Reducing Income Inequalities

Trade Union Congress of the Philippines (TUCP)

Ariel B. CastroDirector for Education

Introduction and overview

1. Unions evolving role2. Labor market realities

Disturbing economic signs “Jobless Growth” High unemployment and underemployment Wages and benefits not kept up with prices

3. TUCP responses4. Concluding remarks

Evolving union roles given realities

Union renewal and revitalization strategies to confront:

• Changing nature of work• New model of human resource

management• Changing composition of labor force• Political/legislative challenges

Economic realities

• Economic growth in the Philippines is expected to fall to 4.3 percent this year and 4.2 percent in 2009 amid a global credit crisis (The Economist, 2008)

• Double digit inflation is eating into consumer spending and wages have failed to keep pace with rising living costs

Economic Realities (2)

• Remittance flows of overseas Filipino workers (OFWs) now equivalent to 10 percent of GDP

• Economy is underperforming relative to its neighbors in the region with per capita GDP growth of one percent trailing its neighbors’ 4-6 percent

• Investment climate requires some reforms that should include reducing power rates, curbing corruption and cutting red tape

The World Bank Development Report 2005

A 2003 survey involving 719 firms in the Philippines ranked the issues that make the country’s investment climate unattractive to business:

• 35.2% corruption• 33.8% courts on property rights• 33.4% unreliable power supply• 30.4% high tax rates• 29.5% uncertain economic and regulatory policy• 26.5% crimes, theft and disorder.

Jobless Growth

• Employment levels are rising, but most of the new jobs created (60-75%) are in the informal sector

• BPOs are the growth center, and would surpass manufacturing in the next few years

-500

0

500

1,000

1,500

2,000

2,500

Addition to Labor Force 1,353 621 700 -295 152 1,903 1,122 635

Job Creation 1,510 530 196 -170 -290 1,704 906 566

1996 1997 1998 1999 2000 2001 2002 2003

ADDITION TO LABOR FORCE VS. JOB CREATION

Daily Family Living Wage (Daily)

Minimum Food Non-Food

Wage Rates Expenditures Expenditures Total

NCR 382 232 601 917

Region 1 240 247 535 860

Region 2 235 231 465 766

Region 3 302 250 485 809

Region 4A 320 231 505 809

Region 4B 252 No data No data No data

Region 5 239 221 494 787

Region 6 250 210 427 701

Region 7 267 215 613 910

Region 8 238 212 343 610

Region 9 240 218 579 876

Region 10 256 218 526 818

Region 11 265 228 488 787

Region 12 245 229 481 781

CAR 260 233 570 883

ARMM 210 301 902 1,322

CARAGA 233 No data No data No data

Comparison of Daily Minimum Wage, and the Family Living Wage, Sept.

2008Source: NWPC

Labor Market, Employment and Working Conditions

• Quality of employment has deteriorated, with new employment concentrated in contractual terms, home-based work, and informal arrangements

• Women and young people face unemployment, inadequate education and training, exploitation and discrimination at work

• Inspections of establishments have indicated increasing violations of labor standards (over 50% with violations) and of the wage law (over 25%)

8.08 Filipino Migrants

Social outcomes lackluster

• Given present trends, Philippines unlikely to realize its MDGs by 2015 in:

– families living in extreme poverty

– child malnutrition

– maternal mortality

the dashed lines are the MDGs

% of families living in extreme poverty

8

13

18

23

1991 2000 2015

Prevalence of Malnutrition among 0-5

152025303540

1991 1998 2015

Maternal Mortality Rate

0

50

100

150

200

250

1990 1998 2015

Source: World Bank

Trade Union Responses

• Alliance Building for Constructive

Engagement with IFIs•Promoting Decent Work for All

Asian Labor Network on IFIs• Network of TUs, Pos, NGOs

and academe from four countries most hit by the Asian Financial Crisis [Indonesia, Philippines and Thailand]

• More than an institution for workers’ education, it has evolved into an organization with a multifaceted approach to advocacy and social action

Mission Statement

“Committed to engage IFIs and the Philippine Government in constructive dialogues on policies, programs and projects that have direct impact on

Filipino workers and society at large”

“People believe that IFIs propose, the Government implements, workers

and people suffer”

ALNI/P Priority Advocacy Issues

Framework of engagement

• Advocates to stop Liberalization, Deregulation, Privatization [LDP] until:

• Past and proposed policies are assessed as to their impact on employment and incomes

• Future policies, programs and projects must include measures to help displaced workers

• Tripartite negotiations are made

• Arose from Philippine experience in LDP

Efforts to constructively engage IFIs

Efforts to constructively engage IFIs

• Building relationships with IFI officials– Representation meetings

– Cooperation with Asian Development Bank

– Meetings with ADB Officials

– Participation in consultations (WB, IFC)

• Meetings with Government Agencies involved in the design and implementation of IFI programs

Efforts to constructively engage IFIs

• Dialogue with ADB regarding their Labor Standards Handbook• Research on CLS Compliance of IFC funded utilities company• Involvement in the WB-CAS processes• Continuing dialogue with WB, IFC, ADB, etc.

CLS in ADB Operations

Country strategy and Programs

Pre-Project Design

Project Design

Project Implementation

Labor market assessment

IPSA,

Labor consultants

Loan negotiations,Bidding documents

Compliance Monitoring, Consultation process,

Capacity building on CLS

Efforts to constructively engage IFIs• Media Advocacy

– Generate Public Support

– Media Briefings

– Press Conferences

Efforts to constructively engage IFIs

• Advocacy and Planning Workshops

Why should unions engage IFIs?

• Union jobs are at risk• ADB/IFIs heavily influence govt policies

– Privatization/restructuring public enterprises– Liberalization, deregulation policies

• Taxpayers of donor countries finance ADB lending at ~P5-7B/yr

• Citizens of borrower countries pay back loans whether or not IFI-funded projects reduce poverty– Debt burdens greatly reduce govt spending on public

infrastructure & basic social services

TUCP is also engaged in• Improving labor supply-

building skills, employment facilitation

• Raising labor demand-cooperatives, credit unions, workers’ enterprises

• Wages - pushing for productivity improvement and gainsharing

TUCP also has programs in• Country governance• CSR (corporate social responsibility)• Reproductive Health and family planning• Anti-trafficking in persons• Informal sector• Migrant workers• Etc.