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Chapter 2
Promoting Full Decent and Productive Employment
Despite the modest growth in 2000, there was an increase in the number of unemployed. This implies that economic growth per se, although a necessary condition, does not guarantee employment growth. The employment policy challenge to the Macapagal-Arroyo Administration, therefore, is to formulate effective strategies and identify employment-generating lead sectors under a unified policy framework to promote decent and productive employment for every Filipino worker as a means to alleviating poverty. Employment generation shall be enhanced through the modernization of agriculture, the strengthening of information and communications technology (ICT) and revival of tourism (see Chapters 7, 4 and 5). Measures shall be adopted to enhance harmonious worker-employer relationship, and maintaining existing jobs of local and overseas Filipino workers. The quality of the workforce in terms of competencies, productivity and work values shall be enhanced while better quality of employment opportunities in terms of work conditions, remuneration and welfare shall be promoted. Employment facilitation programs will develop and improve access of Filipino workers to employment opportunities and alternatives, whether locally or abroad.
POLICY FRAMEWORK
Promoting decent and productive employment means that rights at work are protected, adequate income is generated, social protection is provided for, and participation in the democratic process is guaranteed through tripartism and social dialogue.1 It also means sufficient employment, where all workers have full access to income-earning opportunities. Decent employment also entails the continuous improvement of workers’ personal capabilities through a build-up in competitive skills and positive work ethics. This will enable workers to fully participate in both economic and social activities, and maximize their human development potential even with the challenges posed by globalization.
Four major employment-promoting strategies shall be pursued more vigorously: employment generation, employment preservation, employment enhancement, and employment facilitation.
Employment generation involves creating, directly or indirectly, new employment opportunities in the domestic labor market especially in agriculture, tourism and ICT. The private sector is the primary engine for employment generation. The government, on the other hand, shall develop a competent, professional and productive bureaucracy that effectively enables the private sector to perform its role. Public spending and official development assistance will be focused and prioritized on programs that will have the most impact in promoting decent employment and improving the social and physical infrastructure.
Agricultural modernization shall be pursued, generating in the process one million new jobs from both agriculture and agriculture-related activities. The fast-growing ICT sector, where high-value jobs are most plentiful, shall be promoted. Skills development activities shall be pursued to meet the training needs of the knowledge workers of the new economy. Tourism shall also be promoted as a key employment generator. The provision of mass housing to the urban poor will also boost employment in the construction industry.
While employment generation is the overriding goal, employment preservation shall likewise be accorded priority. Measures that enhance harmonious worker-employer relationship and maintain existing jobs with remunerative terms and conditions shall be put in place. Privately-reached employment and wage contracts shall be respected while the rights of workers to collective bargaining shall be upheld. Minimum wage setting shall be rooted on the basic concept of providing workers with "safety net" protection against unjust low wages and protecting the lowest paid workers from the vagaries of the labor market. Above-minimum wages shall be determined through collective bargaining (in the organized sector) and employer-employee negotiations (in the unorganized sector).
Industrial peace, which significantly contributes to the preservation of employment, shall be achieved through freedom of association and free collective bargaining, continuing social dialogue, mediation and voluntary arbitration of conflict, and shared decision-making mechanisms at the firm, industry, sector, and national levels. These measures are expected to develop mutual trust and confidence among the parties. In the process, the industrial relations paradigm will shift from one based on confrontation to one based on cooperation. On the basis of this new paradigm, productivity and competitiveness can be achieved.
To upgrade the competitiveness of Filipino workers, the government shall pursue employment enhancement measures which focus on improving worker competency, productivity and work values. At the same time, work conditions, remuneration, and welfare shall be enhanced.
Government shall also engage in employment facilitation which refers to developing and improving access of Filipino workers to employment opportunities and alternatives, whether locally or abroad.
Overseas employment remains to be a legitimate option for the country’s work force. As such, government shall fully respect labor mobility, including the preference of workers for overseas employment. Protection shall be provided to Filipinos who choose to work abroad and programs to effectively reintegrate them into the domestic economy upon their return shall be put up. Better employment opportunities and modes of engagement in overseas labor markets shall be actively explored and developed, consistent with regional and international commitments and agreements.
