollar.

Actual monthly changes in the pump prices of diesel last year have resulted in a net impact of a reduction of P3.17 per liter; kerosene, 13 centavos; unleaded, P9.16; and LPG, P189.70 per 11-kg cylinder tank. These actual adjustments are much lower than the estimated “ideal” adjustment of P12.73 per liter (or P250.50 per 11-kg LPG tank) in rollback, thus resulting in overpricing.

Bayan’s overpricing estimates looked at the monthly averages of Dubai crude and forex and their combined impact on domestic pump prices. The results (“ideal” adjustment) were then compared with actual monthly price changes at the retail stations as monitored by the Department of Energy (DOE). The impact on domestic prices of Dubai crude and forex adjustments varies depending on the levels of these variables. In December 2008, for instance, a $1 per bbl adjustment in the price of Dubai crude translated to a 34 centavo per liter adjustment in domestic pump prices. Meanwhile, a P1 adjustment in the forex rate translated to a 29 centavo per liter adjustment in domestic pump prices.

But it must be emphasized that such “overpricing” estimates simply refer to the disparity between the adjustments in domestic pump prices and global oil prices. It does not reflect the much bigger overpricing that the oil transnational corporations (TNCs) impose on the market through their monopoly control of the upstream and downstream global oil industry.

Global trends

The year 2008 saw a roller coaster ride in prices of crude oil and petroleum products. In the first week of January, global crude oil price breached what analysts called the “psychological barrier” of $100 per barrel mark for the first time. At one point in July, crude oil traded at an all-time peak of more than $147 per barrel in the world market. Then a month later began the steep decline in oil prices and by December, crude oil was trading at under $33 per barrel. From an earlier forecast of global crude oil price reaching as high as $250 per barrel “very soon”, one estimate now predicts prices to fall to as low as $30 per barrel in first quarter next year. Thus, said one analyst, “2008 will go down as one of the most volatile and difficult years ever for oil. It was a year that started with runaway prices and all the makings of the worst inflation in nearly three decades. It is ending with imploding deflation and worst recession in seven decades”.

Some analysts have identified the “combination of the slowdown in the global economy, which is damp oil demand, and higher production from the Organization of Petroleum Exporting Countries (OPEC)” as the major reason for the reductions in world oil prices since July. OPEC, for its part, listed “lower demand especially in the developed countries, increased oil supply, the strengthening of the US dollar and easing of geopolitical tensions” as the factors behind the decline in global prices.

But an independent report released last year by the US Senate pointed to speculators as responsible behind the rapid rise and subsequent steep fall in oil prices this year. The report said that from January to May, index traders poured $60 billion into commodity markets causing a big spike in oil prices. But when the US Congress held hearings in May to July to curb speculation, traders pulled $39 billion from the market. One of the authors of the report summed up their findings, to wit: “The bottom line here is with regard to commodities, money going in pushes prices up, money going out pushes prices down”.

Wild spikes in the global price of crude oil experienced last year underscore the depth of speculation in the oil market. The prices quoted above actually refer to those of so-called “crude oil futures” as traded in the New York Mercantile Exchange (NYMEX) and the London ICE Futures. Futures market does not involve the physical trading of crude oil but are engaged in by giant investment banks and other financial companies and the oil majors to earn huge profits from speculating on the future price of oil. When oil prices were posting record high numbers in the first half of the year, speculation was estimated to account for as much as 60% of global oil prices.

Indeed, the extreme price swings of oil in 2008 further strengthened the claim that speculation, not actual supply and demand, is behind the world oil price movement. Between January and July, the monthly average prices of crude oil increased by 41% (WTI crude) to 50% (Dubai crude). But between July and December, prices declined by 68% (Dubai and Brent crudes) to 69% (WTI crude). Meanwhile, global oil demand in fourth quarter 2008 was pegged at 85.6 million barrels per day (mb/d), down by only less than 1.4% from its first quarter level. Supply, on the other hand, was recorded at 86.5 mb/d in December, down by only less than 1% from its January average. The figures indicate that there are no very significant changes in the supply-demand balance of crude oil last year that could fully explain the very sharp rise and fall in prices.

