5,000 Subic jobs affected by global crisis

C. Luzon records 1,400 job losses since Nov

More than 1,400 workers in the provinces of Pampanga, Bataan and Bulacan were retrenched since November last year as the global economic crisis starts to make its presence felt in the country.

In her report in GMA News’ “24 Oras," Rawnna Crisostomo said most of the affected workers came from electronics and garments industries.

In Subic Bay Metropolitan Authority (SBMA), about 5,000 workers from 32 affected companies were either retrenched, forced to go on leave, or are experiencing reduction in their work hours, the report said.

SBMA Armand Arreza, however, said the number is comparably low compared to the 87,000 employed inside the ecozone.

He said that those who were retrenched will undergo “re-tooling," which meant they would be transferred to other industries like hotels and restaurants.

Benigno Ricafort, president of Clark Development Corporation, said that despite the layoffs, the business condition in the area is still in good condition. In fact, he said more businesses are expected to come this year.

"Meron kaming apat na malaking companya. Yung isa sa electronic, information technology… projection namin when they operate in June is (there will be) 3,000 (job opportunities)," Ricarfort said.

["We've four big companies, one in electronics, information technology... Our projection is more than 3,000 job opportunities will be open when they start operations in June."] - AIE BALAGTAS SEE, GMANews.TV
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Jobs: the bleeding goes on

THE global economic crisis is often likened to a storm but these days it seems more like a tsunami, striking hard with little warning—or similar to nature’s version three years ago—where warnings went ignored. Still, the crisis has sent experts from the government and private sector scrambling for an explanation, but more important, for remedies. And on Friday’s Labor Forum 2009 at the Asian Institute of Management in Makati City, a clear consensus has emerged: there are steps that can be taken to mitigate the effects of this downturn, and that the backbone of the economy—the Filipino worker—may just be at the heart of the solution.

“The important implication is that we cannot afford to have any job loss. Every single job lost is one too many,” said University of the Philippines (UP) Professor Benjamin Diokno, in a presentation at the forum organized by the Blas Ople Policy Center and LC Soriano Resource Center.

In terms of job creation, the former budget secretary said the 150,000 jobs the government claims to have created in January last year is misleading.

“In fact 488,000 new wage and salary [jobs] disappeared,” he said, adding that this loss was offset by the creation of 397,000 own-job accounts, which he noted were “relatively less desirable,”

“Manufacturing jobs continue to disappear (125,000) and “for the first time” the transportation, storage and communications sector has started to lay off workers—some 107,000 jobs, he said.

(Official data on the peak of the crisis are starting to trickle in, meanwhile. Between December 1, 2008 and until Tuesday, January 27, Labor Secretary Marianito Roque told dwIZ’s Karambola hosts, some 18,000 workers had lost their jobs, and nearly twice that number were affected by various forms of flexiwork and similar strategies businesses have taken to keep themselves afloat: reduced work hours, reduced work weeks and reduced operations.)

Citing statistics, Diokno meanwhile attributed the 107,000 job loss in 2008 to the slowdown in exports growth which from January to October last year slowed to 1.9 percent, a “shadow” from the original target of 11 percent for 2008.

He further expects half a million Filipinos working abroad to lose their jobs.

Job creation is key

Diokno said that this year, the country faces even slower growth—possibly as low as 3 percent—and that the government must make up for the slowdown in private sector spending, especially because of the country’s rapid population growth.

Boosting government spending is a textbook solution in macroeconomic theory. The country’s output or gross domestic product (GDP) is determined by adding consumption, investments, government spending, plus exports minus imports.

Diokno agrees to the boosting of the government infrastructure spending but says it should focus on the maintenance of existing public structures—like roads, irrigation canals and school building—as against starting big new projects.

He explains: compared to big projects, maintenance spending is more labor-intensive, has less opportunity for corruption and is faster to start since a bidding process is no longer needed.

He said the country needs to create between 1 and 1.5 million new jobs a year, considering the population growth rate is over 2.3 percent annually—about 2 million people.

“More jobs should be created now—not two years from now,” he said.

Another near-term panacea should be investments in rural infrastructure, particularly in labor-intensive projects that at the same time enhance agricultural productivity like small irrigation facilities and farm-to-market roads.

Reforestation is another potential job creating source, said Diokno.

“The environment is the base survival of the poor,” he said explaining that the Philippines lost forest cover at 2.1 percent a year from 2000 to 2005—making denudation in the country the fastest in Southeast Asia.

The next step will be to identify the “right” skills needed in the economy in anticipation of the rebound—that while uncertain is inevitable, he said, adding that this should be done in collaboration with the private sector.

