With Determination (and Some Noise), Union Defeats Giant Firm’s Zero-Wage Hike Policy

Labor Watch

CABUYAO, Laguna, Philippines — As with millions of workers around the globe, the first half of the year has been unkind to Filipino workers of NXP (The Next Performance), a leading global semiconductors company with operations at the Light Industry Science Park in this town. In January, 400 of their fellow workers were laid off. And, since January, the wage increases stipulated in their collective bargaining agreement (CBA) have been denied them.

Citing the global crisis, NXP has announced that it would observe this year a zero-wage increase policy in all its companies. Ad Boon, NXP’s regional director for Asia, admitted in a dialogue with union and federation leaders of NXP Cabuyao last week that they were reneging on the CBA they had hammered out with different NXP unions.

Indignation at the workplace greeted the announcement. As far as the union is concerned, NXP appears to be no different from other leading global companies that are, during good times, stingy in granting increases to employees, even more so during bad times. The company is using the crisis to maximize its profit-taking, officials of the union said.

Aleta Mariposque, executive vice-president of the union of workers in NXP-Cabuyao, said NXP did not have to violate its contract with the workers because the company is financially capable to keep its part of the bargain.

NXP is a leading semiconductor company founded by Philips more than 50 years ago. Headquartered in Europe, it has about 28,000 employees working in more than 30 countries and, according to its website, its gross sales in 2008 amounted to US$5.4 billion. “NXP creates semiconductors, system solutions and software that deliver better sensory experiences in TVs, set-top boxes, identification applications, mobile phones, cars and a wide range of other electronic devices,” the website said.

Series of Attacks on Labor

Even before the current global crisis erupted, NXP had been implementing “exploitative measures” to further maximize its profits by squeezing its workers dry and evading paying its taxes in full, the union said. NXP’s private equity investors such as KKR, or Kohlberg Kravis Roberts, are known abroad for taking over profitable companies to squeeze out maximum profits in as short a period of time as possible, often by imposing harsher job conditions, pocketing excessive fees and dividends and executing some adroit tax-evasion techniques.

NXP’s 2006 takeover of Philips Semiconductor in the Philippines, including its plants in Cabuyao and Calamba, signaled a change for the worse in industrial relations. Before NXP, the Philips union had struggled to achieve better wages for all its workers during the last 20 years. When NXP and the private equity consortium behind it took over, it boldly announced that to increase their share of profits, labor costs had to be reduced.

It immediately implemented massive layoffs and pay cuts, imposed forced leaves, replaced permanent workers with contractual workers, and made workloads heavier. Since NXP took control of Philips Semiconductors, it has reduced its global workforce from 37,000 to 28,000.

In the Philippines, NXP sold off the plant in Calamba in 2008, resulting in some 2,700 workers losing their jobs. They held on to NXP Cabuyao, but they have been outsourcing some of its product lines. It transferred the production of two semiconductor parts to NXP China last year, affecting 150 workers. Amid the global shuffling of production lines, hundreds of jobs were lost as a result, fanning greater job insecurity and pushing 1,200 senior workers into accepting NXP’s Management-Decided Separation Program or MDSP, an early retirement scheme described by the NXP Cabuyao union as “honey-coated mass termination.”

From 5,700 workers in 2006, NXP’s total Philippine workforce was reduced to 1,700. The MDSPs had mainly targeted senior workers as they usually receive higher wages. They were replaced by younger workers with lower wages and physically higher tolerance for more punishing work quotas.

But the workers and their union were now fighting back. No longer content with symbolic protest actions, the workers actually staged protest actions — so that the NXP management can have a “better sensory experience” of their demands, the union said.

Last March, more than 95 percent of workers went to work wearing black shirts one day, red shirts the next, to demonstrate their unity. The management promptly teleconferenced with the union, abandoning their zero-wage increase policy and promising the workers that it would give the stipulated wage increases, but only in July.

The workers resoundingly rejected the management’s offer. They held a widely attended general meeting, something the union had not done in a long time. In the said meeting last April, members were agitating for stronger mass actions.

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