2009 prospects

The US recession and the global economic crunch are expected to deteriorate in the coming months. The Philippines is already starting to feel the direct impact as trade and investments slowed down. More overseas Filipino workers (OFWs) face the imminent threat of displacement while the domestic labor market further contracts. All this is only mitigated by easing inflation, mainly due to lower oil prices. But even this “mitigating” factor is offset by unabated oil price manipulation under the ODL.

In addition, the global oil market remains vulnerable to speculation and as such local pump prices could again steeply climb in the coming months primarily due to renewed speculative attacks. The volatile financial market, which in one week saw the demise of two of the US’s mightiest investment banks triggered fresh rounds of speculation. Trading of crude oil futures contracts at the NYMEX for October delivery jumped at one point by $25 per barrel on September 22 – its biggest single-day surge ever – one week after the upheaval at Wall Street. The unusual price hike compelled the Commodity Futures Trading Commission (CFTC) to subpoena trading records from some NYMEX traders to look into possible “illegal manipulation” of prices.  Israel’s intensified military attacks against Gaza in December has triggered fresh rounds of massive speculation that drove oil prices up by 23% in the week connecting 2008 and 2009, the most since August 1986.  Prices of oil futures have been on a steady uptrend since Israel started bombing Gaza and further escalated since the start of the ground assault on January 4.

Furthermore, as the global crisis worsens, oil prices become even more vulnerable to intensified speculative attacks. With the bursting of the housing bubble, more speculators are expected to shift from real estate speculation to speculation in the futures market on commodities including oil. The expected slowdown in real demand as a result of the worsening US recession may not deter traders from speculating on oil since the backdrop for continuing speculation such as the political instability in the Middle East remains. Emerging oil price trends in the light of Israel’s military offensives in Gaza clearly illustrate this.

While Malacañang pretends to run after the oil companies for not implementing substantial price rollbacks, the Arroyo administration’s continued adherence to the ODL and continued imposition of the VAT on oil betray its lack of genuine intentions to lower pump prices. Thus, consumers must rely on their own strength to compel Congress to implement the necessary corrections in oil policies that will truly promote and protect the public and national interests.

2008 was indeed a rollercoaster ride in oil prices – but whether international prices shot up astronomically or steeply declined, Filipino consumers in the end still paid for exorbitantly priced oil. 2009 is certainly even more tumultuous as the recession in the US and other major industrial economies deepens and further aggravate the permanent crisis of the pre-industrial Philippine economy. The country’s already chronic job scarcity is expected to worsen as overseas Filipino workers (OFWs) and those employed in affected local sectors such as exporter manufacturing firms start to feel the pinch of the global economic crunch. The situation could easily deteriorate once prices of basic consumer goods and services again unjustly escalate, which is to be expected as long as government insists on the already discredited principles of free market economics such as the ODL.

Policy makers must now seriously rethink the deregulation policy and put in place a mechanism for effective oil price control to ensure reasonable oil prices and help cushion the impact of the raging global crisis.


Worsening permanent crisis amid the global crunch

In her New Year message, Mrs. Gloria Macapagal-Arroyo described 2008 as “tumultuous” due to the global recession. But fortunately, according to her, this “has not become a crisis in the Philippines”. In several occasions, Mrs. Arroyo had credited her “tough, unpopular” decisions for supposedly cushioning the impact of the world economic crisis on the country.

poverty1Malacañang assures Filipinos that the economy will not be in recession (i.e., two consecutive quarters of fall in the gross domestic product or GDP) this year. We are repeatedly told that the economy and the people are resilient. With supposedly correct policies and sound fundamentals, the country could weather the storm rocking the world’s largest industrial economies. However, the definite effects of the recession in the US and other major capitalist economies on the Philippines could not be denied. The National Economic and Development Authority (NEDA) already said that the GDP growth in 2009 will further slow down to 3.6%. The GDP has started to decelerate last year posting a third quarter growth of 4.6% from 2007’s 7.1%.

