The Filipino Worker in a Global Economy by Ronald Yacat

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THE FILIPINOWORKER IN A GLOBALECONOMY

THE FILIPINOWORKER IN A GLOBALECONOMY edited by Leonardo

A. Lanzona

Jr.

PASCN PHILIPPINE

APEC

STUDY

CENTER

NETWORK

PHILIPPINE INSTITUTE FORDEVELOPMENT STUDIES SuriansamgaPag-aaralPangkaunlaran ngPilipinas

Printed

in thePhilippines.

All rights

reserved.

The findings, interpretation and conclusion in this volume are those of the authors and do not necessarily reflect those of PASCN and PIDS and. other institutions associated with the project. The publication whose members

of this book was funded in whole by the PASCN include: Asian Institute of Management,

Ateneo de Manila University, Central Luzon State Uni_;ersity, De La Salle University, Foreign Service Institute, Mindanao State University, Philippine Institute for Development Studies (Lead Agency), Silliman University, University of Asia and thePacific, University of San Carlos, University of the Philippines and Xavier University.

Please

address

all inquiries

'to:

Philippine APEC Study Center Network Secretariat Philippine Institute for Development Studies NEDA sa Makati Building 106 Amorsolo Street, Legaspi Village 1229 Makati City, Philippines Tel. No.: PASCN (63-2) 893 9588; 892 5817; PIDS (63-2) 893 5705; 892 4059 Fax No.: PASCN (63-2) 893 9588; PIDS (63-2) 893 9589; 816 1091 E-mail: pascn@pidsnet.pids.gov.ph; publications@pidsnet.pids.gov.ph URL: http://pascn.pids.gov.ph; http://www.pids.gov.ph

ISBN971-564-041-9 RP 1,2-01-500 Cover and, book design Printing by Promoprint

by Ed Castillo

Industries

to be examined: Identification

of key industries .................................... Employment and wage incomes ...................... Results of the Empirical Tests ............................ Conclusion ........... i .................................

26 33 37 50

Appendix .............................................. Bibliography ...........................................

53 56

Chapter Three Trade Liberalization and International Migration: The Philippine Case by Fernando T. Aldaba ......................................

Abstract ............................................... Introduction ................. _..........................

57 57

Conceptual Underpinnings ............................... Substitution Between Migration and Trade in the H-O Framework ............................................

Complementarity Under Certain Assumptions ............. An H-O Model with Migration Costs and Financing Constraints ............................................

Alburo's Turning Point Hypothesis ........................ An Eclectic Migration Model ............................. Data Analysis ........................................... Empirical Analysis ...................................... Labor Market Effects of Continued

64 65 67 70

international Migration ................................. Conclusions and Policy Recommendations ................ Bibliography ............................................

78 83 85

Chapter Four Factors Influencing the Observance of the Core ILO Labor Standards by Manufacturing Companies by Divina M. Edralin ........................................

Abstract ................................................ Introduction ............................................ Theoretical Framework .................................

87 88 101

Methodology

102

........................................... vi

Findings ............................................. Profile of Companies ...................... Degree of CompLiance with Core tLO Labor Standards .....................................

......

Facilitating and Hindering Factors in Implementing the Core Labor Standards ...... Effects of the Union on the Competitiveness of the Company in the Global Market ............ Labor and Management Stand on the Social Clause ......................................... Conclusion ........................................ Recommendations ................................ Bibliography ...................................... Chapter Five Tripartism and the Role of the State in a Period of Restructuring Under Globalization by Virginia A. Teodosio ....................................

105 105 105 117 123 125 128 129 135

139

Abstract .............................................. Introduction .......................................... Globalization and the State: Conceptual Underpinnings... Structural Change, Trade Unionism and Collective Bargaining ........................................... Flexible Work Arrangements ........................... Social Partners Policy Orientations and Agreements, 1990-1997 .............................................

139 139 142

The Continuing Tensions .............................. Contextualizing Tripartite Decision Making Through Broad-based Representation and Participation ........... Conclusions and Policy Recommendations .............. Bibliography ................... ......................

173

Chapter Six An Evaluation of the Readiness of Filipino Professionals to Meet International Competition by Tereso S. Tullao Jr .....................................

vii

149 156 162

176 177 180

185

Abstract .............................................. Introduction ..........................................

185 185

Role of Professional Services in the Economy ........... Theoretical Underpinnings: Education, Development and Liberalization .................................. ' ......

188

Higher Education in the Philippines .................... Curricular Programs and Licensing Requirements Selected Professions ...................................

204

194

of 212

Accountancy ...................................... Civil Engineering .................................. Teacher Education .................................

212 214 215

Mechanical Engineering ............................ Electrical Engineering ............................. IndustriM Engineering ............................. Nursing .......................................... Architecture ........................................ Law ..............................................

