Intensification of Exploitation and New Forms of Exploitation

From Antonio Tujan, Globalization and Labor and Social Investigation in Southern Tagalog. [4 May 1998]

PHILIPPINES: Antonio Tujan Jr. discusses globalization and labor in Southern Tagalog,a region south of Manila, the Philippine capital.

(Note: Cut and paste from Antonio Tujan's paper, Globalization and Labor and Social Investigation in Southern Tagalog)

1. Labor Flexibilization

Due to high labor costs in the imperialist countries, monopoly capitalist firms have resorted to international subcontracting. The labour-intensive aspects of production are assigned to countries where wages are cheap. Under the international subcontracting scheme the imperialist countries keep high technology under their control while assigning low-value added processing to underdeveloped third world countries.

A new device by which the capitalists further intensify their exploitation of the workers of the underdeveloped countries is the phenomenon of flexible-hiring schemes which take maximum advantage of the labor market to hire the best labor force on the cheapest terms. This is achieved by reducing the expensive regular workers to the bare minimum in the most important positions in the production process and in supervision, removing the bulk of the workforce and replacing them with casuals and contractuals.

For example, Laws Textile which exports shirts mainly to the US for such clients as JC Penney has only 390 regular workers but 1,700 contractuals which are mostly semi-skilled new recruits from the government's technical training schools and are contracted for only three months at a time.

The local capitalists have taken on the practice in this so-called era of globalization.

An example is Shoemart, one of the biggest department store chains in the Philippines. Shoemart has an estimated 20,000 employees, but only 1,731 rank and file employees are categorized as regular workers and protected by the collective bargaining agreement between the union and management. The rest are provided by recruitment agencies and are hired in contracts of less than six months.

In 1992, an ILO study revealed that 73% of factories in the Philippines were already implementing various forms of flexible working arrangements. These include labor-only contracting, contract and casual hiring, piece-rate and part-time system, rotations, extension of workweeks and other cost-cutting schemes.

A casual/contractual employee works for less than six months and is therefore not qualified for benefits and protection for job security and the like, and not eligible to become a member of a trade union. A contractual employee works for a fixed short-term contract, while a casual employee has an open-ended contract but is terminated before six months of service so that he cannot become a regular worker.

Factories or enterprises engaged in mass, hand production like garments, electronics subcontractors and handicrafts or in unskilled or semi-skilled work are adaptable to the system of using casuals, including piece-rate, apprentice and trainees. A Department of Labor and Employment (DOLE) study from 1988-1990 showed that 40% of factories were employing temporary or casual workers, many of these foreign companies in the electronics and garments industries.

Manila Bay Hosiery is the main producer of socks and once employed thousands of workers. It reduced its regular workforce gradually to only 257 at present while increasing the number of contractuals. The management set up an independent shop inside the factory which employs workers on five-month contracts and to which the company subcontracts job orders.

Labor-only contracting (LOC) is another form of labor flexibility scheme gaining popularity among capitalists. It allows even more flexibility and less costs for the factory because the workforce is now agency-hired and management is shielded from issues of workers' benefits, unionization and work scheduling. LOC is technically illegal, but the Labor Code has many loopholes.

An outstanding albeit somewhat odd example is San Miguel Corp (SMC) which is the largest food and beverage corporation in the Philippines. It generates four percent of the country's GNP, and accounts for six percent of the country's total tax revenues. It is one of the three Philippine corporations which made it to the 50 top TNCs from the Third World. SMC has been implementing a streamlining program to reduce production costs. Departments which were considered nonessential were closed down and early retirement schemes were offered removing thousands of workers in various branches and subsidiaries.

In an unusual form of labor contractualization, SMC laid off workers at its Manila Glass Plant as a cost-cutting measure. It then organized the workers it laid off into a cooperative which now served as a labor agency supplying SMC with contractuals for non-core production positions.

Unlike the usual agency hiring, the workers are not terminated before six months in order to evade local laws which mandate permanent status after six months of employment. The workers, who are now working in their old positions as contractuals through their cooperative, work continuously, but do not enjoy benefits, wage increases and job security—they are the first to get booted out during seasonal retrenchments. They receive wages of P180 per day compared to regular workers who receive up to P400.

2. Flexible Work Schedule: Intensification of work and lengthening of working hours

Cost-cutting in this era of globalization also calls for flexible work schedules, oftentimes requiring workers to undergo job rotations and the like to reduce expenses for overtime pay and increase productivity per worker. An example of this is Wyeth Philippines which changed its workweek schedule to what is called the 6-2 scheme where an employee works continuously for six days and gets two days off. As a result, the worker works on Saturdays and Sundays without overtime pay and is forced to work more than 40 hours per work week in violation of the Collective Bargaining Agreement (CBA).

In many Export Processing Zones (EPZs), it is normal for workers to work from 10 to 12 hours per day. In some cases they work longer. In a Taiwanese firm based in the Cavite Export Processing Zone (CEPZ), workers are forced to work for 14 hours from Monday to Saturday, and 8 hours on Sundays. During peak periods or when factories have to catch up on their shipment, workers are made to work from 7:00 in the morning to 9:00 in the evening and sometimes even up to midnight or 3:00 the following day.

Forced overtime is implemented by many factories in the CEPZ. Company rules impose disciplinary actions ranging from warning to suspension and termination if workers refuse to comply with orders from management for them to work overtime.

A not too subtle way by which capitalists force workers to do overtime without compensation is to require them impossible quotas. Workers who fail to meet the quotas within 8 hours are made to work the extra time until they are able to complete their quotas.