The structural defects of the domestic economy – fashioned and strengthened through centuries of colonialism and decades of neocolonialism – have tied a great majority of the Filipino people to perpetual and worsening poverty, have denied local productive forces of any real shot at genuine industrialization, and have condemned the economy to a permanent state of crisis. In the face of what some analysts describe as its worst crisis ever, US imperialism, which is primarily responsible for the country’s own permanent crisis, shall become more vicious in its exploitation, plunder, and aggression. This in turn will translate into more bankruptcies, joblessness, and poverty in the Philippines, feeding ever worsening social discontent and unrest, especially under the hugely unpopular Arroyo administration.

Emerging economic trends

1. Falling exports

The US remains the single largest market for commodities produced and shipped from the Philippines, directly absorbing 16.28% of the country’s total exports from January to September 2008. In addition, it is estimated that as much as 70% of the country’s exports are dependent on the US (and EU) market through networks of subcontractors, joint ventures, and affiliates established by its transnational corporations (TNCs) operating in China, the NIES and ASEAN countries, which directly consume a huge portion of Philippine exports of intermediate goods.

This early, the impact of a contracting export market is already being felt by the country. In October 2008, exports fell 14.9%, the worst in seven years. The drop was attributed to falling US demand for electronic products, which comprised 59% of the country’s total export receipts. Electronic exports slumped by 18.9%, as big US-based electronics retailers start to close shop due waning consumer spending.

Because the country’s supposed export-winners are import-dependent, falling imports of materials and components for their manufacture indicate the depth of the impact of the global crisis on Philippine exports in the coming months. The January to September 2008 imports of electronic products declined by 26% as electronic firms cut production due to the global economic crisis, and this will impact on electronic exports in the months ahead. While falling imports ideally could mean increasing local content of exports and thus a positive development, such contraction, in the context of the Philippines, is described by mainstream economists as a “sign of a weakening economy” and a “worrisome situation”.

2. Worsening destruction of domestic jobs and livelihood

As domestic production is in the main dictated by the whims of foreign capital and markets, primarily of the US and other centers of monopoly capitalism, the economy continues to fail to generate enough jobs and livelihood for the people. The huge army of unemployed Filipinos in fact continues to grow as imperialist globalization has further destroyed the domestic productive sectors that could provide local employment. With the worsening of the cyclic crisis of the US economy and global monopoly capitalism in general, domestic production will be further undermined and consequently, millions more of Filipinos will be added to the number of jobless.

Job scarcity is at its worst under the Arroyo administration. From 2001 to 2007, the official annual unemployment rate has consistently remained double-digits, with the yearly jobless rate pegged at almost 11.3% and almost 4 million workers unemployed every year. Due to the global crisis, the overall domestic unemployment situation is turning from bad to really, really worse. The Bureau of Labor and Employment Statistics (BLES) noted the three-year downtrend in what it calls “job opening rate”, a measure of the tightness of the labor market and an indicator of the economy’s ability to create new jobs. From 2005 to 2007, the job opening rate has been progressively declining and was pegged at 1.21%, with agriculture and manufacturing posting the lowest rates.

With the global economic crisis seen to deteriorate in the coming months, Filipino workers should indeed brace themselves for even more severe job insecurity and even more dwindling local employment opportunities. Around 1/3 of manufacturing employment can be found in the EPZs and thus will be directly hit hard by the falling US and global demand. The impact could be greater considering that EPZ locators have also built their own local subcontracting networks to further cut labor costs.

The much-hyped employment driver aggressively promoted by the US-GMA regime, the BPO service subsector, could be hit in the immediate term by slowing demand and possibly investment from the US, the country’s number one BPO client and investor. One BPO firm, Advanced Contact Solutions (ACS), has reportedly downscaled its workforce by about 900 call center agents in November due to declining business volumes from the US. But over the long-term, the BPO sector may continue to thrive precisely because of the never-ending efforts of TNCs in the imperialist countries to cut production cost and increase profits. However, this also means intensified exploitation of the country’s cheap labor as call center agents face even more depressed wages and exploitative and oppressive working conditions. Employment in the BPO firms will thus continue to grow until the next episode of the periodic crisis of the US and other monopoly capitalist countries.

3. Increasing exploitation Filipino migrant workers

The domestic job crisis is mitigated only through labor export, which under the Arroyo administration has been officially proclaimed as government policy for job creation. As of December 2007, there are 8.73 million overseas Filipinos at any given time, of which more than 2.8 million are based in the US (of which, in turn, 2.5 million are immigrants or permanent residents), according to official records.