215 216 216 217 217 218

Pharmacy ......................................... General Medicine ..................................

218 218

Continuing Professional Education ..................... Absorption of Professionals ............................. Responses of Key Informants on Readiness of Filipino Professionals ......................................... Conclusion ...........................................

232 233

Appendix Table 1 ...................................... Bibliography ..........................

241 270

About About

the Authors the PASCN

........................................ .......................................

viii

................

219 226

275 277

ListofTables Chapter Table 1. Table 2.

Two Highest and Lowest Wage Incomes in the Three Main Sectors ...................................

Means and Standard Deviations of Selected Variables

Panel A. All Industries

.................................

Panel B. Agriculture-based Industries ................... Panel C. Natural Resource-based Industries ............. Panel D. Manufacturing Industries ..................... Table 3. Random Effects Estimates of Factor Share Returns

39 40 41

Panel A. All Industries .................................

Panel B. Agriculture-based Industries ................... Panel C. Natural Resource-based Industries .............

43 44

Panel D. Manufacturing

Industries .....................

Table 4.

Ordinary Least Square Estimates of Factor Share Returns Panel A. All Industries ................................

Panel B. Agriculture-based industries .................. Panel C. Natural Resource-based industries ............

45 46

Panel D. Manufacturing Industries ..................... Table 5. Fixed Effects Estimates of Factor Share Returns Panel A. All Industries

................................

46 47

Panel B. Agriculture-based Industries .................. Panel C. Natural Resource-based Industries ............

47 48

Panel D. Manufacturing

Chapter

Industries

.....................

Three

Table 1.

Migration, Trade and Growth Data . ..............

Table 2.

Growth Rates of OCW, Remittances

Table 3.

Number of Deployed Overseas Filipino Workers by Region of Destination

Table 4.

Exports-Remittances

and Exports..

(1984-1998) .............

Ratio and Remittances

per OCW .......................................

Table 5.

Dependent Variable: OCWs Deployed Ordinary Least Squares (OLS) N=23 ..............

Table 6.

Dependent Variable: OCWs Deployed Ordinary Least Squares (OLS) N=22 .............

Table 7.

Table 8. Table 9.

73 75

Dependent Variable: Number of OCWs Deployed to the Destination Country Ordinary Least Squares (OLS) N=70 .............

Dependent Variable: Per Capita Households Income ........................................

Deployed Overseas Filipino Workers by Skill Category (1992_1998) ............................

Chapter Four Table 1.

Distribution and'_pe

Table 2.

of Respondents

Profile of Participating Companies

Table 3.

of Sample Manufacturing

Table 5.

........................

Profile of Participating

Firms ...........................

Table 7. Table 8.

Characteristics

108 109

of Firms with Relatively High

Satisfactory Average Rating of Compliance with ILO Labor Standards ....................... Table 6.

106

Unionized

Significance of Tests on and Degree with Core ILO Labor Standards by Manufacturing Companies .... Characteristics

103

Manufacturing

....................................

Manufacturing Table 4.

Firms

116

of Firms with Relatively Low

Satisfactory Average Rating of Compliance with ILO Labor Standards .......................

117

Factors that Help Companies Comply with Core ILO Labor Standards ............................

119

Factors that Hinder/Block in the Observance

Companies

of Core ILO Labor Standards...

121

Table 9.

Characteristics

of Companies which Favor

the Inclusion of a Social Clause Trade Agreement,

127

Chapter Five Table 1.

Employment by industry:

Table 2.

Unemployment

1993-1998 (In percent)...

and Underemployment:

1990-1997

(In percent) ....................................

150

Table 3.

Increase of Workers Employed by Hours of Work:

Table 4.

1993-1998 (In thousands) ......................... Number and Percent Distribution of Workers in Nonregular

Employment

150

152

in Establishments

Employing Ten or More Workers by Specific Category and Sex, Philippines:

1997 (In thousands

except percent) .................................

152

Table 5.

Establishments

Resorting to Closure/Retrenchment

Table 6.

and Workers Affected:1997-1999 (In thousands) .... Distribution of Establishments with Subcontractors by Major Industry Group, Philippines:

Table 7. Table 8.

1997

(Based on Sample Data) .........................

153

Number of Existing Unions and Percent Change: 1990-1996 .......................................

154

Number and Percent Distribution

of CBA

Coverage by Region and Status, Philippines: 1993 and 1997................................... Table 9.

152

154

Percent Share of Union Membership, CBA Coverage, LMC Coverage and Employees Association Membership

to Total Employment

Philippines:

1993................................

by Region,

Table 10. Some Key Points in Labor's Legislative Agenda .... Table 11. Management Corporations

155 156

Flexibility Scan in Various Private ...................................

I58

Table 12. Type of Flexible Work Arrangement

...............

