A high rate of population growth, lack of access to land, insufficient job creation in industry, and a history of inappropriate economic policies contributed to high unemployment and underemployment and a relatively high proportion of the labor force being in low-productivity, service sector jobs in the late 1980s. Real wages were low, having declined at about 3 percent per year since 1960, and relatively weak labor unions were unable to substantially affect the deterioration of workers' earning power.

Labor Force and Employment

Population growth averaged 2.9 percent from 1965 to 1980 and 2.5 percent in the late 1980s. While more than 40 percent of the population was below fifteen years of age, the growth of the working-age population--those fifteen years of age and older--was even more rapid than total population growth. In the 1980s, the working-age population grew by 2.7 percent annually. In addition, the labor force participation rate--the proportion of working-age people who were in the labor force--rose approximately 5 percentage points during the 1980s, largely because of the increase in the proportion of women entering the work force. So the actual labor force grew by 750,000 people or approximately 4 percent each year during the 1980s.

Agriculture, which had provided most employment, employed only approximately 45 percent of the work force in 1990, down from 60 percent in 1960. Manufacturing industry was not able to make up the difference. Manufacturing's share of employed people remained stable at about 12 percent in 1990.

The service sector (commerce, finance, transportation, and a host of private and public services), perforce, became the residual employer, accounting for almost 40 percent of the work force in 1988 as contrasted with 25 percent in 1960. Much of this growth was in small-scale enterprises or self-employment activities such as hawking and vending, repair work, transportation, and personal services. Such endeavors are often referred to as the "informal sector," because of the lack of record keeping by its enterprises and a relative freedom from government regulation, monitoring, or reporting. Informal sector occupations were characterized by low productivity, modest fixed assets, long hours of work, and low wages. According to a 1988 study of urban poor in Metro Manila, Cebu, and Davao cities published in the Philippine Economic Journal, more than half of the respondents engaged in informal sector work as their primary income-generating activity.

Unemployment, which had averaged about 4.5 percent during the 1970s, increased drastically following the economic crises of the early 1980s, peaking in early 1989 at 11.4 percent. Urban areas fared worse; unemployment in mid-1990, for example, remained above 15 percent in Metro Manila.

Beyond the unemployment generated from economic mismanagement and crises was a more long-term, structural employment problem, a consequence of the highly concentrated control of productive assets and the inadequate number of work places created by investment in the industrial economy. The size and growth of the service sector was one indicator. Underemployment was another.

Underemployment has been predominantly a problem for poor, less educated, and older people. The unemployed have tended to be young, inexperienced entrants into the labor force, who were relatively well educated and not heads of households. In the first half of the 1980s, approximately 20 percent of male household heads and 35 percent of female household heads were unable to find more than forty days of work a quarter.

Overseas migration absorbed a significant amount of Philippine labor. From the late 1940s through the 1970s, migrants were largely Filipino members of the United States armed services, professionals, and relatives of those who had previously migrated. After liberalization of the United States Immigration and Nationality Act in October 1965, the number of United States immigrant visas issued to Filipinos increased dramatically from approximately 2,500 in 1965 to more than 25,000 in 1970. Most of those emigrating were professionals and their families. By 1990 Filipino-Americans numbered 1.4 million, making them the largest Asian community in the United States.

In the 1970s and 1980s, quite a different flow of migration developed: most emigrants were workers engaged in contract work in the Middle East and, to a lesser extent, elsewhere. Although some were professionals, the majority were production, construction, and transport and equipment workers or operators, as well as service workers. An increasing number also were merchant seamen. Inasmuch as wages paid for overseas contract work have been a multiple of what Filipinos could earn at home, such employment opportunities have been in great demand. Government statistics show that overseas placements of land-based workers increased from 12,500 in 1975 to 385,000 in 1988, a growth rate of about 30 percent per annum. The number of seamen also increased, from 23,500 in 1975, to almost 86,000 in 1988. The average stay abroad was 3.1 years for land-based workers and 6.3 years for seamen.

In 1982 the Philippine Overseas Employment Administration was established in the Ministry of Labor and Employment. The Philippine Overseas Employment Administration consolidated responsibility for regulating overseas land-based workers and seamen, supervising recruitment, as well as adjudicating complaints and conflicts. The agency also was tasked with promoting employment opportunities abroad for Filipinos. Overseas employment created two benefits for the economy: jobs and foreign exchange. The total number of placements abroad from 1980 through 1988, 3.2 million, was about one-half the growth in the country's labor supply during that period. Remittances through the banking system for the period 1983 to 1988 totaled approximately US$4.6 billion, an amount equal to 14 percent of merchandise exports during the same period. The Central Bank estimated that remittances passing through "informal channels" might be as much as twice the documented figure. If so, export of labor would be the largest single earner of foreign exchange.