ASSESSMENT AND CHALLENGES
Domestic Employment
In 1999, the number of employed people rose by 3.8 percent from 0.7 percent in 1998. Much of this growth was accounted for by the expansion in agricultural employment (6.3%) and services sector employment (3.5%) (Table 2.1). The growth exceeded the projected employment growth estimates of 2.8 to 3.2 percent in the Medium-Term Comprehensive Employment Plan (CEP).
Total employment decreased by 1.0 percent in 2000 as employment in the agriculture sector fell by 5.5 percent. Jobs were also lost in the industrial sector despite the growth in industrial production in 2000. The number of establishments which permanently closed down or retrenched workers almost tripled in 1998 (2,525 establishments) compared with the previous year’s figure (889 establishments), and the number has remained at that very high level in the succeeding years.
The services sector was the only source of employment growth for the year, posting a modest growth in employment of 2.9 percent.
Notwithstanding the employment growth in 1999, the one million jobs generated during the year were not enough to sufficiently bring down the unemployment rate. From a double-digit unemployment rate of 10.1 percent in 1998, the average rate in 1999 remained high at 9.8 percent but within the CEP target of 9.6 to 9.9 percent. This increased to 11.2 percent in 2000 exceeding the unemployment projections of 8.8 to 9.4 percent for the year.
Underemployment remained at close to 22 percent. If the unemployment and underemployment figures are summed up as a measure of labor underutilization, the labor underutilization rate inched up to 30.5 percent in 2000, from 29.7 percent in 1998 (Table 2.2).
Despite the stresses on the labor market, employers and workers worked together to preserve industrial peace. The number of strikes remained below the 100 mark, a record since 1994 (Table 2.3).
Over the medium term, the government is faced with the challenge of increasing the ability of the domestic labor market to absorb new entrants. The growth in employment in 1999 was largely due to good weather and fiscal pump-priming rather than an expansion in investments and exports, where sustainable jobs are created.
Another challenge is globalization. Globalization provides an opportunity for nations to access larger markets. However, workers need to compete in such an environment. At the same time, globalization can lead to the displacement of workers in uncompetitive sectors and the expansion of the informal sectors arising from new working configurations. Skills-training and provisions of safety nets are essential to meet the challenge of globalization.
Overseas Employment
Filipino workers continue to seek overseas employment. For many years, the number of Filipino workers deployed overseas has exceeded the increase in local employment, especially in 2000 although the growth of overseas deployment has weakened since 1999 (Table 2.4).
One benefit of overseas employment is that it is a source of foreign exchange. Dollar remittances grew from $4.9 billion in 1998 to $6.1 billion in 2000. As a percentage of gross national product (GNP), this increased to 7.6 percent in 2000 from 7.2 percent in 1998 (Table 2.5). During the Asian crisis in 1997-1998, the economy escaped a negative growth in 1998 as dollar inflows from overseas workers propped up domestic demand.
Overseas employment, however, has its costs on social structures and value systems. Working in a different society affects the individual worker’s value system. The worker’s absence from his family for long periods also affects the family and marital life. Cases of abuse have destroyed lives of workers and their families. Hence, the generation of domestic employment remains the major priority.
TARGETS AND STRATEGIES
Targets
In the medium term, domestic employment is expected to grow by 3.2 to 3.5 percent (Table 2.6). From a level of 27.4 million employed in 2000, the number of employed will increase to 31.2 to 31.5 million by 2004. Average yearly net addition to employment is projected to reach one million. In addition, about one million workers per year will be deployed overseas.
The services sector shall continue to be the biggest employer, surpassing its performance in 1999-2000. The number of employed in the services sector shall expand from around 12.8 million in 2000 to an average of 14.3 to 14.4 million over the medium term, during which its share to total employment shall rise from 46.7 percent in 2000 to about 48.0 percent during the same period. In particular, tourism shall generate an additional 1.0 to 1.6 million jobs during the period. The bulk of employment creation will come from passenger transport, retail trade, hotel and accommodation, restaurants, travel agency and tour operations, and recreation and entertainment. The services part of the ICT sector, on the other hand, will generate an additional 52,000 to 57,000 high-value jobs.
For its part, the industry sector is expected to slightly increase its share from 16.2 percent in 2000 to around 16.5 percent by the end of 2004. Despite this conservative projection, the employment level in the industry sector will increase by 690,000 to 760,000 jobs over the period. ICT manufacturing, which is mostly for the export market, will generate 19,000 new jobs.
