Higher Growth, Fewer Jobs

Leonor Magtolis Briones
Freedom from Debt Coalition (FDC)

In Metro Manila, Philippines, towering skyscrapers reach for the sky amidst constant feverish construction activity. At the same time, sprawling squatting communities engulf housing "villages" of the middle–class and the affluent. The world–famous garbage heap, Smokey Mountain, is being bulldozed to make way for a loww cost housing project even as another mountain of garbage is rapidly accumulating in an Quezon City. Glittering parties and receptions are held in exclusive enclaves while outside on the streets, the poor are selling cigarettes or themselves or simply begging.

Vast stretches of empty wasteland greet the visitor who visits the lahar–stricken provinces of Pampanga and Zambales, site of the eruption of the mighty Mt. Pinatubo. At the same time, the site of the former U.S. Base in Zambales, now converted into an export processing zone as well as a popular tourist destination, is humming and bustling with activity.

The devastation wrought by natural disasters, combined with traditional neglect of farmers and agriculture has driven multitudes of jobless rural folk to the cities. Every day, thousands of professionals and college students leave the country and brave the life–threatening hazards of employment in the big cities of Asia, the Middle East, the United States and Europe.

This is the Philippines, a developing country –a land of good news and bad news, with higher growth but fewer jobs.

At Last... Economic Recovery?

In July 1995, Philippines President Fidel V. Ramos triumphantly reported in his State–of–the–Nation address that in 1994,Wper capita GNP grew at 5.1%. During the first quarter of 1995, it grew by 5.5%. This achievement was praised by multilateral institutions, the business sector as well as the local and international media. The government announced that economic recovery was complete. It projected that by the year 2000, the Philippines would definitely reach NIC status and join the other tiger economies of Asia.

Poverty Midst Growth

While President Ramos was reporting the rising GNP to Congress, 100.000 angry protesters milled outside, waving placards and streamers stating that GNP was actually 70%. But to them, GNP meant "Gutom na Pilipino", or hungry Filipinos. For even as the GNP was growing, a survey by Social Weather Stations, a respected research institution, showed that more than 70% of Filipinos considered themselves poor, or approximately 49 million.

Government statistics officially calculated poverty incidence in 1994 at 35.7% or 4.558.974 families approximating 27.5 million individuals. These figures were attained after the formula for calculating poverty thresholds and poverty incidence were changed amidst criticism from NGOs and economists.

The Philppines reflects the paradox of many so–called middle–income developing countries: poverty, unemployment and social disintegration continuing to out pace gains made in economic growth.

The Poorest Filipino

Poverty tends to be more prevalent among cultural minorities and non–Christian communities in the Philippines. Thus, while the government reports show decreases in the incidence of poverty in 10 regions, increases are registered in the ARMM or Autonomous Region of Muslim Mindanao at 9.8%; CAR or Cordillera Autonomous Region occupied by non–Muslim cultural minorities at 6.6%; and Region I which is in Northern Luzon, at 1.3%.

Poverty among the cultural minorities is largely a result of decades of government neglect, discriminatory policies, as well as internal armed conflict. It is not surprising that the Autonomous Region of Muslim Mindanao has the highest level of poverty incidence at 60.5%. The Cordillera Autonomous Region where non–Muslim cultural minorities live, follows with 55.4% poverty incidence. Region 12, located in Central Mindanao, home of Muslim communities, has poverty incidence of 54.8%.

These regions have seen generations of bloody rebellions which have been brutally suppressed by the government. As in all cases of armed conflict, innocent civilians, particularly children and women have been brutalized by decades of violence. They have had to flee their homes and farms, even as many were killed in the crossfire or used as hapless hostages. In such a scenario, appalling poverty is the inevitable result and consequence.

Income Distribution

Government statistics on income distribution confirms the grim picture of poverty amidst rapid economic growth. In 1994, the richest 20% of the populaton cornered 52.4% of total national income while the lowest 40% of the population had to survive with only 13.56% of total income.

The Gini coefficient, a measure of income disparity further confirms the dismal news about poverty. In 1988, a boom year for the Philippine economy, gini coefficient was 0.4446; in 1994, likewise a growth year, gini coefficient went up to 0.4539.

Cold statistics help explain contrasting images of the Philippines: swimming pools in exclusive "villages" and unimaginable filth in crowded squatter colonies without water; commercial districts overly covered with lights and rural villages blanketed in darkness; cellular phones, internet, sky cable TV, and wastelands created by lahar and devastated by typhoons; people eating five times a day and others hardly getting one meal a day–all in the booming Philippines.

It is obvious that economic growth does not automatically bridge the bottomoless abyss that separates the absolutely poor from the mega rich. It cannot cross the chasm that dooms 27.5 million Filipinos to penury without the intervention of government, civil society and the international community.

