Is there a labor constituency for the trade policy that Filipino economic technocrats have been pushing for literally four decades already?
There have been changes in the country’s political leadership in the last 40 years. But surprisingly, the trade and economic policy pursued by the government, as spelled out in the Medium-Term Philippine Development Plans (MTPDPs) prepared by Neda under each Administration, has remained fairly uniform and consistent. It hews closely to the original structural adjustment program (SAP) crafted by the IMF-World Bank in the early 1980s. The Philippines was the first recipient in Asia of the SAP program, which calls for the liberalization of the trade and investment regimes, the deregulation of the various economic sectors and the privatization of a number of government corporations, assets and services.
Accordingly, SAP would help transform the economy to become productive, efficient and job-creating. So, given SAP’s lengthy history, it is only right to raise the question: has SAP, with its goal of job creation, developed a constituency among the trade unions, farmer organizations and other organized segments of the working population. This is a question that should have been answered by a recent ILO publication – The impact of trade on employment in the Philippines: Country report (2019). Sadly, this ILO publication failed to address this question.
So what then is the answer? None. One is at a loss looking for a major trade union federation or farmer organization openly endorsing the liberal trade economic policy being pushed by Filipino technocrats, from one Administration to another, since the 1980s.
The reasons are not difficult to find.
First, the projected gains from SAP and trade openness have not been realized. In 1979, the World Bank Mission which recommended the SAP program wrote:
“Based on the Mission’s projection of non-traditional export growth of 18% p.a. and overall manufacturing growth of 8% p.a. in 1977-1985, the manufacturing sector as a whole would create close to one million (i.e. 960,000) new jobs, i.e., 120,000 jobs per year, which is more than one-fifth of the growth in the labor force (600,000 per year)… In all, manufacturing employment is expected to grow at an average annual rate of 5.9% (or about twice its historic rate) and reach 2.6 million in 1985. At the end of the eight-year period, its contribution to total employment in the economy would reach about 15%.”
The foregoing never happened. Instead, many manufacturing firms collapsed in the decade of the 1980s. Of course, this decade also saw the collapse of the Marcos regime, which bequeathed the country with a mountain of debt accumulated by his cronies and the technocrats, who negotiated with the IMF-WB group for loans to finance the Marcos build-build-build infrastructure program.
So let’s take up another economic projection, this time the one used by the trade liberalizers in justifying the Senate ratification of Philippine membership in the World Trade Organization (WTO). At the height of the ratification debates, the government, through Neda, DTI and DA, came up with the following projected gains for the country:
- Stronger agricultural sector that would be able to create half a million new jobs a year and P60 billion a year in gross value added, and would transform the Philippines to become a major agricultural exporting nation;
- Stronger industrial sector that would be able to create half a million new jobs a year (as high as 700,000-800,000 annually) and, more competitive “modernized industries”, plus an assurance that there would be “No dying industries” (for they would “mature” and adopt “new trading behavior”).
The Senate, in its Committee Report No. 702, summed up the situation as follows: the Philippines would be a major winner under the WTO. It warned that non-ratification would mean decline in industry and agriculture, rise in consumer prices and interest rate, budgetary deficit, employment deterioration and trade deficit.
As things turned out, the opposite happened. The Senate warning on the projected outcomes from non-ratification was what came about. As documented in the above-cited ILO study and other studies, including those made by the ADB and World Bank, the industrial sector shrunk in the 1980s-2000s. In the case of agriculture, the outcome is worse: the Philippines has been transformed into a major net agricultural-importing country. But thanks to the remittances of a growing army of overseas Filipino workers, the economy has survived and has even been posting positive growth numbers under an economic phenomenon dubbed by some economists as “consumption-led growth”. The economic sector that has been growing is the services sector, where jobs are generally short-term and precarious in character.
The foregoing developments have naturally angered the trade union movement. A number of highly-unionized domestic manufacturing industries such as the textiles and rubber industries are gone. The once vibrant export-oriented garments industry also shrank, with total employment going down from over a million to just a hundred thousand or so. The big garments unions such as Novelty, Karayom, Aris and so on also disappeared. As pointed out in the 2017 ILO Decent Work Country Diagnostics, the number of workers enjoying benefits under registered collective bargaining agreements number around 200,000 – in a country with 43 million workers (as of 2017)!
And in the export processing zones (EPZs), unionism also has difficulty surviving. Most of the Philippine trade union complaints raised in the ILO Committee on Freedom of Association (CFA) deal with labor problems in the EPZ-based industries.
Under the SAP, the economy has been liberalized, deregulated and now being privatized. But are there unions and farmer organizations rejoicing over this development?