Table 13. Trade Union is Well Informed by Management Table 14. Trade Union is Consulted by Management Table 15. _q_e of Written Contract ........................

159 ....

.....

. ..

159 159 159

Table 16. Benefits for Displaced Workers ....................

160

Table 17. List of Benefits .................................

163

Table 18. Sectoral Policy Orientations

164

.....................

Chapter Six Table 1.

Employment

Share of Professional

Nonagricultural Table 2.

Employment

Table 3.

(In percent)

Employment

Selected Years (In percent) ...........

Continuing Professional Education January-December

Table 6.

Table 7. Table 8.

Table 9.

190

Classified by

1998 ........

190

(CPE)

Compliance and Renewal of Professional Table 4. Table 5.

........

Share of Professional Workers to

Nonagricultural Occupation

Workers to

License,

.................

221

Matrix for CPE Programs, Activities, or Sources... Number of Accredited CPE Providers

223

by Profession,

1999 .............................

225

Employment and Share of Major Occupation Group in Nonagricultural Employment (In thousands), 1998 ...........................................

227

Professionals Employed in Major Industry Groups (In thousands) January 1998 ....................

228

Continuing Professional

Education

(CPE)

Compliance Based on Adjusted Stock of Professionals Selected Professions .............

229

Selected Professionals Deployed Overseas by Skill Category, 1992 to 1998 ..........................

231

Table 10. Readiness of Filipino Professionals:

Responses

of Key Informants on Performance, Competence and Training of Newly Hired Professionals ........ xii

234

Table 11. Readiness of Filipino Professionals:

Responses

of Key Informants on Competitiveness Hired Professionals .............................

xiii

of Newly 235

ListofFigures Chapter Figure 1. Figure 2.

Two Effects of Openness on Relative Wages: Two Traded Goods .............................. Effects of Openness on Relative Wages: Many Traded Goods ..............

Figure 3. Figure 4. Figure 5. Figure 6. Figure 7.

: .............

Estimated Prices of Top Nonmanufacturing Exportables, 1989-1996 ..........................

Prices of Top Manufacturing Exportables, 1989-1996 ......................................

Estimated Total Factor Productivity of Nonmanufacturing Industries ................

Estimated Total Factor Productivity of Manufacturing Industries .....................

Number of Employees in Top Nonmanufacturing ExP0rtables,

Figure 8.

1989-1995 ..........................

Number of Employees Exportables,

in Top Manufacturing

1989-1995 ..........................

Wage Incomes of Households with Low Education, 1991 and 1994, By industry ......................

Figure 10. Wage Incomes of Households with High Education, 1991and 1994, By Industry ......................

Figure 9.

Chapter Four Figure 1.

Operational

Framework .........................

102

Figure 2.

Position of Respondents on Whether a Union is a Help/Advantage to the Company to Become Globally Competitive ...........................

Figure 3.

Position of Respondents Regarding the Social Clause .......................

xiv

124 _.......

126

ListofAcronyms AFTA

ASEAN Free Trade Area

APEC ASEAN

Asia-Pacific Economic Cooperation Association of Southeast Asian Nations

CBA

collective bargaining

CHED

Commission

CPE

continuing

DOLE

Department

ECOP

Employers Confederation

FDI

foreign direct investment

GATS GATT '

General Agreement on Trade in Services General Agreement on Tariffs and Trade

GDP

gross domestic product

GNP

gross national product

HEIs

higher education

H-O

Hecksher-Ohlin

ILO

International

LMCs

Labor Management

Councils

MRA

mutual recognition

agreement

NAPC OCWs

National Anti-Poverty Council overseas contract workers

POEA

Philippine Overseas Employment

SUCs

state universities and colleges

PRC TFP

Professional Regulation total factor productivity

TIPC

Tripartite Industrial Peace Council

TLM

temporary

TRP

Tariff Reform Program

TUCP

Trade Union Congress of the Philippines

WTO

World Trade Organization

agreement

on Higher Education professional

education

of Labor and Employment of the Philippines

institutions theory

Labor Organization

Agency

Commission

labor migration

Foreword always draw out equally controversial reactions from all G lobalization and its impact are replete contentious that sectors of society. Labor on is labor already with issues complex dimensions, one of which deals with how it can be further enhanced to benefit both the workers and management and subsequently increase productivity. Bringing the issue of globalization into the equation greatly adds to the scope of its implications. That this book combines these issues and looks at how one affects the other makes for a very interesting read at least and, at best, for valuable policy counsel for our national leaders and lawmakers. The advent of globalization certainly brings fears to the Filipino worker, as it has to other hands in both developed and developing countries. Uncertainties in the workplace have been fueled by increasing negative reaction and resistance to globalization especially by labor groups in developing countries. The lowering of protectionist barriers as financial and economic integration continues to expand leaves Filipino workers vulnerable to the risks brought about by globalization. These and other issues on human resource development, wage inequality, labor migration, labor standards and professional education are discussed in this book by a group of researchers who are among the best in the fields of labor, HRD, economics and education. We appreciate their commitment and diligence, in spite of their hectic schedules and myriad duties, to produce a collection of timely and very informative research papers. On behalf of the PASCN, I would therefore like to express my deepest thanks and appreciation to the authors and all those involved in making this volume possible.