Coupled with very bad working conditions like lack of ventilation and protection from hazardous chemicals, long working hours have led to serious health problems. In a case that shocked many people, a woman worker, Carmelita Alonzo, at VT Fashion Image died from pneumonia as a result of continuous long hours of forced overtime work.

3. Union Busting and Other Forms of Repression

An insidious effect of contractualization and such other forms of flexible hiring is to increase the number of non-unionizable workers. As a result of casuals and contractuals forming the bulk of the work force, the union's bargaining position within each enterprise is greatly weakened.

It is no wonder then that contractualization has also been closely identified with efforts of businesses to bust unions, replacing regular workers with contractuals or closing down shops and replacing them with new shops hiring only contractuals. This is the case of Magnolia-Nestle where the workers are currently in the thick of their struggle against contractualization and union busting.

Before Nestle merged with the Magnolia dairy products division of the San Miguel Corporation, the union had been successful in fending off the retrenchment program that was being implemented to impose contractualization. Since 1988, the company had stopped hiring workers on a regular basis, opting to hire contractuals instead. By 1995, contractuals comprised two-thirds of the labor force in the company. The union went on strike in late 1995 to protest unfair labor practices, including the retrenchment program.

In October 1995, after the transfer of Magnolia to Nestle, the management refused to negotiate with the union, and afterwards Nestle forced many workers to retire and selectively rehire the others. This meant the reversal of gains achieved in the previous CBAs.

Issues regarding the evaluation of jobs, wage adjustments and others were finally resolved through a settlement under the Department of Labor and Employment (DOLE) in November 24, 1996, six days after the union members wore black armbands and staged a picket. But instead of obeying the Memorandum of Agreement it signed with the union, on January 11 Nestle instead dismissed the officials (10) of the union and suspended 200 members of the union allegedly for breaking the company's code of conduct for staging the picket which led to the settlement. Two days afterwards, the union went on strike.

Another celebrated case of union-busting is that of Rubberworld Philippines, the manufacturer and distributor of Adidas shoes and sportswear which used to have a work force of more than 5,000 workers. In 1991 the company started a retrenchment program and phased out three of five plants resulting in the lay-off of 2,300 workers. While management claimed financial losses as the reason, the fact was that the company actually subcontracted its production. Rubberworld finally closed shop and shifted production to smaller plants such as Rubberland with 400 workers in 1996. All of Rubberland's workers are agency-hired contractuals (through EC Dynamics Manpower Development) and receive lower than the legal minimum.

The establishment of export processing zones and other similar industrial estates has been welcomed not only by foreign investors but also by local companies because of its avowed anti-union policy. This phenomenon was started in the province of Cavite by its governor Remulla in the '80s. Existing unions were busted, strikes were violently broken and union organizers were harassed including three cases where organizers were disappeared or summarily executed.

When workers of Basic Chemicals and Plastic Inc., (BCPI) in Carmona, Cavite attempted to go on strike, Gov. Remulla went to the picketline within the hour after the workers declared their strike and warned theworkers to remove their picketline, or else. The strike was aborted and those who participated were dismissed from their jobs.

According to the Center for Trade Union and Human Rights, a total 80 cases of violations occurred in 1996 involving 2,436 workers. These included a murder and an attempted murder of unionists, a frustrated massacre of 26 workers and the arrest of 253 workers. There were 25 cases of assault of the picketlines involving 1,338 victims. For 1997, 16 have already been arrested, one was abducted and 51 escaped an attempt at massacre. Assaults and grave threats and coercions of unionists is common, victimizing 1,484 workers and unionists in 1997.

4. Low wages

As of January 1998, the cost of living for a family of six in the National Capital Region has reached P410, but the present daily minimum wage is only P187. Just to make both ends meet, two members of the household must find regular employment.

The absence of a living wage, or consistently depressed wages below the already low cost of living standards in the Philippines is typical of an underdeveloped country and is the source for monopoly capital's superprofits. Besides depressed minimum wage standards, additional profits are made because the majority of enterprises do not implement the minimum wage.

Companies are legally able to evade the minimum wage law by hiring workers on a piece-rate basis or by hiring workers as trainees or apprentices. Some industries also apply for exemptions on the basis of distressed status like the garments factories. Companies also flaunt the law by hiring casuals or contractuals who are afraid to complain of being paid less than the level mandated by law. According to the government's nationwide official survey on violations of labor standards in February 1997, minimum wage was the most violated labor standard, followed by other wage standards like the 13th month pay and remittance of employees contributions to the Social Security System.

In a study of garments companies, only seven out of 16 enterprises paid the mandated minimum wages. But these seven enterprises base these wages on quotas. Workers who lag behind get wage deductions.

5. Women and Child Labor

With the advent of semi-processing export industries like garments and electronics subconductors in the 1970s and 1980s, women have increasingly become wage and salary earners, in many cases comprising the majority of employees, especially for enterprises in export processing zones. Women are extremely marginalized and constitute the majority of the unemployed. They are employed only because the company is in need of persons who are capable of repetitive and meticulous work like in electronics subcontractors and garments like embroidery. In other situations, they have to be more qualified and have to work harder in order to keep their jobs. And where they have jobs, women suffer from double work as they juggle employment and house work.

There is also an increase in the employment of child labor. They are preferred by some companies because they can be paid very low wages. Children are mostly hired by subcontractors where they perform simple tasks such as revising, or removing stray threads/yarn. Many subcontractors also hire children for simple embroidery such as hemming. This is mostly done not in factories but in cases where subcontractors put out work to homes.

According to the International Labor Organization, there are 250 million working children aged between 5 and 14 in underdeveloped countries. Sixty-one percent of these children are in Asia, 32 percent in Africa and seven percent in Latin America.