Chapter 8
LABOR AND EMPLOYMENT
See
Human resources are the key to
‘economic development. What the people
consider to be important goals in their
lives — how they think about work, how
creative or skillful they are, how intelli-
gent and motivated they are — will
determine whether their country will
develop or not. The other economic re-
sources like land and capital assume
their importance only insofar as people
make use of them.
Oil is a very important economic
resource, but as long asit remains in the
bowels of the earth, it just remains dor-
mant. It becomes a useful and precious
resource only when man drills it out,
refines it, and distributes it to the end
users. Machines assumeimportance only
when they are intended to function and
serve man’s need. They are intended to
facilitate man’s work. Thus, the notion
that a country’s natural resources are
the key to its development is fallacious.
Laborisa very important resource.
It is also important that some noted
economists postulate that labor is the
source of all value. This book examines
some of the important hypotheses and
principles economists have developed
about labor. Although not all of them
hhave been tested and accepted, they
represent an index of what should be
known about labor problems and labor
markets,
Labor Problems
Labor problems represent conflict
on social reality with social ideas that
normally rise out of employment. Un-
employment is a classic example. Most
People agree that those who want work
and are capable of working should have
jobs. A problem would exist if people
could not find the job that they had been
preparing for. Unemployed people are
thus considered part of the labor prob-
Jem,
When we talk of labor problem, we
are referring here to working relation-
ship which is considered below the ideal.
Many of our workers sent to the Middle
East countries are doing well in their
Jobs. They can thus send part of their
income to the Philippines for the sup-
port of their families here. Contracts
between the workers and the contrac.
tors are facilitated by the government or
by government approved employment
agencies. Now, if some unscrupulous
employment agencies fleece applicants
and run away with the money intended
for application fees — a labor problem
occurs,156 INTRODUCTORY ECONOMICS
Those who take part in employ-
ment relationships must work out mu-
tually satisfactory arrangements.
‘Among the things that have to be deter-
‘mined are the part individual workers
havetoplay: theirresponsibilities, privi-
leges, opportunities, etc., return for the
payment given by the employers. The
employers, in turn, mustclarify theterms
of agreement. A mutually satisfactory
arrangement spelled out from the very
beginning would lessen labor problems.
‘The government and the private
sectors have the capabilities to provide
employment opportunities to members
of the labor force who are looking for
work, If both the government and the
private sectors cannot adequately pro-
vide this need, then big labor problem
exists.
Areas of Labor Problem
Unemployment and Underemploy-
ment
Anindividual suffers eonomicand
social dislocation if he is unemployed
and underemployed. A person is consid-
ered unemployed if he is a least 15 years
old, willing and able to work but cannot
find work. Underemployed is an em-
ployed person but works for less than 40
hours a week even he wants to work for
more hours.
‘There has been some misunder-
standing among researchers and econo-
mists regarding the definition of unem-
ployment rate. As an example, consider
the employment figures published by
the National Census and Statistics
Office (NCSO) for 1992 which showed
the Philippine unemployment rate to 13
percent. Quite apart from the question
of underemployment, it would seem im-
plausible that in the middle ofthe reces-
sion, the Philippines posted a figure
close to what may be considered full
employment in the United States or the
United Kingdom, respectively. The ex-
planation is tobe found in the definition
of “employment”: anyone who worked
one hour in the preceding three months
is considered employed. In 1976, the
reference period was changed from the
“the past week” to “the past quarter.”
Moreover, employment was expanded
to include such activities as home gar-
dening and raising poultry, as long as
there was a harvest. These changes ef-
fectively increased the numerator of the
employment rates. The base of the em-
ployment rate, which is the labor force,
wasalsochanged. Where before thelabor
forceincluded the population 10 years or
over, who were either employed or look-
ing for work, the cutoffage was changed
to 15 years, thus reducing the size of the
denominator. All these changes tend to
reduce the unemployment figure.*
For our purposes, however, we
consider a person unemployed ifhe is at
least 15 years old, willing and able to
work, but cannot find work. Thus, @
member of the labor force is anyone who
is at least 15 years old, able and willing
to work.