Mar rBÂŁs d2 ;t s Ph.D. and Lead Convertor, PASCN xvii

Preface and the subsequent worldwide concern on terrorism have he recent globalization terrorist attacks York and Washington, D.C. brought back in in New the forefront. It has always been said that globalization is irreversible. But history tells us the opposite: it is highly reversible. The process of international integration has mostly been implemented so far at a national and, at best, the regional level, thus resulting in the formation of various alliances and ironically the fragmentation of the global economy. This development has backfired in one important respect -- it had well driven an even greater wedge between the developed and the developing world: Such a geopolitical divergence could reinforce an already seething economic gap and increasingly isolate the developing world. Widening income inequalities between the rich and the poor nations of the world was a defining feature of the 20th century. According to research conducted by the International Monetary Fund, the richest 25 percent of the world's population were found to have experienced a six-fold increase in real GDP per capita over the last century. By contrast, the lower quartile of the world population enjoyed less than half that gain. Moreover, there is reason to fear these disparities could well be exacerbated by the "digital divide" of the Information Age--the contrast in economic opportunities between the computer literate and those lacking in such skills. However, this fragmentation also provides us with the opportunity to coordinate more closely economic and financial functions of different nations and to build a world order based on equality, rather than dominance and dependence. It is a test to our institutional and political imagination to design ways to implement this new order. Apparently, the thorniest issues are mainly found in those areas where some friction exists between global ends and national, sovereign ends. There have been attempts at forming common codes and standards of conduct to induce countries to move in the same direction as the xix

global community. However, common standards and principles will achieve little if countries and institutions do not implement them. This book is an attempt to establish, at least in the labor markets, a process by which the country can benefit from the development of globalization without sacrificing national values. Within the labor market reside most of these conflicting issues between the welfare of workers and the nation vis-a-vis global interests. The five papers in this volume provide a spring of insights into the workings of this conflict. They all present a comprehensive description of potential causes of social problems, particularly in wages, migration, labor standards, wage bargaining and education. Furthermore, these papers offer veritable policy directions whereby the country can promote the values of the workers and simultaneously create a national environment that can respond to the opportunities found in the global economy. A caveat on the data used in the papers, however, needs to be cited. Since the project was started in 1998, much of the secondary data on wages and migration did not go beyond 1997. Primary data collection was also conducted only in the period from 1998 to 1999. The secondary data relating to tertiary education and other education indicators also covered the years only up to 1999. Despite these restrictions on the data, the papers nonetheless establish the basic trends on labor movements and in education that remain valid in the recent periods. This book is a research project of the Philippine APEC Study Center Network (PASCN). In this regard, we want to thank the overall assistance and encouragement provided by Dr. Mario Lamberte, President of the Philippine Institute for Development Studies (PiDS) and Lead Convenor of the PASCN, and Dr. Myrna Austria, Director of the PASCN Secretariat. The five papers were all presented in a series of technical workshops and conferences that ultimately helped in raising their quality. The authors therefore wish to especially acknowledge the keen inputs of Dr. Ponciano intal Jr., Ms. Avelina Tan-dela Rea, Ms. Teresa Soriano, Mr. Reydeluz Conferido, Dr. Catalin0 Rivera, Undersecretary Rosalinda Baldoz, Undersecretary Benjamin Domingo, and Dr. Emmanuel.Esguen'a. We would also like to acknowledge the competent service and dedicated support of our research assistants: Marissa Paderon-Macam and Michael Tavas for Dr. Lanzona, Pauline Rebucas and Philip Arnold Tuano for Dr. Aldaba,Ma. Theresa Mosquito, and Eleazar ToUedo for XX

-Dr. Edralin, Mark Perete and Ronan Justo for Dr. Teodosio, and Jocelyn Cruz, Victor Pontines and Erwin Alcala for Dr. Tullao. Finally, we are grateful to the PASCN Secretariat staff for all their help throughout the course of the project and the PIDS Research Information Staff for coordinating the publication of this book.