Labor Relations

From independence in 1946 until martial law was declared in 1972, the government encouraged collective bargaining and, except for setting up a commission in 1970 to supervise the fixing of minimum wages, involved itself minimally in labor relations. For most of the martial law period (1972-81), strikes were forbidden or severely limited. The Marcos labor code of 1974 made arbitration compulsory. The right to strike was partially restored in 1976, but with considerable restrictions. The Aquino government took a somewhat more liberal approach to labor, but some of the structures of the Marcos period remained.

Organized labor in the Philippines has been relatively weak. In 1986 it was estimated that about 2.2 million Filipinos were part of the union movement, accounting for approximately 20 percent of the wage-and-salary work force or 10 percent of the total labor force. These workers were organized into some 2,000 unions, half of which were not connected to a national union or federation. In 1987 only 350,000 workers were covered by collective bargaining agreements.

The largest union body was the Trade Union Congress of the Philippines (TUCP). Formed in December 1974, it was designated the official labor center of the Philippines by the Marcos government. Another labor organization, the Kilusang Mayo Uno (KMU), or the May First Movement, was formed in July 1980, bringing together nine broadly based, more ideologically oriented unions. The two major union centers represented sharply different visions of the role of unions in society. Although TUCP supported Marcos, it represented itself as a proponent of nonpolitical unionism, concerned primarily with the collective bargaining process. The KMU was more openly political, projecting itself as a proponent of "genuine, militant, and nationalist unionism." Going beyond collective bargaining, the KMU called for the formation of worker solidarity movements and advocated a nationalist-oriented alternative to the prevailing economic and social policies of the government. The Labor Advisory and Consultative Council (LACC), formed at the onset of the Aquino administration in 1986 by then Labor Minister Agusto Sanchez, drew the various factions of the labor movement together to advise the Ministry of Labor and Employment. Membership in LACC included the KMU, the Federation of Free Workers, Lakas Ng Manggagawa Labor Center, and, for a short while, the TUCP.

When Aquino came into office in 1986, she had the backing of a wide spectrum of the population, including those affiliated with labor unions. In her May 1 speech that year, before a large and enthusiastic gathering of labor groups, Aquino presented a package of labor-law reforms, including extension of the right to strike, making it easier to petition for a union certification election, and abrogation of repressive labor legislation decreed by the Marcos government. Soon, however, the president began to shift ground as she received vigorous protests by both Filipino and foreign businessmen against her May Day promises. The pledges were rethought, modified in some cases, and not promulgated in others. This willingness to respond to the interests of the boardroom rather than the shop floor also extended to official appointments. In particular, her first minister of labor, Agusto Sanchez, was considered to be too prolabor and eased out within a year of his appointment.

The TUCP was generally supportive of the Aquino government, but the KMU and other progressive unions resisted the conservative drift of her administration through strikes, demonstrations, and antigovernment rallies. The KMU gained influence through its leadership of the national strike, or Welga ng Bayan, in 1987, 1989, and 1990. From September to December 1990, the KMU led a series of general strikes in response to dramatic increases in the prices of petroleum products. These labor actions were noteworthy both because of a heightened level of conflict between strikers and the authorities and because of the participation of professionals and other middle-class groups.

Repression of labor activists, widespread during the Marcos era, resurfaced early in the Aquino administration. In November 1986, the chairman of the KMU was murdered. The following January, the army opened fire on a march of the Peasant Movement of the Philippines (Kilusang Magbubukid ng Pilipinas--KMP) and their supporters who were protesting the lack of government action on land reform. Eighteen were killed and nearly 100 wounded. In 1990 the government charged two KMU labor leaders with sedition: Medardo Roda, the head of PISTON, a federation of drivers, and Crispin Beltran, the chairman of KMU. Old charges of slander and fraud dating back to 1967 and 1971 were revived against Beltran. The government also imprisoned the leader of the KMP, Jaime Tadeo, on ten-year-old fraud charges initiated against him by the Marcos government. After a 1990 violent strike, during which an estimated 500 participants were arrested, both the military and government officials suggested banning the KMU as a communist-front organization.

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Source: U.S. Library of Congress