Unemployment rate in excess of 6
percent of the labor force represents an
emergency situation and should be rem-
edied right away. Unemployment is not
only considered as economic problem,
(oss of job, lack of income, inability to
feed one’s family, etc.) but is also a social
problem. Unemployment ean lead to
petty crimes or outright holdups or rob-
beries. It can also lead to social
dissatisfactions. The government must,
therefore, place the problem of unem-
Rosa Linda P. Tidalgo and Emmanuel
‘Bsguerra, Philippine Employment in the 1970's"
IDS Working Paper 82-02, 1982.
ployment among its!
Underemploym
Jem. An underemple
person who works fo
per week, despite th
to work for more he
ment exists in some
example, jeepney 4
shifts and in substan
turally based jobs
Underemploys
divided in two: visibl
and in visible und
ible underemployms
number of people
hours per week and
work. Invisible und
fined as the numbs
40 hours or more
‘wanting additional’
rette vendors, for e
underemployed. Th
Shours per day for’
still want addition
augment their me
Inadequate Wag
Wages and ¢
providea minimus
can be regarded
equate wages ant
ity of wages to &
creases in the pr
from the inability
plyhimselfwithtt
intelligence to pe
enterprises and fi
‘The coneept
as that level af
sumption of basi
estimated for far
teristics for the P
ig also called the
Jow which a fam
‘The Depat
Employment (D¢LABOR AND EMPLOYMENT 187
ployment among its first priorities.
Underemploymentis another prob-
Jem. An underemployed is an employed
person who works for less than 40 hours
per week, despite the fact that he wants
to work for more hours. Underemploy-
ment exists in some part-time work for
example, jeepney drivers who work in
shifts and in substantially large agricul-
turally based jobs.
Underemployment is further sub-
divided in two: visible underemployment
and in visible underemployment. Vis-
ible underemployment is defined as the
number of people working less than 40
hours per week and wanting additional
work. Invisible underemployment is de-
fined as the number of people working
40 hours or more per week and still
wanting additional work. Thestreetciga-
rette vendors, for example, are invisibly
underemployed. They work formorethan
Shours per day for 40 hours per week yet
still want additional hours of work to
‘augment their meager income.
Inadequate Wages
Wages and earnings that fail to
providea minimum of comfortable living
can be regarded as inadequate. Inad-
equate wages can result from the inabil-
ity of wages to catch up with the in-
creases in the prices. It can also result
from the inability of the worker to sup-
plyhimselfwith thenecessary skills and
intelligence to perform work needed by
enterprises and firms.
‘The concept of subsistence income
as that level affording minimum con-
sumption of basic necessities has been
estimated for families of given charac-
teristics for the Philippines. The income
is also called the poverty threshold, be-
low which a family is considered poor.
The Department of Labor and
Employment (DOLE) defined poverty as
the condition where a family receives
insufficient income to purchase or meet
the recommended minimum nutrient
requirements and basic needs in cloth-
ing, education, medical care, housing
and fuel.
Quoting the results of a 1985 fam-
ily income and expenditure survey, the
DOLE said the National Economic and
Development Authority (NEDA)has set
the poverty line for a family of six that
receives P2,500 amonthin the National
Capital Region (NCR) and P2,000 for a
family outside the NCR.
The DOLE’s labor statistics serv-
ice reported that in 1985, there were
around 4.785 million families with
monthly income below P2,000 and 6.628
million families below P2,500,
‘The labor statistics service said
that on the basis of the data gathered,
the number of families below the pov-
erty line now is about 58 percent of the
total 9.566 million families.?
Evidences ofinadequate wages can
be seen in the deterioration of the pur-
chasing power of the peso, the existence
ofslumareas, and other conditions asso-
ciated with poverty.