Leonardo San Francisco del Monte, Quezon City October 15, 2001

xxi

ChapterOne

tabor,HRD andGI0balizati0n: AnIntegrativeReport Leonardo

A. Lanzona

Jr. *

ABSTRACT T

n a world of greater economic integration, strengthening trade i linkages, unceasing technological changes and weakening .J.institutions, workers are concerned about their incomes and security in their workplaces. Because Of this uncertainty, coupled by large negative reactions against globalization in developed countries, policymakers have expressed skepticism on the benefits of globalization especially as this relates to the labor market. Several issues affect the relationship between greater openness to the world market and human resource development. With the fall in protectionism and breakdown of centrally planned governments, Filipino workers are greatly exposed to the uncertainties that come along with globalization. These include the fear of immiserization, the possibility of unemployment, the concern of labor standards, the dismay over worker participation and the inadequacy of higher educational institutions. The crucial role of state is to create and strengthen the institutions that can provide the necessary economic programs and political incentives and promote long-term development and society.

of worker quality and benefit both the individual worker

"Associate Professor, Ateneo de Manila University.

The Filipino Worker in a Global Economy

INTRODUCTION With increasing world integration, hastening capital mobility, unceasing technological changes and weakening institutions, workers are concerned about their incomes .and. security in their workplaces. Because of this apprehension, coupled by large negative reactions against globalization in developed countries, policy makers have expressed skepticism on the benefits of globalization especially' as.thiS relates to the labor market. Several issues affect the relationshi p between greater openness to the world market and human resource development. With the fall in protectionism and breakdown of centrally planned governments, Filipino workers are greatly exposed to the uncertainties that come along with globalization. First is the fear of further immiserization as a result of globalization. Wage inequalities can widen along with the rising trade, as in many countries, particularly in Latin America (Wood 1994). Workers in many developing countries fear the entry of China and other labor surplus in the international trade, as wages are pressured to decrease. Second is the possibility of increased unemployment and international migration. Particular industries that have been previously protected may be unfavorably affected, possibly resulting to a reduction in the domestic labor demand. While a number of industries will to some extent benefit from this globalization, it is expected that the process of readjustments will cause some short-term loss of jobs. The government then is tasked to devise mitigating measures in the short run. One way workers can cope with unemployment is to consider international migration as an alternative. However, the prospects and the costs of future migration to society may be a problem: Third is the concern about labor standards and institutions. Market regulations may have to be imposed as workers may be forced to work in substandard conditions in order for firms to be competitive. At the same time, the importance of long-term labor arrangements and unionization has been. put into question in the light of the need for greater competitiveness. Fourth is the role of schooling institutions that have been increasingly analyzed in the light of the rising international interdependencies and rapid structural change. Furthermore, the role of the government--in relation to the participation of the private sector--

Chapter 1 : integrative Report

will have to be examined. In this case, the importance of educational institution in determining opportunities should be noted here. These issues constitute a veritable source of discussion, requiring closer analysis and more in-depth examination of existing data. The articles found in this volume will consider these issues separately or jointly. What emerges from all of these papers is the recognition of the vital role that the state should play in developing the skills and improving the welfare of the Filipino workers. Like Don Quixote, the Filipino worker cannot turn back the winds of change. Yet, unlike this character who at least was able to raise his medieval lance against seemingly illusory foes, the Filipino workers lack the necessary training and equipment to protect themselves against the real dislocations and uncertainties emerging from globalization. INEQUALITY,TECHNOLOGY, SKILLS AND INTERNATIONALTRADE For middle-income developing countries like the Philippines, where a band of skilled labor exists in select industries alongside a pool of unskilled labor in less advanced sectors, the impact of greater international openness on wage equality is uncertain. According to the standard (Stolper-Samuelson) trade theory, wages are dependent upon the effect of trade on product demand and product prices. Wage inequality between skilled and unskilled labor may then increase if the product prices of goods produced by the less advanced sectors are higher than the imported goods. To study the effects of globalization on the distribution of income--specifically wages--through an empirical framework, one must account for two key factors affecting wages: the country's technological structure and, more important, the education levels. Globalization can be defined as a "shock" that increases the foreign goods produced by either skilled or unskilled workers associated with the increasing wave of economic liberalization around the world. Most of the studies have focused mainly on the effects of world prices and of technology, at home or abroad, on wage distribution. An important issue however is to consider how skills, measured through levels of education, can be able to influence whatever effects trade may have on wages. In particular, we can measure the export price returns on investments in skilled and unskilled labor, as well as capital and intermediate inputs.

