Implications of an EU FTA to the Philippine Labor Market

The Philippines is currently negotiating a free trade agreement (FTA) with the European Union (EU). This paper is expected to shed light on these negotiations in terms of the possible effects of the FTA on the employment in particular. Conceptually, the effects of FTA on the labor market may come from two sources. The first is the intensification of free trade which can either be an opportunity or a threat to the workers, depending on whether the trading of goods and services are complementary or substitutable to the goods and services produced in the country. The second source is the proposed set of core labor standards which the EU can impose given the previous FTAs it has forged with other countries. These standards can result in making the country less competitive.Analyzing the experience of the country with its previous FTAs with the ASEAN and Japan, the paper found that FTAs as a whole have a positive impact on employment. While there may be unemployment caused by the entry of more imports from other countries, the effect of the trade commitments found in FTAs is essentially to mitigate such negative effects. It is then proposed that the country should negotiate within the same rules and standards that are set in their previous FTAs and that appropriate taxes and subsidies should be imposed in order to counteract the negative effects of further trade and labor standards

A National Policy Study on Child Labour and Development in the Philippines

The alarming number of children engaged in labor as released by the National Statistics Office from the years 1995 to 2001 gave rise to a timely national policy study to review all the important studies available on child labor and assess key government policies affecting child labor in the Philippines. The paper provides an overview of the nature, extent and predominant forms of child labor in the country based on available data disaggregated by age, sex, geographic distribution, industry, and occupation. Previously done literature about child labor is examined to identify determinants as to why children work despite low wages and poor working conditions and the possible consequences and implications socially and economically. A review of the international and national policies operating in the Philippines concerning child labor is conducted to identify best practices and replicable approaches as well as to assess the adequacy of policy responses in eliminating child labor. The paper ended with proposals and recommendations on what else needs to be done and an agenda for possible future researches

Labor Policy Analysis for Jobs Expansion and Development

The Philippines is at a crossroad. It can choose to continue to follow current unrealistic policies that despite good intentions have been shown to be actually detrimental to the poor. Or, it can elect to try another development path to get a better chance at reducing poverty.This study proposes a 12-point agenda, conveniently referred to as the Jobs Expansion and Development Initiative (JEDI) for poverty reduction. JEDI has two objectives. One is to expand gainful jobs through the acceleration of labor intensive production, particularly, the manufacturing of tradable commodities. The other is to improve investments in education and other human capital development and sustain total factor productivity gains. These objectives require inter alia minimum wage reform, which should be undertaken immediately, while investors are looking for new places to locate labor-intensive production and the Philippine economy is getting another look as a potential destination.The study recognizes the Filipinos' aspirations for secure jobs with decent wages. But it challenges the idea that imposing minimum wages and other current labor regulations should be the weapons of choice. They do not work; worse, there is preponderant evidence of its detrimental consequences. Alternatives should, therefore, be considered, such as better education, increased labor-intensive manufacturing, and greater opportunities for training on the job. Arguably, alternatives like these might take time. Consequently, bridging social protection programs need to be implemented in the meantime to help the poor directly with their subsistence needs. For this, instead of imposing mandatory minimum wages, the paper points out that it would be better to use direct and temporary income subsidy, carefully targeted to extremely poor households to meet suitable norms that society considers a public good. Such an approach would be both efficient and equitable, conforming to the general principle of public economics that a public good should be financed by general tax revenues.The study concludes that the time has come for the country to leave the beaten path and try new approaches that would rebalance current labor laws and practices to expand gainful jobs and minimize unintended consequences detrimental to the poor, the young, the women, the less educated, and the unorganized workers