Industrial and Labor Management
Conflict
When workers strike, or when
employers resort to lockouts, inconven-
ience between the two groups can follow.
Prolonged strikes or lockouts could be
harmful for both parties. Work stop-
pages could result in less income for
both sides. Violence, and even death,
can occur because of strikes.
‘Olaf, Giron, “Poor-rich gap widens,”
Manila Bulletin, Janay 1, 1987, p&.‘Has management been faithful to
the letter and intent of the Labor Code?
Have they taken the interest of their
employees to heart, or have they been
cheating them? A positive answer to
this question will goalong way in resolv-
ing labor-management conflict; a nega-
tive answers will prolong the conflict.
Has there been a restraint on the
part of the unions in the exercise of their
right to strike? If we look at the reports
for the years 1984, 1985, and 1986, the
answer is negative.
The Bureau of Labor Relations
(BLR) reports said that as of May 2,
1986, the year’s strike-count reached
197, exceeding the 182 strikes declared
during the same period in 1985, and 86
declared in 1984.
A total of 78,976 workers were in-
volved in the 1986 strike count, surpass-
ing 1985's figure of 46,663 workers and
the 1984 count of 16,473 workers.*
Economic Insecurities
‘Threats of interruptions in earn-
ings or in one’s work can be regarded as
a serious problem. A head of the family
would be terribly insecure if he is not
certain that his job would last long
enough. Illness, accidents, retirements,
threats of lockouts or strikes can also
pose as problems.
People have to provide funds for
emergencies like illnesses, accidents,
threats of lockouts and strikes. If work-
ers arenot secure in their jobs, orif their
wages are just enough to meet bare
subsistence, provisions for emergencies
just mentioned could simply not be met.
WJoey Salgado, “Labor, cool to Aquino’s ap-
peal for restraint”, Malaya, May 12, 1986, p.1
INTRODUCTORY ECONOMICS
Inareport by aleading newspaper,
businessmen and investors expressed
fear of an escalation of strikes and work
stoppages resulting from the “strike lib-
eralization” policy outlined by President
‘Aquino in her Labor Day speech, May 1,
1986. According to the Employers Con-
federation of the Philippines’ president,
Raoul Inocentes, “considering the tight
economic situation, business firms are
hesitant to invest or expand."
However, in fairness to the Presi-
dent, she likewise exhorted the workers
torestrain themselves from abusing the
right to strike and rid themselves of
labor racketeers and little dictators.
Comparative Unemployment
Figures
‘We have just seen the local figures
andproblemsregarding employment and
unemployment. Is the Philippines the
only country having problems regarding
unemployment?
Time magazine reported that for
1986 and 1987, countries worldwide are
expected to have a mixed impact on the
uncomfortable levels of unemployment
around the world. In Western Europe,
the jobless rate will decline from its
current 12.2% to 10.3% by the end of
1987. But no improvement at all is seen
for the 13.3% unemployment rate in
Britain.
In the United States, unemploy-
ment will rise slightly from 7% to 7.3%
bythe year’s end andremain unchanged
for 1987. Across the Pacific rim, jobless
rate will remain relatively low for
almost countries like Taiwan, South
Korea, Japan, Indonesia, Hong Kong
Rey M, Lagonsin, “Strikes, Work Stops,
Worry Businessmen", Philippine Daily Inquirer,
May 7, 1986, p. 9
Countries having un‘
Jems are Australia 7.
pines 12.0%
Table
‘Unemploym
‘on the Pac
Australia
Hong Kong
Indonesia
Japan
Malaysia
Philippines
Singapore
South Korea
Taiwan
Thaiiand
Source: Time, July 18
Philippine Labo!
The country’s
tion’ in the third
reported to be 38 5
increase of 2.93 per
ous year’s 36.92 mi
1990, total labor fe
annual average of 2
In 1990, of #
population 15 years
million or 63.53 p
labor force while &
million or 36.47 per
labor force. Emplo
22.89 million and
numbered 1.25 mil
°Philippine Yeas