The Filipino Worker in a Global Economy

In my study of top 40 exporting industries (Chapter 1), I have shown that unskilled labor benefited from globalization, although far less than the educated and perhaps more skilled workers. The study may subject to a number of measurement errors, but nonetheless robustly shows that the process of internationalization has actually been beneficial to all workers. This means that globalization, despite its adverse distributional effects, should not be impeded since this is very important source of economic growth. Could all workers be made better off through some scheme of redistribution? Conceptually, if we consider a lump-sum tax, the optimal policy intervention is a factor-use tax on skilled labor as well as on the other factors, along with a subsidy specific to the unskilled workers and favoring the use of this factor intensively. LABOR MOBILITY:PROSPECTS AND CONSEQUENCES The effects of international labor mobility are seen to be favorable for labor-abundant countries. The export of labor services to the more advanced countries reduces domestic unemployment, and increases wages, resulting to a larger GNP share of labor. This is based on the standard economic (Ricardian) model where wages are determined in a national labor market. Equivalently, the framework views a single factor, labor, which can move freely between sectors. In reality, however, there are different types of workers as there are industries. Yet, wages earned in one industry are largely determined by the wages that similar workers are earning in other industries. IdeaUy, this may have two important implications. First, workers can earn more in an open economy by moving into the industries or nations in which they have a comparative advantage. Second, because of globalization, regardless of which industry the worker belongs, wages should not necessarily reflect the productivity at the level of the individual company. Wages for some individuals can very well improve even if the domestic industry where these individuals work languishes. In this framework, skills are assumed to be the only determinants of earnings and are seen to be completely transferable to countries. These points suggest that labor mobility is a device that the productive workers can wield to gain favorable terms for their labor service. The workers possessing valuable skills can also very well experience the same improvements in wages in other countries. The

Chapter 1 : Integrative Report

only constraints here then are the impediments to labor mobility that can prevent the workers from achieving these benefits (Refer to Lanzona, 2000, for labor mobility constraints in APEC). The study of Fernando Aldaba in Chapter 2 of this volume provides some evidence on how the prospect of labor mobility can reduce the debilitating effects of domestic unemployment and labor dislocations. In a panel regression, using the overseas contract workers (OCWs) deployed as the dependent variable and controlling for characteristics of the destination countries, he shows that accelerated Philippine exports tend to reduce the migration. The idea is that the country experiences a turning point, where initially greater trade openness leads to greater migration but as the country further develops migration diminishes. Aldaba also presents some data indicating that Filipino OCWs and emigrants are generally those that have finished college. Relating this to the educational level of the presently employed, he found that the work force of those who stay behind tends to be less educated than those who have migrated or who works abroad temporarily. This supports the view that international migration provides opportunities for the qualified individuals to earn more than what they earn domestically. Aldaba notes however that while this condition may be individually rational, this may not be socially beneficial. Migration ultimately reduces the supply of highly skilled or educated individuals, diminishes the human capital investments in the economy, and destroys social capital as families are broken up. Nevertheless, Aldaba concludes that neither migration nor trade liberalization should be impeded. Instead, greater trade openness should be pursued as it promotes labor-intensive exports, greater competition and efficiency, resulting in higher output in the medium and long run. In the short term, however, the government should be able to formulate and implement policies and structures that will limit the drain of skills and will protect OeWs from onerous contracts that may only seek to abuse them. LABOR STANDARDSAND ECONOMIC GROWTH Contrary to common perception, a protective labor market policy, measured in terms of greater labor market regulations and standards, has not resulted in poor and economic and employment

The Filipino Worker in a Global Economy

conditions (Freeman 1993). One possible explanation is that market regulations that go against the market forces are not commonly complied with. Given that compliance to these regulations are choices made by both the workers and employers, the efficiency losses that result from these market regulations will be averted even before these become binding. The important point here is that effective labor market regulations can be implemented alongside with free trade policies, but only so long as these regulations do not restrict the efficiency gains that can be derived from free trade. Divina Edralin's contribution in this volume (Chapter 3) shows that a majority of management and labor groups are in favor of what is known as the "social clause" which refers to the incorporation of various social provisions into the labor relations. These provisions include freedom of association and the right to organize. Reasons cited in favor of this clause are: (1) to enhance and improve the quality and productivity of workers, (2) to boost benefits for better competition; and (3) to serve as guide or protection for both union and management. Nevertheless, Edralin also stresses that, despite the general agreement about the benefits of a social clause, a number of industries have found it very difficult to comply with such standards. Her findings indicate that the various hindrances for both labor and management exist towards the full compliance of core labor standards. These include (1) the consequent increases in the costs of operating the business; (2) the impractical and rather unrealistic requirements set by government; and (3) the worker's apprehension that, if the standards are imposed fully, the probability of higher unemployment will be enhanced. It was observed that companies with high level of compliance were generally those that had medium degree of capitalization, experienced a fair level of profits and had been operating for a number of years. In which case, to the extent that trade liberalization provides opportunities for future growth, labor standards and liberalization are thus not contradictory. The key point in Edralin's paper is perhaps the obduracy of institutions in relation to worker benefits, despite the benefits brought in by globalization. Firms usually require an additional amount of time to reinforce whatever gains they have gotten from liberalization. In this case, government stabilization policies and legal structures will be valuable in encouraging the implementation of labor standards and protection. Government should then clarify their rules and regulations to the firms in order for them to determine the costs as well as the

Chapter i : Integrative benefits

Report

of setting these standards

be willing to provide the costs

to the workers.

to workers

of doing so are not too prohibitive

workers

Firms can very well

such rights and protection

as long as

and the productivity

is improved.