Overall, the government should look towards increasing human capital investments such as basic education and health care to “every Filipino child,” as well as the expansion of the conditional cash-transfer program.

Guidote: still uncertain waters

For her part, Cora Guidote, SM Investment Corp’s vice president for investor relations, agrees that creating new employment is important in this crisis.

“We’re bordering on the unknown right now, no one can tell how many jobs will be lost,” she said adding, “job creation is imperative- [there should be] workshops/training sessions to retool laid off individuals so they can reinvent their careers.”

She conceded that while the government should take a leading role in job creation, its resources are still limited and that initiatives will need private sector support.

“We can’t depend too much on government because our government’s reserves are $32 billion,” she said, comparing this to China’s $3 trillion. She added that the government has debts to pay as well.

“So those reserves can’t all be used completely to help our situation. Whatever we can do, let’s do on or own,” she said.

Like Diokno, Guidote said the government should direct its limited resources to boosting investments in infrastructure as well as agriculture. The latter, she noted, can be a cushion for the country during the crisis, given favorable weather conditions, but will need government “enabling.”

Tap OFW support

Another key cushion, according to Guidote, are remittances from overseas Filipino workers (OFWs), which contribute over a tenth of GDP. For the first 11 months of 2008, remittances hit $15 billion, up 15 percent from 2007.

She said the country has a “critical mass” of OFWs, accounting for over 40 percent of the labor force, but lamented that OFW potential has not been harnessed in terms of leveraging the country’s position.

Atty. Ding Bagasao, chairman of the Economic Resource Center for Overseas Filipino Workers (OFWs), said that work must be done to prime the economy in the countryside with OFW support.

“Two thirds of OFWs come from the countryside, [so] we’ve lined up certain programs like reliable microfinancing institutions,” he said noting partnerships with the Rural Banking Association of the Philippines to join with 15 banks with a reputable track record.

The other initiative is to get OFWs to invest in their “dairy cow program.”

This, he said, includes a memorandum of agreement between the OFW investor, dairy farmer and dairy processor, who will buy all the milk and sell it to coffee shops in Manila.

He cited the case of 10 [OFW] investors coming from five or six different countries who invested a total of P700,000 for dairy cows in the town of Talavera [Nueva Ecija]. Bagasao added that nationwide implementation of this program is a possibility.

OFWs to be affected, too

Despite the remittance growth, there are threats to Filipinos working abroad. While experts debate the crisis’ effect on remittance inflows, some vulnerable sectors have been identified like the export intensive economies of Taiwan and South Korea.

Meanwhile Lito Soriano, chief executive officer of recruitment agency LBS e-Recruitment

Solutions Corp. said that sea-based OFWs--thought to be safe--are also threatened due to the cascading effects from the weaknesses in banking, retail and telecommunication sectors.

He proposed that alongside labor policy, there should also be the corresponding foreign policy, education policy, trade policy for a more coherence between policies. “This is the right time to assess and rethink our social protection and safety nets,” he said.

Safety nets

Deputy executive director Esther Guerrero, National Wages and Productivity Commission from the Department of Labor and Employment (Dole) said that there are some sectors ambivalent to the crisis like business process outsourcing (BPOs).

Citing the Business Process Association of the Philippines, she said their outlook is positive this year as they expect some 25-percent growth. For displaced workers [in the electronics sector], she said that BPOs were willing to take them on because the skills sets are related.

“Retrenchment is the last thing they have in mind,” she said. For OFWs like IT workers in Taiwan, and sea-based workers, Guerrero noted that the government is preparing for these scenarios.

“Secretary Roque told us that the mantra of the department will be job preservation and job loss prevention,” she said.

“Ang gusto mangyari ni Secretary, bago pa malay-off ang workers, alam na naming para maayos namin ang safety nets” [ What the secretary wants is to have knowledge before workers are laid-off, so safety nets can be arranged], she said. She noted that these nets can be in the form of skills retraining or facilitation of money claims.

The forex tack: P55 to a dollar

In light of decreasing inflation and weakening exports, a proposed fiscal stimulus to boost the economy is to fix the peso dollar exchange rate at P55 to a dollar.

This plan is a two-pronged approach as it is seen to boost the ailing exports industry, as Philippine goods become cheaper—and thus more attractive— apart from the fact that it will put more money in the hands of OFW beneficiaries, thereby boosting local consumption.

Consumption is an important aspect in calculating growth, and is responsible for over 70 percent of the country’s GDP.

Professor Diokno also favors fixing the exchange rate as a more efficient stimulus over budget increases, as this will remove the opportunity for corruption.

