Bu-lat-lat (boo-lat-lat) verb: to search, probe, investigate, inquire; to unearth facts Volume IV, Number 13 May 2 - 8, 2004 Quezon City, Philippines |
LABOR WATCH Workers Need Wage Relief Now The
need of workers for immediate relief from the effects of the deepening
socio-economic crisis in the country is irrefutable while the so-called
disadvantages of a wage hike are either false or exaggerated to dampen the
burning campaign for substantial wage increase nationwide. By
The Ecumenical Institute for Labor Education and Research, Inc. (EILER) It
is a familiar doomsday scenario. Workers’
demand a substantial wage hike in the wake of spiralling costs of basic goods
and services. On cue, big business
screams even louder that inflation, closures and lay-offs would be the result of
any such wage hike. Columnists and
commentators who otherwise wouldn’t deign to speak about workers’ rights and
welfare are suddenly concerned about jobs and job losses, echoing the perennial
refrain of big business. If only
they were as vociferous in their protest against the shameless profiteering of
the oil cartel, the multinational drug companies, and other TNCs in the country,
the privatization and commercialization of social services, as well as the
fanatical liberalization of the economy that is the real culprit behind the
country’s job-loss growth pattern.
In
reality, the need of workers for immediate relief from the effects of the
deepening socio-economic crisis in the country is irrefutable while the
so-called disadvantages of a wage hike are either false or exaggerated to dampen
the burning campaign for substantial wage increase nationwide. 1.
The need of workers for a substantial increase in wages
across-the-board is undeniable. The
current minimum wage of P250 in Metro Manila (where it is highest) is less than
half of the daily cost-of-living, now estimated to be P594 in Metro Manila (as
of February 2004). It can barely
cover the minimum food basket for a family of six as prescribed by the Food and
Nutrition Research Institute (FNRI). The
P30 “emergency cost-of-living allowance” (ECOLA) mandated by the regional
wage boards last year is not even enough for one meal.
Besides, it certainly is not a wage hike since it is not added on to
basic, overtime and 13th month pay.
Contractual
workers are worse-off, receiving between 40-50% less than their regular
counterparts on the average. 2.
Big business is using SMEs as a foil against the just demand of workers
for a wage hike. While
working families experience new depths of deprivation, the share of profits in
the national pie has been growing. The
gross profit margin of the top 1000 corporations averaged 18.6% in 2001 which
was a crisis year. The revenues of
MNCs in the Philippines top 1000 for example have risen 68% between 1999 and
2001. Labor productivity in
industry increased by almost 10% from 1999 to 2003 in real terms yet the real
value of the minimum wage has been eroded by over 18% since 1999.
Clearly
MNCs and the local business elite can afford to pay their workers much more than
what they are currently paying. After
all, they seem to be the only ones benefiting from neoliberal globalization
while workers are forced to choose between hellish jobs or hellish unemployment.
That’s
why big business is forced to dissemble by claiming to have the interests of
small businesses and their workers at heart when they rail against wage hikes.
But in truth, majority of wage and salaried workers are employed in
establishments employing 10 or more employees.
Only 37 percent of workers are employed in firms with less than 10
employees (even if such micro-enterprises comprise majority of establishments).
More importantly, labor productivity or the value-added created by each
worker in establishments with 10 or more employees clearly indicate that their
capitalist owners can afford to raise the wages of their workers by a
substantial margin and still profit.
Note
that government functionaries and neoliberal economists are predisposed to
citing productivity statistics based on gross valued added
(GDP) and total employment of the entire economy
-- including the low-productivity household (informal) sector which is
not covered by minimum wage and labor standards law in the first place.
This understates the productivity of workers and the capacity-to-pay of
capitalist-employers in the establishment (formal) sector -- where wage and
salaried workers are to be found -- by more than three times (taking 1995 as an
example). The
government’s own productivity figures, therefore, justifies a substantial wage
increase. This means that even if wages in the formal sector are
doubled, workers’ would still be creating profits for capitalist-employers.
And since wages make up only around 10% of production costs, the threat
of inflation is merely exaggerated by capitalists and government to rally public
opinion against wage increases. In
reality, a wage hike would only be inflationary if capitalist-employers are
allowed to pass-on the increase to consumers instead of trimming down their
profit margins. If
the government is sincere in its avowed concern for small Filipino
entrepreneurs, then it should address the problems besetting domestic industry
without sacrificing the even more pressing needs of workers.
Filipino
entrepreneurs are overcome primarily by the high interest rates of the local
banking cartel, high power rates and poor infrastructure, unfair competition
from foreign monopolies, their local agents and Malacanang-favored businessmen
who corner concessional loans from government financial institutions. Foreign
competition in the form of cheap imports and foreign investors encouraged by the
government's own neo-liberal policies is pushing domestic industry to the brink. In
this light, workers and small Filipino entrepreneurs have a common interest in
opposing neo-liberal globalization which merely favor transnational
corporations, the cartel operations and rent-seeking of local big business and
their brokers in government. 3.
Even non-wage and informal sector workers support the demand for higher
wages. Over
16 million wage and salaried workers and their families stand to benefit
directly from a legislated wage increase, or two-thirds of the country’s
non-agricultural workforce. Other
measures must be pursued to provide relief and address the basic concerns of the
remainder of the labor force. But
surely only the most narrow-minded and anti-worker cynic would oppose a wage
increase simply because it will not directly benefit all workers.
In
fact, the unemployed, unpaid family workers, the self-employed and irregular
workers in urban poor communities, for example, also support the campaign for a
wage increase because their parents or siblings or relatives or even neighbors
stand to benefit. In short they stand to benefit indirectly.
