Export Processing Zone Workers Victims of Unfair Labor Practices

The minimum wage in the CEZ is pegged at P272 ($6.03 at an exchange rate of $1=P45.04) barely providing for the family’s basic needs even if both husband and wife works; workers labor under extreme conditions such as working non-stop for 48 hours, not being allowed to eat or go to the toilet during working hours, and are made to handle hazardous chemicals with minimal protection. When they form unions and go on strike, they are violently suppressed.

Philippine Collegian
Posted by Bulatlat
Vol. VII, No. 34, September 30 – October 6, 2007

It was almost midnight. The picket line in front of Phils-Jeon Garments Factory, Inc., a transnational corporation (TNC) inside the Cavite Economic Zone (CEZ), was nearly deserted. Some 130 workers were on strike due to the management’s refusal to bargain, forced leave of regular workers and illegal termination of their union president. Aling Norma (not her real name) a Phils-Jeon worker, is inside a makeshift tent with a co-worker when men wearing ski masks entered their tents. “Tinali kami [ng mga lalaki], piniringan at binusalan. Pagkatapos, isinakay kami sa sasakyan kasama yung mga gamit namin. Inupuan kami para hindi kami makita ng bantay. Maya-maya ibinaba kami sa labas ng CEZ” (We were tied, blindfolded and our mouths covered. We were forced to ride on a vehicle, with our belongings, and sat on to conceal our presence. Then we were released and left outside the gates of CEZ.) Aling Norma recounted.

The CEZ is one of the country ’s export processing zones (EPZs), employing over 80,000 workers. EPZs are categorized as special economic zones (SEZ), or “selected areas which have the potential to be developed into agro-industrial, industrial, tourist/recreational, commercial, banking, investment and financial centers,” as stated in the Special Economic Zone Act of 1995.

At present, there are 262 factories inside CEZ, about 240 of which are partly or fully-owned by foreign investors, among them Phils-Jeon and Chong Won Fashion, Inc.

The lure of incentives

Business establishments inside SEZs enjoy fiscal incentives that are exclusively granted by the government. For instance, while corporations outside SEZs are required to pay a 32 percent income tax, the companies in SEZs are exempt from paying taxes, with the condition that five percent of the annual gross income of all establishments inside the zone be remitted to the national government. Any capital equipment or machinery used in production is not subject to real property tax, while other establishments have to pay taxes for equipment bought and owned. Also, losses in operations for the first 10 years are deducted on the taxable income for the six years following the year of loss. However, since TNCs are concentrated in SEZs, these incentives usually benefit foreign investors alone — to the detriment of local industries which, given their small capital, cannot compete with big corporations.

Aside from these incentives, SEZs have strategic locations in Cavite, Laguna, Batangas, Rizal,
Quezon and similar areas where goods are traded through a network of international seaports and airports. The Philippine Economic Zone Authority (PEZA), the governing body of SEZs, ensures that there are no trade disruptions by monitoring the performance of workers.

Labor leaders, however, contest the composition of the PEZA, which includes representatives of the Department of Trade and Industry, Department of Finance, Department of Labor and Employment, Department of Interior and Local Government, National Economic and Development Authority, Bangko Sentral ng Pilipinas, and the ecozone business sector. Meanwhile, SEZ workers are unrepresented in the regulating body.

Labor leaders further assert that both the national government and PEZA seek to maximize the labor market through flexibility schemes that allow the expansion of TNCs. Among these flexibility schemes are depressed wages, excessive quotas, poor working conditions, and union busting.

Exploitative practices

The minimum wage in the CEZ is pegged at P272 ($6.03 at an exchange rate of $1=P45.04), an amount based on the needs of the workers and the capability of the capitalists to pay. Despite this, some factories inside the CEZ pay 25 percent less than the minimum wage for contractual workers. However, according to the National Wages and Productivity Commission, a family of six in Cavite needs a daily income of P669 ($14.85). Thus, even with both husband and wife earning a minimum wage, their combined income will still fall short of the required daily income.

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