Globalization – not Wage Hike – is the Culprit for Job Losses

Globalization has resulted in the destruction of domestic and export manufacturing enterprises, since they cannot compete with cheaper dumped products in the local markets nor in the global export market against manufacturing powerhouses such as China, and this is why the country is shedding jobs.

BY IBON FOUNDATION, INC.

Posted by Bulatlat

Independent think-tank IBON Foundation belied claims by the National Economic Development Authority (NEDA) that the proposed P125 across-the-board wage hike currently pending in Congress would result in the loss of 1.1 million jobs.

IBON research head Sonny Africa last week said that since 1995, the year when the Philippines became a member of the World Trade Organization (WTO) and began liberalization of the economy in earnest, local establishments have ceased operations or retrenched workers mainly due to financial reasons (i.e. lack of capital, high production costs) and reorganization or downsizing of firms.

Only a few firms have reported closing down or resorting to retrenchment as a result of increases in the minimum wage. (See Table) From 1995 to 2006, there were nine wage increases in the National Capital Region.

Table. Establishments Resorting to Permanent Closure/Retrenchment - Workers Affected (1995-2005)

Product Demand                                     178,341

Lack of Market / Slump in Demand      164,123

Uncompetitive Price of Products            10,395

Competition from Imports                          3,823

Financial                                                   214,854

High Cost of Production                          53,715

Lack of Capital                                           54,964

Peso Depreciation                                       9,583

Financial Losses                                      103,372

Others (Economic crisis)                          15,583

Organization                                             209,810

Reorganization /Downsizing /Redundancy       170,958

Change in Management / Merger           33,789

 Lack of Raw Materials                             24,976

Minimum Wage Rate Increase                  3,044

Others                                                         25,990

Total                                                         660,266

Source: Department of Labor and Employment

Note: Details may not add up due to rounding

Globalization has resulted in the destruction of domestic and export manufacturing enterprises, since they cannot compete with cheaper dumped products in the local markets nor in the global export market against manufacturing powerhouses such as China, and this is why the country is shedding jobs, Africa said.

Africa also hit the Department of Labor and Employment (DoLE) for asking Malacañang to veto the wage hike bill.

“It is ironic that the DoLE, which should be defending workers’ rights, is instead pushing for a rejection of a proposed bill that will give the workers respite from the sky-rocketing cost of living,” he said. Posted by Bulatlat

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