Reviving the Philippine Economy under a Responsible New Normal

After the reclassification of areas under enhanced community quarantine (ECQ) to general community quarantine (GCQ), the urgent task for the Philippine government is to provide an exit plan to revive the Philippine economy. Given the significant economic damage resulting from the shutdown of roughly 75 percent of the country’s total production in the National Capital Region (NCR) and in the CALABARZON and Central Luzon areas, a gradual reopening of the economy will be necessary to prevent further economic damage that could not only be difficult to repair, but also long to overcome. Indeed, based on recent directives from the government, a substantial number of industries and services have thus been allowed to operate in both the ECQ and GCQ areas. However, as the Philippine government begins to calibrate the opening of sectors, there remain concerns as to how this process will affect jobs and livelihoods now and beyond. In this context, an economic recovery plan that talks about short-term, a transition, and full recovery phases— encompassing a revision of the current Philippine Development Plan without losing sight of the long-term goals envisioned in Ambisyon Natin 2040— is still needed. Indeed, a key component of AmBisyon 2040 has been of building resiliency over the long-term, which includes resiliency in health and economic shocks apart from natural disasters. At the same time, this recovery plan should also be accompanied by structural reforms to enhance its implementation. The Department of Finance has crafted a four-pillar socio-economic strategy aimed at: (a) supporting the more vulnerable sectors of society; (b) increasing medical resources to contain the virus and offer safety to front-liners; (c) keeping the economy afloat through financial emergency initiatives; and (d) creating jobs and sustaining the economy. Yet while enumerating the costs of these plans, the said strategy lacked details on how the country could achieve some of the goals without the availability of widespread testing and adequate health facilities. Loan guarantees, cash transfers, and other forms of subsidies can revive disrupted supply chains but cannot restore productivity in the middle of a persisting health crisis, while the uncertainty of a possible outbreak can keep workers from supplying goods and services. It is crucial to have these programs and institutions in place since a number of cities, regions and provinces have started to reopen. A modified community quarantine without the necessary health system investments, protection measures, and economic recovery plan risks amounting to an unregulated herd immunity strategy. Opting for herd immunity allows governments to blame the failure of the health and economic system on the virus, rather than on bad governance. Under current GCQ protocols, the burden on containing the virus is mostly transferred to the public. Unless the government provides mass testing, the problem of information is aggravated, probably raising the transmission risks. Moreover, unregulated herd immunity will be differentially felt by the poor. As healthy workers may recover their earnings from the modified quarantine, the poor, who have limited access to the health services and are thus more susceptible to the virus, are unlikely to benefit from this system. In effect, this will only exacerbate the inequality that prevails in the country. Moving towards a responsible new normal requires a strategy that addresses both people’s wellbeing and the socio-economic weaknesses exposed by COVID-19. Thus, the strategy should have the following elements

The Effect of Fragility on Labour Market Employment and Wages in the Philippines

Fragility refers to weak regional institutions that fail to respond to specific risks and needs of the community. The article aims to measure fragility and its effects on labour market employment and wages. The observed non-work-related migration is used to derive annual fragility indices for regions that are then incorporated into standard labour market employment and Mincer wage equations. The estimates indicate higher employment but lower wages in fragile regions. Under weak institutions, workers will decide to engage in alternative low-paying work arrangements in anticipation of conflict, environmental or income shocks. Furthermore, biases on effects of macroeconomic policies can be noted in regression estimates that do not control for fragility

An Empirical Analysis on the Trade-off between Schooling and Child Labor in the Philippines

In 1996, an award-winning documentary about child labor in the Philippines was shown on national television. The documentary, entitled Minsan lang sila bata, featured movingly how a semblance of childhood could be lost because of child labor.1 It aimed to present the sad plight of child laborers, grim realities of child labor, and to stir up the sensibilities of the viewing public, who, perhaps, were largely unmindful of this distressing reality. Economic theory emphasizes the important role of human capital, among others, in furthering and sustaining economic growth or economic development. It is not without basis to say that Philippine economic development will be anchored, in part, on the quality of the economy’s current and future human infrastructures. The operational word is quality, which presupposes and necessitates an educated, well-trained or highly skilled human resource. The absence of this quality will definitely have a detrimental impact on future productivity. In light of these positions, therefore, this question then begs to be asked: Does the prevalence of child work or child labor encumber on the country’s economic growth and development? This paper looks into the reality that is child labor and tries to understand its existence in light of education realities and schooling issues in the Philippines. It attempts to answer the aforesaid question through the investigation on the seeming tradeoff between child labor and schooling, and through the exploration of the impacts of this tradeoff in both the short term and long term. The exploration and discussion of other determinants of child labor is beyond the purview of this paper. The first section discusses current statistics about the incidence of child labor considering the 1995 and 2001 surveys of children. The second section sets the parameters regarding the operational definition of child labor in the Philippines. The third section reviews the literature on child work, focusing on factors that lead households to choose child work vis-à-vis schooling. The fourth section discusses the theoretical framework, which is essentially a household model on the determinants and causes of child labor. The fifth section presents methodological framework and the two-stage model employed in the empirical investigation. The sixth section discusses the institutional setting considering schooling issues and the data employed in the empirical inquiry. The seventh section presents the results of the econometric analyses, and the last section, the summary and recommendations

Employers’ Demand for Child Labor in the Pyrotechnics and Fashion Accessories Industries in the Philippines

The literature on child labor has largely focused on the supply side determinants, i.e., the causes of child labor from the perspective of the family and its economic decisions. In contrast, this study examines the demand side factors—the rationale of employers for employing child labor based on the differences they perceive between adult and child labor. Specifically, the objectives of the study are to determine and analyze 1) the main reasons for using child labor in selected industries and communities, 2) the socioeconomic contexts of the industries and communities selected for the study, and 3) the employers’ perspectives on the employment of child labor vis-a-vís other types of labor, and related issues. The aim is to use the findings of the study to formulate policies that will address the child labor problem from the demand side, particularly in the pyrotechnics and fashion accessories industries