The Effects of Globalization and Economic Restructuring on Philippine Labor Policies and the Responses of the Actors of the Philippine Industrial Relations System1

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Abstract

The Philippine labor policies and standards are based on international labor standards (ILS). With the present intensification of globalization and the resulting economic restructuring, there are agitations from certain groups that these high labor standards need to be liberalized since the country is experiencing “jobless growth” in the formal industrial sector and the use of capital intensive work processes is being encouraged in the face of very high unemployment and underemployment rates of 10.8% and 17.6% respectively.

This paper argues against the suggestions of liberalizing labor policies and standards which may lead to the race to the bottom lowering of wages, benefits and working conditions among workers in the underdeveloped and developing countries as their comparative advantage and the possible retaliation of developed countries through the imposition of their high labor standards as a trade protectionist device in order to protect the jobs of their local labor force earning high wages and benefits.

The major actors of the Philippine IR system- government, employers, trade unions and civil society groups- have responded to the said imbalance between high labor standards in the face of high unemployment and underemployment rates.

This paper advocates the retention of Philippine labor policies based on international labor standards as the correct path in the attainment of economic growth and development that will result in social equity and decent work.

Globalization Trends in Asia

Globalization was more intense in Asia, particularly East Asia which contributed to the fast growth of the region today.

Globalization in Asia is characterized by the increasing participation of foreign capital, including small and medium scale investors from the NICs (Taiwan, So. Korea, Singapore, Malaysia, China, etc.) in the enterprises of the developing economies including infrastructure and energy development projects which were previously monopolized by the state. These foreign investors favor the less developed countries due to cheap labor costs.

The impact of globalization on employment was favorable to South Korea, Thailand, Singapore and Malaysia. It is not as successful in the Philippines.

Effects of Globalization to Philippine IR Actors

Globalization in the Philippines was accelerated since it joined the WTO and APEC in 1990s. The country was a recipient of several structural adjustment loans from the WB-IMF.

Figure 1. Responses of IR Actors to Globalization

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The Gove

The Government

The government adapted the development strategies prescribed by the WB-IMF whose main features are trade and investments liberalization and globalization.

The schematic diagram in Figure 1 illustrates the Four “D” strategies that the Philippine government initiated under former President Fidel Ramos- Deregulation, Democratization, Devolution and Decentralization. Among the typical economic programs of the government include reduction of subsidies to state enterprises, privatization, import liberalization, foreign exchange decontrol and investments liberalization.

Privatization and build-operate-transfer (BOT) projects resulted in the decline of state ownership of big enterprises and infrastructure. This strengthened private business cartels which may disadvantage the workers and consumers.

Globalization was not able to arrest the increasing income inequality among countries and regions of the world. In the Philippines, income inequality among classes and among regions remained (Sibal 2002). As will be explained later, the country failed to develop its agro-industrial base and did not create enough jobs to absorb the unemployed and the new entrants in the labor force. The trickle down effect to the poor did not materialize.

The widening social inequity as a consequence of WTO’s trade...
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