Like the case of BPO, OFW deployment could be undermined in the immediate term by the raging global economic crisis. Domestic helpers who accounted for the largest portion of newly-hired OFWs last year at 15.6% of the total, for instance, could be immediately vulnerable as households in recession-hit countries like Hong Kong, Singapore, and Taiwan cut costs to cope with the crisis. In the US’s agriculture and service industries, more than 50,000 OFWs were already “possibly” displaced, according to a government report. Readying itself for the possible influx of jobless OFWs, the government has devised a contingency plan to redirect them to other potential foreign labor markets or to encourage those with savings to start a small business.

This betrays the lack of any comprehensive and long-term government plan to invigorate domestic sources of growth that could sustain local job creation.

But then again, since OFWs are a reliable provider of cheap labor power, American and other foreign businesses will continue to hire them, although expectedly at even more exploitative terms. The crisis in fact creates more conditions including the feared increase in number of undocumented OFWs as displaced migrant workers refuse to return home since no jobs await them, that make OFWs even more vulnerable to various forms of abuse and exploitation.

4. Intensifying economic liberalization

To address its economic crisis caused by overproduction, the US and other rich countries are also expected to become more aggressive in pushing for more trade and investment liberalization. Recent pronouncements by the imperialist powers, such as in the APEC and G20 meetings last year, indicate a renewed drive to further pry open the markets of neocolonies to accommodate their surplus commodities and create new openings for their capital to operate and squeeze more profits from the cheap labor and cheap raw materials of the Third World.

The imperialist powers find a ready and reliable ally in the Arroyo administration in its efforts to push for increased free trade. The regime has been aggressively pursuing new bilateral and regional FTAs in a misguided endeavor to increase access to export markets and invite more foreign investments for job generation. Last October, the Senate, under tremendous pressure from Malacañang and the Japanese government and businesses, railroaded the ratification of the Japan-Philippines Economic Partnership Agreement (JPEPA). Also in the pipeline is a Partnership Cooperation Agreement (PCA) with the EU as part of the process to establish an EU-ASEAN FTA. The RP-EU PCA formal negotiations will this year. And finally, the stalled negotiations for an RP-US FTA are expected to be revived soon as the US intensifies efforts to surmount its recession.

In terms of national policies, the US-GMA regime has recognized that trade and investment liberalization may have already reached its limits and thus the only way that the domestic economy can achieve more liberalization is through Charter change (Cha-cha). GMA said so herself in a roundtable with the business sector last October that the “next liberalization has to be through the Constitution… to liberalize economic provisions… mostly the 60-40 restriction (on foreign equity)”.

5. Increasing desperation for foreign capital

While tighter access to credit, aid, and investments may be felt in the immediate term, the export of capital from the monopoly capitalist economies to the neocolonies will continue and intensify. The export of capital remains one of the imperialist means to extract profits from the neocolonies and to accelerate the rate of profits. Usurious debt payments from the neocolonies, for instance, have remained a steady source of financial profits for the banks and financial institutions controlled by monopoly capitalists in the US, Europe, and Japan. From 2001 to June 2008, the cumulative debt service burden (interest and principal) already reached $56.66 billion – more than enough to wipe out the current external debt of $54.81 billion.

However, the bigger danger for the Philippines in the long run is not so much that it will have less access to foreign loans but that commercial creditors and the bilateral and multilateral banks will impose even more usurious terms and impose even more painful restructuring as conditionalities in their desperate attempts to get out of the crisis and increase profit rates.

With more foreign exchange actually being squeezed from the country through foreign direct and portfolio investments, ODA and foreign debt, and through colonial trade as mentioned earlier, it is OF remittances that really save the day for the country in terms of foreign exchange earnings and in keeping the dollar-dependent national economy afloat. Most of the OF remittances come from the US, which accounted for 55.2% of the accumulated remittances from 2000 to September 2008 of around $82.13 billion. OF remittances is the single largest factor that sustains the Balance of Payments (BOP) position, which measures the foreign exchange transactions between the domestic economy and the rest of the world. However, the BOP surplus may not last for long as the global economic crunch intensifies and investors particularly from industrialized countries resort to “risk aversion” as an immediate reaction to protect their wealth. While most OFWs may be able to keep their jobs or are able to find other jobs illegally as discussed earlier and deployment continues, migrant workers face the reality of even cheaper wages or lower incomes. Combine this with even higher taxes and higher consumer prices and cost of living like what is happening in the US, the migrants’ remittance flows will certainly be not as brisk as before which will affect not only the BOP’s current account but household spending and domestic production as well.