As the implementation of the Agriculture and Fisheries Modernization Act (AFMA) takes full swing, real productivity of the agriculture sector shall increase. Its share to total employment shall gradually decline from 37.1 percent in 2000 to an average of 35.6 to 35.7 percent during the medium term, but the magnitude of employment in the sector will increase from 10.2 million in 2000 to a range of 10.8 to 11.0 million by 2004. Agriculture-related construction and its multiplier effects in other sectors like retail trade will provide additional jobs for rural workers such that net job creation will average one million during the period.
The unemployment rates will steadily improve in the medium term. From 11.2 percent in 2000, the unemployment rate will further go down to 7.6 to 8.6 percent by 2004. In nominal terms, the number of the unemployed shall decline from around 3.5 million in 2000 down to a range of 2.6 to 2.9 million by the end of the medium term.
Real labor productivity (computed as real gross domestic product divided by total employed) will steadily increase in the medium term from P34,740 in 2000 to P36,780 to P37,110 in 2004.
Strategies
To achieve the employment goals, four major employment strategies shall continue to be adopted: employment generation; employment preservation; employment enhancement; and employment facilitation.
Employment generation
To generate the one million jobs in agriculture and agri-related industries, a more meaningful pursuit of the agriculture and fisheries modernization program shall take place. Programs shall focus on increasing employment productivity to raise incomes. These programs shall be complemented by efforts to generate off-farm employment. Alternative livelihood activities shall be promoted for subsistence farm workers during nonplanting and nonharvest seasons. The development and integration of farm workers in off-farm livelihood activities, where alternative sources of incomes can be realized, shall be explored and facilitated.
Agriculture shall be a priority in the allocation of budgetary resources to expand the construction of irrigation and postharvest facilities, farm-to-market roads and other infrastructure projects, credit facility, and research and development.
To enhance employment in industry and services, globally competitive industries shall be developed. The country’s national competitive edge in tourism shall be maximized. The government will focus its efforts on supporting the development of tourism hubs, such as Manila, Cebu, Davao and Laoag by upgrading airports, seaports, and roads, and securing greater involvement of local government units in tourism development. The development of tourist destinations in the countryside will boost the growth in the retail trade sector and handicraft industries leading to increased employment and livelihood opportunities for communities and cooperatives.
ICT capabilities across a broad range of economic activities and income groups shall be developed. Operational telecenters in all municipalities and public payphones in cluster of barangays shall be established. Broadband services in cities, identified growth centers and priority areas shall be provided. The country’s competitive niches in software development and e-services shall be secured and enhanced by seizing local and overseas market opportunities in developing strategic partnerships for major ICT development initiatives.
Labor-intensive activities in infrastructure development, particularly in the construction of mass housing, shall be further explored to increase employment generation.
Self-employment shall be promoted as an important employment generation strategy. Self-reliant communities shall be developed by providing adequate and sustainable sources of livelihood for its members and their families. Likewise, full support for the development of small and medium enterprises (SMEs) shall be pursued. The government will implement programs for the informal sector to improve their access to productive resources, protection and social security. Microfinancing will be made available for 300,000 women entrepreneurs every year. Social safety nets, including the provision of emergency employment programs, shall be provided.
Employment preservation
Employment preservation shall be promoted in all sectors. Industrial peace, which is necessary for the growth and development of private enterprise, shall be maintained. In addition, the employment impact of economic restructuring policies and programs shall be assessed. Commitments on measures to mitigate the negative social and employment consequences obtained through social dialogues shall be put in place.
To ensure the preservation of existing jobs the following specific strategies shall be pursued:
1. Proactive industrial peace interventions such as forging of social accords, establishment of labor-management councils, preventive mediation, promotion of social dialogues, quick reaction teams (QRTs), etc. This will help sustain employment, mitigate displacement, improve the quality of working life, and promote industrial harmony and stability as well as productivity and competitiveness;
2. Promotion of efficiency-enhancing measures, including employment arrangements or human resource strategies that minimize employment loss like job sharing, compressed workweek, etc;
3. Adoption of policies that would make the cost of doing business in the country competitive with respect to other countries; and
