Labor and Economy

1. 1 In partial completion of IR 207.2 LABOR STANDARDS, JUSTICE and EQUITY
Dean Jonathan P. Sale, LlB, PhD
Submitted by Alfredo V. Primicias III avprimicias@up.edu.ph 0925-5259824
1) At least one writer has opined that the cause of global financial crisis is the underestimation of risk but he cautions that there should be less instead of more regulation. Do you agree? How does government regulate the recruitment and placement business? What techniques does government use to regulate such business? Should the regulatory function of government over recruitment and placement activities be phased out or stopped? Why or why not? Explain fully considering the migration context, evolving nature of programs and gaps and realities discussed in “Social Security and Migrant Workers in the Philippines: Social Protection for the Country’s Economic Protectors.”
Answer:
Greenspan (2008) viewed that the “culprit behind the current global financial crisis is the “underestimation” or “under-pricing of risk,” as shown by “lax and fraudulent mortgage lending practices, indiscriminate securitization of credit products and over reliance on risky short term funding for long term assets.”1
“The Laws of Migration… laws of population and economic laws generally, have not the rigidity of physical laws.”2 University of Pennsylvania E.S. Lee was quoting the second book of Ravenstein where Humphreys’ reaffirmed the conclusion by stating, “migration was rather distinguished for its lawlessness than for having any definite law.”3
But what is migration. Lee (1965) says that it is a “permanent or semipermanent change of residence.”4 He even included a move across the hall from one apartment to another, as to moving from India to the US. He further gave us four factors of migration which I then figured can then be combined with Exit, Voice and Loyalty of Hirschman (1970)5 and Wage, Voice, Exit, and Public Policy: a study on the mobility of labor in the Philippines of Sale (2012):
2.1 Factors associated with the area of origin
2.2 Factors associated with the area of destination
2.3 Intervening obstacles
2.4 Personal factors
In the Philippine context, according to Dean JP Sale of the School of Labor and Industrial Relations, University of the Philippines, “(i) enterprises are fully mobile and will move to the community where their set preference patterns are best satisfied; (ii) enterprises have full knowledge of differences among revenue and expenditure patterns; (iii) a large number of communities exist in which enterprises may choose to operate; and (iv) bigger enterprises choose to operate in NCR while small enterprises choose to operate outside NCR because of certain factors.
Assimilating these with other models on labor mobility are Kochan’s (1980), James March and Herbert Simon’s voluntary turnover model and Hirschman’s, where “voluntary turnover is
1 Page 1, Labor and Social Security Laws in the PH: Emerging Enforcement Approaches in the Informal Sector, Sale, JP, UP, 2009.
2 Page 47, The Theory of Migration, Lee E.S., Univ Pennsylvania, 1965.
3 Ibid. Page 47.
4 Ibid. Page 49.
5 Exit or leaving without trying to fix things. Voice or speaking up and trying to remedy the defects. Loyalty or modify the response causing one to stand and fight (voice) rather than to cut and run (exit).

2. 2 In partial completion of IR 207.2 LABOR STANDARDS, JUSTICE and EQUITY
Dean Jonathan P. Sale, LlB, PhD
Submitted by Alfredo V. Primicias III avprimicias@up.edu.ph 0925-5259824
influenced by ease of leaving and desirability of leaving” while other may consider “voice since there are existing mechanisms that work in the present workplace.”6
I simply understand these models because as an HR practitioner, I’ve seen a lot of our employees (particularly when I was working both in the Hotel and Restaurant industry and BPO Industry) leave the country for ‘greener pastures’. In fact when I did my 2010 year-end report where compilation of results of exit-interviews were delivered to top management, a staggering 63% of our high performers leave because of job opportunities abroad despite of the fact that they would be demoted in terms of rank or level, but definitely promoted in terms of salaries and benefits.
The microcosmic view above is fully supported by outmigration of our talented Filipino workers. OFWs leave because of the high “demand from other countries that can offer employment and comparatively high pay combined with high population growth and with a lack of attractive opportunities in the Philippines due to modest growth of both the industry and service sectors.”7 The Philippine government totally supports this by institutionalizing outmigration as protected by the Labor Code in 1974 and formation of agencies like POEA and OWWA to facilitate bilateral agreements with other host countries. As a positive economic consequence that made the Philippines as the world’s third largest recorded remittance recipient. However, it must be underscored that these remittances are used more on consumption rather than direct investment which can yield more prospects of job- generation.
However, some economists predict that this trend would not be a sustainable solution. The Marcos regime (as followed by his predecessors Aquino and Ramos), although had created structures to assuage deployment of OCWs (overseas contract workers as a former term for OFWs), considered this as a temporary economic solution since Agriculture and Manufacturing as the paramount economic tickets. Therefore prediction then, as foretold by today’s reality that the, “demand for Filipino workers has been rising, but vacant overseas jobs are becoming more difficult to fill. Data from POEA show that nearly 72 percent of approved job orders were unfilled in the second quarter of 2011. The gap is prominent among semiskilled jobs, such as welders, plumbers, and electricians. POEA’s field survey finds that applicants fail to get overseas jobs because of i) lack of experience (at least two years of experience in their respective fields is often required), ii) limited years of formal education (i.e., 10 compared to 12 years of basic education), iii) lack of license, iv) lack of vocational-related training, and v) insufficient work experience abroad. In summary, while overseas migration is a testament to the competitiveness of Filipino workers in the global market, it also reflects a domestic economy that is unable to provide good jobs to the majority of its people. A number of factors explain the country’s weak employment record, slow progress in reducing poverty, and rising outmigration. Foremost is the lack of structural transformation in the Philippine economy, as evidenced by its weak agriculture and manufacturing sectors — the two sectors that could have provided jobs to the poor.”8
In 2015, ASEAN integration would allow several markets to be open principally of goods and services that will eventually affect each partner- counties’ employment rate as caused by, among other things, the deluge of global and regional talents competing with local talents. Rightly so,
6 Page 2, Wage, Voice, Exit and Public Policy: A Study on the Mobility of Labor in the PH, JP Sale, 2012.
7 Page 16, Leveraging Service Sector Growth in the Philippines, Raja Mitra, ADB, 2013.
8 Op Cit. Page 79, Philippine Development Report- Creating More and Better Jobs.