This is not surprising since the only meaningful safety net and social
security system available to the Filipino poor is provided by the extended
family and the community. Moreover,
unlivable wages actually magnify the unemployment problem and swell the informal
sector because it forces more members of the household to seek employment in
order to earn more for the family. Millions
of children or youth are forced to withdraw from school in order to augment the
family income or at least cut down on family spending.
Six out of ten Filipino families are forced to let their children work to
help the family make ends meet. 4.
Workers must not be forced to choose between jobs and higher wages. Big
business and their client technocrats should not use the economic crisis and
chronic unemployment in the country to corner workers in a “jobs versus wages
and rights” option. The state should address both the need for jobs, job
security and the need for higher wages. Neither
should the poor “investment climate” and chronic unemployment be blamed on
"uncompetitive wages" prevailing in the country.
In the Philippines, the flood of imports due to import liberalization, a
constricted market due to mass poverty, systemic corruption, cronyism and state
abandonment of its rightful duties including the provision of adequate public
infrastructure and utilities have rendered domestic production more costly and
less rewarding compared with mere trading, finance and TV gameshows.
This has been confirmed by numerous surveys of business executives in the
country as well as the DOLE. According
to DOLE figures, over one-fifth of all establishments resorting to closures and
retrenchments in the first quarter of this year cited "lack of market/slump
in demand" as the principal reason for the decision while less than 1
percent cited wage rates as a problem.
Weak demand was the second most frequently cited reason for workers
displacement. The top excuse is
"reorganization/redundancy" which is the reason cited by half of all
establishments who retrenched workers from January to April in 2002.
This is often a euphemism for laying-off regular workers to be replaced
by contractuals, agency-hired workers or subcontractors.
The
proximate cause of increasing distress in the domestic economy and the real
threat to jobs is the crisis of overproduction in the
world economy -- which is exacerbated by the wanton liberalization of the
domestic economy according to the dictates of US-controlled multilateral
institutions, namely the IMF-WB-WTO. Even
before the Asian financial crisis, many local
industries were already stagnant or in decline in the face of competition
from foreign imports. This was made
worse by the country’s accession to GATT-WTO in 1994 – championed by then
Senator Macapagal-Arroyo. Barely a
year after, our trade deficit in agricultural products quadrupled and has
widened each year since. The
Kilusang Magbubukid ng Pilipinas (KMP) estimates that around 400,000 rice
farmers, 66,000 corn farmers, 200,000 fisherfolk and nearly 500,000 sugar
workers and farmers have been displaced by the flood of imports under the WTO
regime. As a result, our
unemployment rate last year is the highest recorded in 4 decades and this year
may even be worse. The
severe and chronic unemployment crisis in the Philippines should not be used as
a pretext for depressing workers’ wages and trampling on workers rights.
Rather, it should compel the Arroyo government to rethink its basic
development strategy and abandon its fanatical devotion to neoliberal
globalization. 5.
“Global competitiveness” should not be based on providing cheap and
oppressed labor. According
to the World Competitiveness Yearbook 2003, the Philippines’ ranking fell in
four major criteria: economic performance, government efficiency, business
efficiency and infrastructure. According
to the study conducted by the Asian Institute for Management (AIM), the
Philippines’ primary strength is centered on the labor market, particularly
the abundance of skilled labor, the availability of competent senior managers
and the wealth of finance skills available.
This is contrary to claims that labor is to blame for the country’s
so-called eroding global competitiveness. Indeed,
lower wages do not necessarily attract more investments. Around 80 percent of
the global flows of foreign direct investments in the last decade have been
concentrated in the US, Japan and the other rich countries of Western Europe.
Even in Asia, countries with higher wage levels compared with the
Philippines such as Hong Kong, Singapore, Taiwan and South Korea, attract
greater foreign direct investments. Indeed,
“market size” is an important consideration for investors - reckoned not
only in terms of the population’s size but also its purchasing capacity.
Clearly encouraging productive investments should not preclude raising
people’s incomes.
The
current downturn in the global economy must be seen in its proper light.
In the wake of massive mergers among international monopolies and the
depressed incomes of the broad masses, the global crisis of overproduction now
affecting all types of goods - from raw materials to light consumer goods to
high value-added manufactures - is forcing MNCs to shutdown plants or downsize
operations. Neo-liberal
globalization is prompting MNCs to “rationalize” their operations by closing
down plants in many countries while expanding their production in other plants
in a few countries according to the global profit calculus of international
monopolies. Competing
for foreign investments against 120 or so countries that make up the rest of the
third world by offering ever cheaper labor, more tightly fettered unions and
workers deprived of security and democratic rights will only condemn workers to
suffer an unending downward spiral of wretchedness and indignity.
Indeed,
foreign investments is far from being the panacea to Philippine underdevelopment
as it is held up to be by government and business.
Historically,
foreign investors have taken out more resources from the Philippines than they
have put into the economy in terms of profit remittances, royalty payments,
transfer pricing and so on. Moreover,
foreign investments in the Philippines has not resulted in technology transfer
or industrialization while their contribution to employment generation has been
minimal. Genuine
development should not just trickle down but should be directed towards
uplifting the broad masses from poverty and penury.
It cannot be dictated by market forces which reward owners of property
and capital while immiserizing the majority with no means to live except
backbreaking toil. Posted by Bulatlat.com (EILER
is
a non-profit institution providing research and education services for workers
and for the advancement of genuine trade unionism in the Philippines. We want to know what you think of this article.
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