Rising Unemployment, Persisting Underemployment

In 1992 unemployment, as defined by the Philippine government stood at 9.8%. Per capita GNP growth at that time registered at .06%. By 1993, with the dramatic rise to 2.77% in per capita GNP growth, unemployment went down slightly to 9.3%. At the end of 1994, with even higher growth at 5.1%, unemployment paradoxically rose up to 9.5% (See Table 1) By April 1995, with GNP growth still climbing up to 5.5%, umeployment shot up to 11.9%.

The picture in terms of unemployed human beings is telling: 1992, 2.594 milion; 1993, 2.497 million; and in 1994 2.622 million. Truly, a scenario of jobless growth! (See Table 2)

The underemployment picture is even more disturbing. More than 20% or one–fifth of those employed in the country are actually underemployed. In 1992, the underemployment rate stood at 20.5% and shot up to 21.7% in 1993 and went down slightly in 1994 at 21.4%. Absolute numbers of underemployed consistently increased from 4.866 million in 1992 to 5.824 million in 1N93 and 5.353 million in 1994.

Even as government figures are worrisome, actual problems of employment, unemployment and underemployment may even be worse. Official definitions of these terms are so loose that a person who works for one hour in a week can be considered "employed". Thus, the seemingly high levels of employment disguise real unemployment and underemployment.

Because labor laws are often times not implemented due to inadequacy of government monitoring, working conditions in many areas are generally appalling. Exploitation is rampant, even in Metro Manila; wages are generally below living standards, overtime is not usually paid and social security is often unavailable.

To illustrate the quality of employment, the construction sector had the highest growth rate at 12.5% in employment in 1994. In this sector, workers generally work on a project basis, don’t have social benefits and work under great physical risk and difficult working conditions.

On the other hand, in the manufacturing sector where the possibilities for permanent jobs, social security and better working conditions are higher), growth in employment was only at 4%. In the agricultural sector, employment had negative growth at –6.4%. Rural workers outnumber urban workers in the labor force: thus, reduction in agricultural employment is a major problem.

Export of Human Beings

In 1975, the number of Out of Country Workers (OCWs)who left for abroad totaled 686.461. The number was slightly lower in 1993 at 684.831. In 1994, the number of Filipinos who left surged to 719.602.

Rightly, Filipino OCWs are called the "unsung heroes" of the country. Aside from easing unemployment pressures, they regularly remit foreign exchange earnings which shore up the domestic economy. In 1992, OCWs remitted $1.8 billion through the banks. By 1993, they contributed $2.2 billion. In 1994, they sent home $2.9 billion. The following year registered a dramatic increase. During the first nine months of 1995, OCWs remitted $3.6 billion. Government officials admit that remittances which are not coursed through the banks (e.g. by hand through returning fellow workers) might even make this figure much larger.

Source: National accounts of the Phi. NSCB. Current labor statistics, Dept. of Labor and Employment.

A former Finance official has observed that OCW remittances constitute the only inflow item in the balance of payments which is consistently positive and is steadily increasing, unlike inflows from trade which have been in deficit since 1986.

While the financial gains for the Philppine economy are impressive, the human costs of exporting human beings abroad for

work are overwhelming. Exploitation stalks the OCW at all steps of his other odyssey. The typical OCW borrows money at outrageous interest rates to pay recruitment agencies. Falsification of travel documents, bribery and misinformation on actual compensation attend their deployment. Domestic helpers endure exploitation, both psychological as well as physical.

The internationally known cases of Flor Contemplacion who was hanged in Singapore and Sarah Balabagan who was sentenced to death in the United Arab Emirates are dramatic examples of the high levels of suffering that OCWs endure.

Human costs are borne not only by the OCWs but their families as well. The social impact on children and spouses is well documented. Nonetheless, this export of human beings continues unabated.

Gender Aspects of Employment

While both men and women are subject to the difficulties of employment, underemployment and unemployment, the women are especially vulnerable. It is recognized that while women contribute more than their share of work in the home, the farm and the workplace, it is not generally recognized publically or in government statistics.

In rice farming for example, 75% of the various phases of rice production are done exclusively by women. Much of household chores and the functions of childrearing are done by women, even as they also work outside the home.

While men outnumber women in the labor force, the rate of unemployment for women is higher. In 1992, it stood at 11.5% compared to 8.8% for men. In 1993, unemployed women comprised 10.7% of the labor force while men constituted 8.4%. In 1994, they constituted 10.56% of the labor force compared to 8.84% for men.

Since 1974, male OCWs have consistently outnumbered female OCWs. However, female OCWs have been steadily increasing. By 1994, women workers who left for abroad outnumbered men by a ratio of 60:40. Thus, 431.761 women went abroad compared to 287.841 men.