3. 3 In partial completion of IR 207.2 LABOR STANDARDS, JUSTICE and EQUITY
Dean Jonathan P. Sale, LlB, PhD
Submitted by Alfredo V. Primicias III avprimicias@up.edu.ph 0925-5259824
the focus of Sale’s (2013) Social Security and Migrant Workers in the Philippines: Social Protection for the Country’s Economic Protectors started with a daring and soul-searching question, “Imagine if the PH has no safety net called ‘OFW remittances’? No … Filipino workers remitting around US$2B a month?” The 10M strong OFWs have provided sustenance funds for families back home, consequently creating a consumption- led and service- led economy.
With this commercial paradigm, over the years government has relented to build structures that will protect our migrant workers, “The 1987 Constitution of the Republic of the Philippines lays down the basic policy framework. It requires the state to provide full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all.”9 As a result, the structures that the government instituted are the following:
2.a Occupational safety and health measures
2.b Employees Compensation and State Insurance Fund
2.c Social Security
2.d Government Service and Insurance System
Moreover, Sale (2013) mentioned that the PH has ratified three ILO conventions related to social security, namely:
2.i C165 Social Security Convention, 1987 (seafarers- revised)
2.ii C157 Maintenance of Social Security Rights Convention, 1982
2.iii C118 Equality of Treatment Convention, 1962 (social security)
Then the unfortunate plight of SG OCW Flor contemplacion paved the way for the Republic Act 8042 to be passed and billed as The Migrant Workers and Overseas Filipino Act of 1995. As an outcome:
2.a.i laws are established to have higher standard of protection and promotion of welfare
2.a.ii laws are enlarged to the meaning of illegal recruitment and increased the penalties
2.a.iii laws are provided to deregulate and phase-out POEA (but eventually repealed)
More governmental protection measures:
2.b.i PH will only deploy migrant workers to countries with existing labor and social laws.
2.b.ii The host country is a signatory to and or a ratifier of multilateral conventions, declarations and resolutions.
2.b.iii The host country has concluded a bilateral agreement or arrangement with the government.
In retrospection, venturing to answer the question, “(2.c.1) The cause of global financial crisis is the underestimation of risk and that there should be less instead of more regulation. Do you
9 Page 169, Social Security and Migrant Workers, JP Sale, 2013.

4. 4 In partial completion of IR 207.2 LABOR STANDARDS, JUSTICE and EQUITY
Dean Jonathan P. Sale, LlB, PhD
Submitted by Alfredo V. Primicias III avprimicias@up.edu.ph 0925-5259824
agree? (2.c.ii) Should the regulatory function of government over recruitment and placement activities be phased out or stopped? Why or why not?”
In my view, addressing these two questions must involve an actual government articulation of its economic agenda. Among the three identified industries, agriculture, manufacturing and service, the government must focus on designing and implementing potent and sustainable economic measures.
In fact, in the past two decades, “the services sector remained to be the major engine of economic growth, particularly in the modern marketing and financial services sector. This is in contrast to the paltry performance of the manufacturing and agriculture sectors. The services sector is a dominant source of employment and has increasingly absorbed labor for the period 1991- 1997. This pattern was reversed between 2000 and 2006, particularly in the community and personal services which account for the primary share of services employment. By contrast, the agriculture sector, which took up a declining share of the employed labor force between 1991 and 1996, has filled in the slack in the services sector for the period 2000- 2006.”10
Moreover, “overseas migration may be a significant outlet for educated workers.”11 This is an important measure to underscore primarily on the relevance of the government’s policy and implementation programs to address literacy and productivity by advancing education in the community as a way to pursue development of the country’s human capital. “The major priority reforms in education have been spelled out in the Basic Education Sector Reform Agenda (BESRA). Implementation of the agenda involves: school- based management; enhanced learning efficiency such as through the K+12 system; quality assurance and accountability; and complementary learning interventions.”12
In 1986 (post Marcos regime) agriculture has the highest number of employment among industries with a value of 49.94%. However since then agriculture faced a consistent decline in employment despite of Pres. Corazon Aquino’s determination to enact the Comprehensive Agrarian Reform (where in contrast it was in Pres. Noynoy Aquino’s presidency where the distribution of Hacienda Luisita occurred). Moreover, the loss in agriculture sector is gained in the services sector- being the main employment driver of the economy: 36.71% in 1986, 39.73% in 1990, 40.54% in 2005 and 51.44% in 2009. To mirror this is an illustration coming from the NSCB (2012) and BSP (2013) that showed GDP contribution of three sectors between 2004 and 2009.
Finally, as expressed earlier, only when our economic architects and lawmakers fundamentally recognize a sustainable economic program (from design to implementation) can we then make sense of protection or regulatory functions of the government.
10 Page 3. Stubborn Unemployment and Employment Vulnerability in the Midst of Economic Growth: The Philippine Case, Cabegin, Dacuycuy and Alba; Policy Brief- DLSU.
11 Pages 30 and 31, Assessing Development Strategies to Achieve MDGs in the Republic of the Philippines, Roehlano M. Briones, UN Department for Social and Economic Affairs, 2011.
12 Page 28, In Pursuit of Inclusive Growth- Philippine Development Plan 2011- 2016.