6. Aggravating poverty and inequities

The years leading to the three-decade high GDP growth of more than 7% in 2007 ironically have been characterized by a dramatic increase in the official poverty figures. Between 2003 and 2006, the number of poor Filipinos grew by 3.8 million, according to the government. It was also in 2007 that the most number of Filipinos have perceived themselves as hungry, based on the regular hunger survey of the Social Weather Stations (SWS). This phenomenon highlights structural flaws in the country’s economic system which could not only produce enough wealth for its own industrialization but also whatever little wealth it creates is monopolized by TNCs and other foreign corporations and share what is left to their local agents composed of compradors and landlords.

In the face of even more dwindling wealth available in the domestic economy as the imperialist crisis worsens, local compradors and landlords will be even more aggressive to consolidate and expand their control of whatever wealth is left in the domestic economy. As such, bureaucrat capitalism in the form of cronyism has become more pronounced under the US-GMA regime. These cronies, such as Mike Defensor and Enrique Razon, have partnered with big foreign businesses to corner government contracts, investment deals, and privatization projects.

Immediate relief and long-term reforms

The immediate challenge today is to assert for urgent economic relief and policy reforms that will at the minimum address the further deterioration of the state of the domestic economy and the people. With increased uncertainties in the global economy, the key is to promote internal drivers of growth, increase domestic consumption, and in the process invigorate domestic production. This can be achieved through substantial reduction in and effective control of the prices of basic goods and services that the people consume. The 12% VAT and other onerous taxes must be scrapped and proposals for additional burdensome taxes must be vehemently opposed. Neoliberal policies that have allowed global and local cartels to abuse the people with exorbitant prices must be opposed such as the ODL, EPIRA, and ongoing, gradual privatization of the NFA and implement state regulation and increased intervention.

Complementing these efforts to bring down prices and keep them in check is the implementation of a substantial wage hike that will allow millions of poor families to at least lessen the disparity between the cost of living and their daily incomes. Filipino small and medium enterprises (SMEs) must be supported and protected by the government not only to allow them to substantially increase their workers’ wages but also to help them cope with the raging global and local crises.

Domestic resources must be freed up and public investment in social and economic services urgently needed by the marginalized sectors must be significantly increased. This entails the repeal of automatic debt servicing, the cancellation of odious debt, and a big cutback in military spending so that enough resources will be immediately made available for social services such as education, health, and housing. More taxes must be collected from big business, especially the TNCs operating in the country and reverse the trend of declining tariffs on international trade.

The domestic economy and local industries must be protected. The implementation of the JPEPA should be stopped and all means must be exhausted to abolish the treaty. Ongoing FTA negotiations must be opposed, including the concession of additional liberalization commitments in the WTO especially on agriculture and non-agricultural market access. New efforts aimed at more trade and investment liberalization such as through Cha-cha must be decisively derailed.

Finally, the latest flare-up in the periodic crisis of monopoly capitalism and its consequent impact on the weak and pre-industrial domestic economy have made it more imperative to create the material conditions that will allow the economy to break free from its permanent crisis of backwardness and poverty. This necessitates the implementation of a genuine agrarian reform program to encourage the productivity of Filipino farmers and farm workers, who comprise a great majority of the direct producers of wealth in the economy. This will allow agriculture to create the needed economic surplus for industrial development and widen industrial production as it boosts domestic consumption in the countryside where an overwhelming majority of poor and exploited Filipinos live. (END)

Agrarian reform


farmer1Explaining her “no” vote to the Joint Resolution on CARP (Comprehensive Agrarian Reform Program) extension, Representative Risa Hontiveros of the pseudo-progressive party-list Akbayan said that Congress has “managed to obliterate an entire class” with the approval of the said resolution. Obliterate means “wipe out”, “eliminate” or “annihilate”. I wonder how a single act of Congress can wipe out, eliminate or annihilate the entire Filipino peasantry, which for almost four decades now, has been waging a civil war in the countryside to implement genuine agrarian reform.