It has been observed that while women earn less than men, they tend to remit a larger proportion of their wages.

In 1995, a presidential commission headed by a former Supreme Court justice strongly recommended the banning of young women from working in countries where they were especially vulnerable. This recommendation has not been implemented by the government. Obviously the possibility of reduced dollar remittances was a major consideration in this lack of enforcement.

Employment and Civil Society

Labor unions are among the most active and aggressive in pushing for pro–people policies and programs. Unfortunately, only a very small percentage of the labor force is actually unionized.

From 1992–94 which are considered periods of moderate growth for the Philippines, the number of labor union members remained minimal in relation to the total work force. In 1992, unionized workers constituted 3.45% of total labor force. In 1993, this increased slightly to 3.55% and 3.54% in 1994. It is clear that increased economic growth was not accompanied by an increase in worker membership in labor unions. (See Table 3)

The number of unionized members in relation to total number of employed is not any better. In 1992, they constituted 3.8% of total employed; in 1993, 3.9% and in 1994, still at 3.9%.

Not surprisingly, a majority of the unionized workers are in the National Capital Region, where Metro Manila is located. In 1992, 57.57% of unionized workers were in Metro Manila; in 1993, the number very slightly dipped to 57.52% and in 1994 it went up minimally to 57.61%.

Aside from the question of largely unorganized labor force, many additional problems beset the labor sector, ranging from company controlled unions, rampant unfair labor practice, as well as deficient monitoring and enforcement of labor laws on the part of the government.

The fact that only a very small portion of the labor force belongs to unions is an indication of how vulnerable and unprotected workers continue to be in the Philippines.

In spite of its minimal size, the impact of labour union activity on employment issues as well as other national concerns is still significant. Woerkers always form the bulk of massive demonstrations against economic policies such as oil price increases and taxes. Their active participation contributes to the success of nationwide strikes.

One significant development during the past three years was the drastic decrease in the number of labor strikes filed. In 1992, 1,209 strikes were filed involving 47.797 workers and 724 wor days lost. In 1993, the humbr went down to 1,146 involving 35.199 workers and 710 work days lost. By 1994, this had drastically gone down to 73 strikes involving 26.888 workers and 37 work days lost.

However, a number of labor disputes that did take place during these years tainted with violence. In December 995, for example, three simultaneous assasination attempts on leading industrialists (one of which was successful) were generally perceived by police authorities to be related to business labor disputes.

Employment and the National Budget

While government considers employment generation and related problems crucial to development, budgetary allocations are limited. In 992, the budget for the Department of Labor and Employment constituted .28% of the national budget. In 1993, this improved a little and increased to .31%. By 1994, it increased minimally to .36%. In other words, the budgetary allocation for labor and employment for the past three years was consistently less than 1/2 of 1% of the national budget! (See Table 4 - 5).

Allocation for the different regions of the country are equally telling. Nearly two–thirds of the entire budget of the Department of Labor and Emloyment are allocated to "national projects". As expected, the National Capital Region received the highest regional allocation.

Employment and Multilateral/Bilateral Aid

Since 1992, foreign–assisted projects from multilateral and bilaterl institutions has declined significantly. In 1992, the total peso value of foreign assisted projects stood at P 2.905.965. (Approx. $116.238, 6) In 1993, this drastically went down to P 612, 811 (Approx $ 24.955, 56) in 1994. Only a little over 1% of multilateral/bilateral aid was for projects focused on employment generation: 1.45% in 1992, 1.04% in 1993, 1.34% in 1994. (See Table 6).

Summing Up; The Good News and the Bad News

To sum up: the good news is that the economy is growing. The bad news is that poverty remains a pernicious problem in spite of government claims of declining rates of over–all poverty incidence.

The good news is that the government reports that employment is high. The bad news is that growth is not accompanied by a decrease in unemployment. Unemployment is rising, the latest figure being 1.9%.

The good news is that OCW remittances are steadily increasing and contribute significantly to balance of payments. The bad news is that the government did not ban the export of young women entertainers and domestic helpers to certain countries mainly because of the potential loss of national revenue it represented.

The good news is that labour unions participate actively in the development process. The bad news is that they form a tiny portion of the entire work force.

The good news is that the number of strikes and work days lost has gone down significantly. The bad news is that some of these strikes were marred by violence.

The good news is that the Philippine government has created structures and mechanisms to implement commitments to the Social Summit and Beijing, represented by the establishment of a national the Social Reform Agenda (SRA) and the government Anti–Poverty Commission. The bad news is that the budgetary allocations for enhancing labor and employment remain minimal. The same goes for foreign–assisted projects.

The best news is that more and more, from the Social Summit and Beijing, civil society are monitoring implementation of government commitments.