“All of a sudden, OFWs will have one billion dollars in their pockets without passing through the government,” Diokno said.

Recruiters like Soriano are pushing this idea. He said that now is an opportune time for the government to let the peso slide.

“This will keep the economy going as OFW remittances have been the driver of Philippine growth,” he said.

Soriano said that if these problems are not immediately resolved, the overall retrenchment could reach 10 percent—for both legal and illegal workers—during the next three years, and remittances would then drop at a greater rate.

But he said that if the government will devalue the peso to “between 53 to 55” against $1, OFW families will maintain current consumption levels and increase investment in their community.

The decision on which policies to implement should not be taken lightly, but time remains of the essence. As Diokno puts it “it is not true that the economic storm is coming—it has arrived.”


More options

With the ongoing crisis causing retrenchments among OFWs and workers in the country, several leaders in the labor sector are pitching more options. 

The Blas F. Ople Policy Center founder Susan Ople is urging the country’s economic team to meet with labor representatives in a tripartite labor summit on the economic crisis and the job losses.

LBS-E Recruitment Solutions Corp. president and CEO Loreto Soriano said the summit could help the government ferret out valuable inputs. “We should create a task force whose main function is to formulate and influence government with recommendations to help offset the economic and social effects of expected OFW layoffs and reduced deployment.”

Besides the Department of Labor and Employment’s livelihood assistance program for displaced Filipino workers, Ople suggested that the government consider a transition allowance that would able them to put food on the table for their families while scouting for new jobs or undergoing livelihood training.

The Center said the Overseas Workers’ Welfare Administration can work with the Department of Education (DepEd) and Commission on Higher Education on a joint program to keep children of displaced OFWs in school despite the crisis

“In January 2003, the government bailed out private banks with nonperforming assets through the Special Purpose Asset Vehicle law. There have also been previous attempts to come to the aid of Napocor. Now, when hundreds of workers lose their jobs through no fault of their own, can’t government intervene by giving them direct financial assistance during a transition phase?” Ople pointed out.”

Over 3,000 Filipino workers were sent home last December due to layoffs in various factories in Taiwan. Ople said that most of the displaced workers have outstanding debts obtained prior to departure in order to pay their placement and brokers’ fees.

She said many issued postdated checks to private lending companies, hoping that their earnings would be enough to cover the loan.

Cash is needed

Elwood Yambao, 35, from Olongapo, a technician record operator laid off in Taiwan, said it’s easier if the government would give them financial assistance other than the livelihood program that they were providing, so they can pay their debts to other agencies.

“The livelihood program is good, but if we don’t have cash to put up a business, or to put food on the table, that will still make life hard for us,” Yambao lamented to the Business Mirror.

“We just need a little cash so we can have some mobility in looking for new jobs quickly,” he added.

“A transition package to enable displaced workers to partly settle outstanding loans or maintain their families’ upkeep is an imperative confidence-building measure. Unless they are given cash assistance to help their families, these workers would have a difficult time finding new jobs or setting up a microenterprise,” Ople stressed.

Ople said cash transfers can be part of a transition program for displaced workers that would also include career-planning sessions and skills retooling.

“This direct assistance should not be considered as a dole-out but as an integral part of a more comprehensive jobs and livelihood program. It will help them to move on and hopefully, even move up as productive members of the workforce,” she pointed out.

On a brighter side, RCM Health Care vice president Mark Chafetz said that there is still a continued demand for health-care professionals in the US, and they are still recruiting Filipino nurses; they are now focusing also on recruiting Filipino physical therapists.

”Filipino nurses and physical therapists are in demand in the US because of their outstanding work ethics,” he said.

The US is also recruiting from India but they found that their clients need most the health care professionals from the Philippines.

“The Philippines is producing outstanding health-care professionals. Our clients from major hospitals and schools specifically demand Philippine health-care professionals,” he said. Qualified Filipino health-care professionals are needed in the northeast part of the country—in New York, New Jersey, Pennsylvania, Maryland and Washington, D.C.

Chafetz said: “We will pay for everything . . .We will provide gorgeous apartment somewhere located near where they work; we will also provide groceries, licensures, medicals, health insurance, dental vision . . . The benefits are pretty much the same as the US workers are receiving,” he said. At present, RCM Health Care Services has provided work for 200 Filipinos health-care professionals in the US.

It specializes in long-term and short-term staffing and permanent placement of rehabilitation, nursing, managed care and allied health-care professionals and physicians. Written by Miguel R. Camus Researcher and Sara Fabunan Business Mirror Correspondent