As if her advocacy of CARP extension with reforms is the be all and end all of the peasants’ fight for land, Hontiveros has reduced the class struggle for effective control of land between peasants and landlords in the cozy confines of the House of Representatives. The Joint Resolution may have set back the peasants’ struggle for genuine agrarian reform in the parliamentary arena, not a surprise in landlords’ turf. But it certainly did not reverse the victories achieved by the peasants’ direct political actions in the countryside to own the land the till. Or will it hinder future triumphs of their agrarian revolution.

As the Bagong Alyansang Makabayan (Bayan) said in its recent statement, “The legislative arena is just one field of struggle by farmers and advocates of genuine agrarian reform. Indeed, the battleground is far wider than the halls of a landlord-dominated Congress. It is in the remotest barangays in the countryside where farmers and farm workers should collectively struggle against oppression and exploitation that stem from landlord domination.

I can assure Hontiveros that the Filipino peasantry will not be wiped out, eliminated nor annihilated any time soon. Heck, they were not obliterated by the political killings and state terrorism by GMA and her armed forces. And no matter what this brazenly anti-people regime does, it could never kill and obliterate an aspiration.

What is certain is that the latest developments in CARP, combined with state repression, Cha-cha, and worsening poverty and hunger, will further fuel agrarian unrest and social discontent. CARP’s extension has only further exposed the rottenness of Congress, and in the process convinced a growing number of tillers that a strong peasants’ and people’s movement is the greatest hope for genuine agrarian reform in the country.


A poem for IBON

IBON's 30th anniversary logo

Last night, IBON had a solidarity dinner with friends and former staff as part of their 30th anniversary year-long celebrations. I was with IBON for almost 10 of those years. Below is a poem i wrote and read for them last night. It’s also my little way of thanking the institution that has patiently taught me a lot. Mabuhay ang IBON at sa susunod pang tatlumpung taon!



tatlumpung taon ka na, ano nga bang ibon ka?

hindi ikaw ang maalamat na phoenix
ng nagliliyab na balahibo at pakpak
na nagsaboy ng nagpupuyos na apoy
at naghasik ng nakasisilaw na liwanag

bagkus isa ka lamang din sa maraming inakay
na napisa sa pugad ng mga gabing hindi tahimik.

hindi ka dumating na tulad ng ibong mandaragit
matang mabangis, kukong matalim
gayunman ang tuka mo’y sintatag at sintalas
ng sa agilang pumupunit sa kalamnan ng bawat
kasinungalingang ipinambubulag
sa bayang minangmang ng karukhaan

ang mga paglusong mo’y sintiyak ng sa lawing
masusing pinag-aralan ang mga hakbang
nilang tagapaglubid ng inimbentong pag-unlad,
nilang tagapagtakip ng katotohanan.

lalong hindi ka rin ang maamong kalapating
nag-iipit sa tuka ng kapayapaang
bulag sa inhustisya, bingi sa pagdaing, pipi sa pagtutol

ngunit ang siyap mo’y madamdaming paghuni
ng tula ng mga api, umaawit ng kanilang kabiguan
ng kanilang pag-asa, ng kanilang tagumpay

ang himig mo’y hindi sa adarnang oyayi sa paghimbing
ang sa iyo’y malakas na kakak ng pagbangon at paggising

loro kang ang dila’y matabil, sa palalo’y sumusugat,
sa hamak ay magiliw.

hindi ikaw ang langay-langayang palayong lumutang sa sta. filomena
hindi ikaw ang ibong umiiyak nang ikulong sa hawla…

tatlumpung taon ka na, ano nga bang ibon ka?

 sa presidenteng maton ikaw ay ipot,
 sa presidenteng peke ikaw ay komunista
 ha! hayaang umipot pa nang umipot
 ang laksa-laksang kawan ng pipit at maya!

Disyembre 15, 2008
Para sa ika-30 anibersaryo ng IBON Foundation Inc.