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PHILIPPINES: Our Failed Labor-Export Policy

by Walden Bello Friday, Apr. 08, 2011 at 8:24 AM

The impacts of disasters occurring in other parts of the world, from Libya to Japan, have perhaps been communicated more drastically to the Philippines than to other countries. Whether it is the tragic trilogy of earthquake, tsunami, and nuclear fallout in Japan or the civil war in Libya, external crises are swiftly transformed into internal crises for our country, as thousands of families are pushed into poverty and economic hardship when their breadwinners are dislocated and repatriated back to the Philippines, where jobs offering decent wages are scarce.

2011-akbayan-party.jpg, image/jpeg, 458x333

Between Death and Poverty

A common refrain I heard from workers returning from Libya went like this: “Wala kaming magagawa kundi bumalik kasi kamatayan ang hinaharap namin roon. Pero gutom naman ng pamilya ang balik sa amin dito.” (“We had no choice but to leave since death is what we faced there. But what do we have in exchange but hunger for our families here?”)

The events of the last three months have brought home the consequences of an economy that has become extremely dependent on the export of labor. Indeed, only does the health of the economy now depend to an extraordinary degree on the remittances from over 8 million workers in every nook and cranny of the globe, from Papua New Guinea to Alaska to Nigeria. Our foreign policy has been reduced to one item: promoting the export of our workers and securing their welfare abroad.

What better indication of this subordination of the broader national interest to the demands of our labor export strategy than President Aquino’s not going to the Nobel Prize ceremonies in Oslo in December in what turned out to be a futile effort to save three OFWs from being executed on drug charges by China? Or Secretary of Foreign Affairs Ramon del Rosario’s personally escorting 400 workers out of Tripoli in early February when he should have been in Manila drawing up a regional contingency evacuation plan for the whole Middle East? Or Vice President Jojo Binay’s scurrying off to Saudi Arabia to convince the Saudis not to ban the deployment of domestic workers to Saudi households?

For all intents and purposes, the Department of Foreign Affairs has become an extension of the Department of Labor and Employment.

Structural Adjustment and the Making of the Labor-export Economy

Our fate as a labor-export-dependent economy was not predetermined. The liberalization of the US Immigration Code in the 1960’s triggered the emigration of skilled workers in the 1960’s, but the numbers wwere manageable. So were the numbers—50,000 workers—relatively small when then Labor Minister Blas Ople inaugurated the program of sending low-skilled and semi-skilled workers to the Middle East in 1975.

Deployments increased in spectacular fashion in the coming years, and this was not unrelated to the program of structural adjustment pushed by the World Bank and the International Monetary Fund on the country in the early 1980’s, which had as its key aim “freeing market forces” to improve economic performance. The key thrust of the program was the liberalization of trade, along with deep cuts in government expenditures. Carried out in the midst of a global recession, structural adjustment triggered a severe domestic downturn in 1983-86. The crisis not only accelerated the traditional flows of emigration from the countryside to the city. With the lack of jobs in the cities, the recession also pushed people to the uplands, thus accelerating deforestation. And it sent thousands scurrying to the Middle East in search of jobs.

As part of structural adjustment, the effective rate of protection for manufacturing provided by tariffs was pushed down from 44 to 20 per cent, causing multiple bankruptcies and massive job losses—in short, deindustrialization. The list of industrial casualties included paper products, textiles, ceramics, rubber products, furniture and fixtures, petrochemicals, beverages, wood, shoes, petroleum oils, clothing accessories, and leather goods. One of the pioneering labor-intensive industries, the textile and garments industry, shrank from 200 firms in 1970 to fewer than 10 at the end of the century, its labor force practically disappearing.

Largely exempted from trade liberalization in the 1980’s, agriculture was subjected to it when the Philippines joined the World Trade Organization (WTO) in 1995. Import quotas were abolished on all imported commodities except rice. Swamped with cheap corn imports, a large part of it subsidized American grain, thousands of farmers abandoned corn-raising, with land devoted to corn production dropping from 3,149,300 hectares in 1993 to 2,510,300 hectares in 2000. The travails of corn were paralleled in other key sectors: massive importation of chicken parts nearly killed the chicken parts industry, while surges in imports destabilized the poultry, hog, and vegetable industries.

To convince the people joining the WTO was a good thing, the technocrats of the Fidel Ramos administration had deployed the visions of 500,000 new jobs a year being added to agriculture. Instead, employment in agriculture dropped from 11.2 million in 1994 to 10.8 million in 2001. With other trade agreements like the ASEAN-CEPT and ASEAN-China agreements coming fully into effect, more and more farming families are likely to be bankrupted and forced into the ranks of the unemployed, with many seeing “going to Saudi” as their only salvation.

The Curse of Debt Servicing

With industry and agriculture assaulted by trade liberalization, the government could have stepped into the breach via accelerated investment, which would have created jobs in both the private and public sectors. However, owing to pressure from the International Monetary Fund, World Bank, and US commercial banks, the government budget was gutted to pay off the billion foreign debt that the post-Marcos governments inherited from the dictatorship. During the Corazon Aquino administration, the “Automatic Appropriations Act” made mandatory the government’s repaying the full amount of the death due. Interest payments as a percentage of the total government budget went from seven per cent in 1980 to 28 per cent in 1996 to 29 per cent in 2005. Capital expenditures, or investment, on the other hand, plunged from 26 per cent to 16 per cent to 12 per cent.

With massive unemployment being generated by trade liberalization in industry and agriculture and government unable to promote economic activities that would absorb those being displaced, Filipinos turned to the global marketplace. One administration after another encouraged this trend. Indeed, although the government did not dare admit it, labor export became the country’s macroeconomic strategy. By 2001, the Philippines had become the second largest labor-exporting country in the world, and nearly half of the country’s population had become dependent on remittances from relatives working abroad. By 2010, over 8 million Filipinos were working abroad, some 1.1 million were being deployed yearly, and remittances totaled over billion.

The Urgency of Changing Course

With over 20 per cent of its work force deployed abroad, the Philippines is thus extremely vulnerable to natural disasters, social conflicts, and policy changes in other parts of the globe. Our sympathy for democratic change in repressive regimes like Libya or Saudi Arabia is tempered by our worry about hundreds of thousands, if not millions of Filipinos losing their jobs. If Saudi Arabia explodes, how will we handle the evacuation of even a third of the 1.8 million Filipinos working there?

At the same time, our severe dependence on labor export provides governments like Saudi Arabia with the means to intimidate us should we insist on their extending coverage of their labor laws especially to domestic workers, many of whom suffer from maltreatment, rape, and other forms of sexual abuse.

Over three decades of exporting our workers to all four corners of the globe as we allowed wrongheaded neoliberal policies to erode our agriculture and industry has brought us to a dead end. Yet we will continue on this unpromising path unless we gather the courage and energy to reverse the policies of structural adjustment, trade liberalization, and perpetually servicing the foreign debt. Unless we move decisively to fundamentally reconfigure our economy to develop and provide within our shores the jobs that our compatriots so desperately seek abroad.

The Aquino administration still has time to turn things around. The question is: will it have the political courage and political will to take on this challenge of bringing an economy that has gone off the rails to the right path?

*Walden Bello represents Akbayan in the House of Representatives of the Philippines, where he is chairman of the Committee on Overseas Workers Affairs (COWA). He is also a senior analyst at Focus on the Global South.

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