4. Forging of multilateral and bilateral labor agreements and arrangements for overseas employment.
Employment enhancement
The skills of workers which will enable them to compete in the global economy will be enhanced by:
1. Benchmarking the quality of basic, secondary, postsecondary and tertiary education along global standards; and benchmarking technology and skills standards to improve productivity and competitiveness;
2. Improving access to education and training programs in priority areas such as export-oriented industries, economic zones, the agriculture sector, the overseas labor market and other identified growth sectors to ensure continuous availability of human resources;
3. Enhancing social partnerships among public and private entities through social dialogues and other consensus-building mechanisms; and strengthening the National Coordinating Council on Education (NCCE) created under Executive Order No. 273 as a participatory coordinating mechanism for the three levels of education;
4. Systematic development and wide installation of the dual training system as the preferred mode of training delivery;
5. Accelerating the implementation of the equivalency and accreditation programs, recognition of prior learning and lifelong learning, continuous development of workers through upgrading/upskilling and retraining, development of competency-based training and the mandatory assessment and certification of workers in critical occupations; and
6. Intensifying efforts to finance the Technical Education and Skills Development Authority (TESDA) Development Fund to ensure sustainable sources of financing for the training and retraining of workers.
Core labor standards shall be observed even with flexible work arrangements, and productivity improvement programs shall be implemented in both private and public enterprises. These shall be complemented by welfare programs for both local and overseas workers. Provision of social protection, other than those already available under the present systems, shall be explored to benefit the formal and informal economy workers.
Equal employment opportunities shall be given to special groups, which include women, youth, elderly, and persons with disabilities. The prohibition on the employment of children below 15 years old in any public or private establishment, and of those 15-17 years old in hazardous occupations shall be strictly enforced in accordance with national laws and international covenants on child labor. This is to ensure that young workers, if they have to work, are not exposed to hazards and risks that may jeopardize their future.
For overseas employment, the government shall: (a) provide mechanism to protect the rights of overseas Filipino workers (OFWs) to fair and equitable recruitment and employment practices and ensure their welfare under a deregulated condition; (b) develop programs to ensure quality employment for OFWs; and (c) provide a provident fund for OFWs.
With new issues emerging in employment and work relations, the legal framework for labor or the Labor Code shall be amended and made more attuned to the realities and challenges of the present times. This is to keep the legal framework abreast with the changing world of work configured by fast technology changes and highly integrated markets. While the focus is to be responsive to the demands of a globalized regime, the legislative reforms should equally given importance to the welfare and protection of the workers.
Employment facilitation
The employment facilitation strategy shall focus on measures that: (a) develop and improve access to employment opportunities and alternatives, local and abroad; (b) provide accurate and up-to-date labor market information to improve matching of jobs and workers; and (c) provide a level playing field for contractual negotiations.
Measures that will facilitate the matching of available supply and demand in the labor market to realize higher employment levels include:
1. Full implementation of Republic Act No. 8759 or the Public Employment Service Office (PESO) Act;
2. Expansion and enhancement of the Philippine Job Network (PhilJobnet), an Internet-based system that matches vacancies and skills for local and overseas employment;
3. Conduct of jobs fairs, and domestic trade fairs especially oriented to workers and entrepreneurs in the informal sector and among micro- and small-scale enterprises; and
4. Provision of vocational guidance and employment counseling.
In the context of the United Nations Convention on the Protection of Migrant Workers, overseas employment will continue to be tapped to take advantage of job opportunities in the world market. Specifically, efforts will focus on identifying selective deployment to more labor-friendly host countries. Government shall use diplomacy to ensure equal protection and safe working condition for OFWs, particularly the women migrant workers. But more importantly, a shift to higher skill and knowledge-based categories of jobs in the new economy is anticipated, taking full advantage of the opportunities brought about by the General Agreement on Trade in Services, the Association of Southeast Asian Nations (ASEAN) Framework Agreement on Services, and the Asia-Pacific Economic Cooperation’s Mutual Recognition of Skills and Professional Qualifications projects. Programs shall be instituted to tap decent employment opportunities of the new economy.
To realize the general thrust of the State on overseas employment program, the government shall: (a) establish an adequate information system in the overseas employment program; (b) improve support programs for the effective reintegration of returning OFWs; (c) provide overseas recruitment and placement assistance as public interest may require; and (d) establish a legal environment conducive to legitimate and responsible private sector participation in the overseas employment program.
1 Adopted from ILO "Decent Work" Agenda, International Labour Conference 87th session, 1999