INDUSTRIAL RELATIONS AND SOCIAL TRANSFORMATION Industrial

relations

result of greater (Devarajan

trade

to increase

in industrialized

in developing

independent granting

unions workers

increasing stringent

measures

economic

growth.

continued

to maintain

not

rights.

only possible

and social

to their

have exercised necessary

human

capital

12.9 percent

in unionization

pressuring

these

the influence

of independent

Labor Management that the present because flexible

decisions labor

happened

Using indicate produced

may not necessarily

are limited.

Teodosio

indicated

unions

of the larger importantly,

has increased,

be favorable

worker

the same as the decline

in labor

growth.

an environment

capital

framework, deepening

that is more conducive

with imperative

to respond

of workers

noted that the emergence reduce

a political

to the workers

participation

further

primarily

from

more visible. This suggests

for greater

that

that the subsequent

Furthermore,

because

opportunities

arrangements

at almost

in 1996 perhaps

are

structural

has decreased

in total employment. or nonaffiliated

alone is

and efficiency

and free-market

regimes

this factor

in the Philippines

Councils (LMCs) became

situation

the necessary

in making

sector

and

countries

in repressive

growth,

changes

in 1990 to 4.7 percent

of the services

such

promotion

that have the full support of workers are created. The study of Virginia Teodosio (Chapter 4) however

that the growth

and

that, though

of labor repression

Competitiveness

if major technological

of in

only after the international

in enhancing

growth.

effects

worker repression,

for export

with past records

in somehow

has

especially

it has been observed

While factor mobilization

to sustain

which

been observed

to be positive,

their competitiveness

to be successful

not sufficient

countries

has succeeded

has proven

returns

Second,

are

unionized,

has actually

The political seen

In fact, countries

workers'

reforms

proper

welfare.

several export-oriented

community

countries.

in two ways, as a

and democratization

of labor

countries,

are generally their

worker

altered

industrialization

et al. 1997). First, the share

been declining

protect

have slowly been

openness,

Teodosio

seems

from globalization to capitalist

immediately

security to has

interests.

to market

prices

The Filipino Worker in a Global Economy

and labor-saving technological innovations, the industries seem to favor flexible arrangements rather than the long-term and permanent contracts. Teodosio views this situation as potentially unstable since it creates a discrepancy between social ends and industrial objectives. The problem appears more evident at the tripartite level that involves the corporations, the local trade unions and the government. The central problem according to her is the failure of the state to address the broader implication of flexibilization in labor relations. She then proposes for a modification in the microcorporatist arrangement, calling for policies that will consider more worker participation and empowerment. The papers of Edralin and Teodosio highlight the need for a more efficient labor market. However, in order for the labor market to work efficiently, wages should adjust sufficiently to achieve noninflationary employment; workers should respond to changes in wages across jobs in different firms, sectors and regions; and workers optimally search for and accept improved alternative employment opportunities as they arise. The problem is that labor contracts typically have established terms of duration and specify many contingencies that may not necessarily meet government specified labor standards. The failure to meet these standards, both in timing and magnitude, seems to be affected more by labor market or welfare policies, rather than the long-term human capital accumulations. This means that the distribution of gains has little to do with the distribution of resources, but more with the social institutions that can guarantee and protect the rights of the workers. Furthermore, a troubling aspect of labor market today is the presence of flexible contracts that have the downside of discouraging investments in worker skills that cannot be transferred to another job. To the extent that on-the-job training enhances the productivity of the worker only in their current job, this form of firm-specific training may be undervalued by the worker and employer and hence subject to under investment. Without a binding long-term employment contract, the employer (by terminating the worker) or the worker (by quitting and job turnover) can reduce the expected return of the on-the-job training to the other party.

Chapter 1 : Integrative Report "-

THE ROLE OF ACADEMIC INSTITUTIONS: MAXIMIZING LEARNING AND SKILLS Underlying all of these points is the idea that investment in population quality through human resource development is the key to generating gains from trade. This is true because certain changes in labor supply of skills can have an impact on wage differentials and equity. Given the gains from greater trade, human capital investment is expected to mitigate that inequality arises from trade. At the center of this issue is the interest on education. Skill differences in wages can be narrowed by increasing the share of skilled workers in the labor force through education, on4he-job training and other forms of human capital investment. More importantly, of all these alternative sources of improving skills, education has been the most closely associated with skills. But does the accumulation of schooling actually respond in this way? While there are increases in the returns to schooling recently, the issue of whether greater investments in education are socially or privately worthwhile remains. This is particularly so in the light of the perceived structural changes expected from globalization. The key insight here is that human capital can be defined broadly as on-the-job training and continuing professional education. Hence, a policy that focuses on achieving large increases in enrollment rates may not be the most efficient policy for improving the country's stock of human capital. Alternative policies or institutions, such as upgrading the structures of present educational institutions or encouraging the private industries to produce jobs with learning-by-doing activities, may achieve the same objective at the minimum costs. The paper of Tereso Tullao (Chapter 5) indicates that the existing educational institutions will not be adequate to improve the chances of the country to benefit optimally from trade unless substantial institutional innovation is developed. The highly distended higher education system in the country is characterized by inadequate faculty qualifications, underdeveloped graduate programs, misallocated resources in public colleges and universities, and highly skewed enrollment in few programs. These problems have led to the following conditions. First, the number of accredited institutions of higher learning offering quality education has been very limited. Second, despite the seemingly high

The Filipino Worker in a Global Economy

supply of qualified Filipino graduates in both domestic and international markets, more than half of the of the graduates fail the licensure examinations of various professions. Third, a mismatch of graduates and manpower needs of the economy is indicated, as well as the oversupply of graduates. Tullao points to the limited government funds to higher educational institutions. For instance, more than three-fourths of the public spending in higher education is spent for the operation and maintenance of 107 state colleges and universities. These have lately been given permission to expand, in direct competition with the private sector while the correct policy is to have more integration and cooperation. Moreover, the limited access to continuing professional education has restricted the further upgrading of teachers' skills. This includes the lack of funds for research and development. Clearly, there is a need to develop higher education further and improve continuing professional education. However, what needs to be settled is how the limited government resources should be allocated. Tullao proposed that state support should legitimately be channeled only to centers of excellence in various disciplines. The problem however is that this may exacerbate income inequality which education is supposed to partly address. In the light of the difficult trade 'off between efficiency and equity, the private sector, to which most of the accredited colleges and universities belong, may have to take an active part in addressing their own problems. This need not include only the schools, but the private firms as well, especially in providing vocational'and onthe-job training to their workers. CONCLUSION While the papers first discuss the effects of globalization on the labor market, all papers in this volume eventually deal with the proper role of the government in the development of worker skillsand welfare enhancing institutions. The process of internationalization produces an imbalanced distribution of benefits and costs. Indeed, while globalization can be beneficial to society in general, various sectors of society can be adversely affected. Since human resource development of the disadvantaged is viewed to have significant societal effects, society can benefit by creating and developing these enduring human resources. The state can thus

Chapter 1 : Integrative Report

play a major activist role in promoting long-term development of worker quality, even as the country pursues a process of globalization. In particular, the employment of Skilled labor and the upgrading of unskilled labor are viewed to have a positive social externality, suggesting that the production of various outputs depends in the social provision of a well-trained and satisfied labor force, in this case, a suitable production program of domestic taxes and subsidies that can raise the relative wage of trained labor and simultaneously assist unskilled worker s will be necessary in bringing about efficiency, without hindering consumers from enjoying the benefits of internationalization. While a tariff on goods employing unskilled labor may be welfare improving, this policy will only be second-best since this will lead to gratuitous and unnecessary consumption costs. However, a program that properly taxes the gainers from globalization and subsidizes the potential losers will result to a condition that is both efficient and equitable at the same time. Furthermore, the papers point to the important role of institution building in protecting workers' rights and security. Although politics will continue to be crucial in the design of institutional reform, any repression of labor rights, particularly those of the affected by globalization, is not viewed to be favorable for improving employment and wage incomes. In the same vein, flexible arrangements and negotiations between management and worker unions should be encouraged since these can yield positive benefits especially with the rise of more sophisticated technologies. Indeed, state measures to protect those adversely affected by globalization are needed, but at the same time, mandates on working conditions can also be detrimental to markets and eventually to workers. Ultimately, the proper program mix of wages and job security is better left to industry managers and workers. Finally, the functioning of education and training systems will have a powerful complementary effect on labor market performance. Government intervention clearly remains critical in this area, but various forms of economic as well as political incentives can be formulated so that the private sector will be induced to invest in training and education. Continuing professional education can be developed with the help of private firms and corporations to help workers acquu-e skills during the course of their working lives.

Chapter i : Integrative Report

12 REFERENCES

Devarajan, S., H. Ghanem, and K. Thierfelder. 1997. Economic Reform and Labor Unions: A General-Equilibrium Analysis Applied to Bangladesh and Indonesia. The World Bank Economic Review 11:145-170. Freeman, R. 1993. Labor Market Institutions and Policies: Help or Hindrance to Economic Development? World Bank Annual Conference on Development Economics 1992. Washington, D.C.: World Bank. Lanzona, L. 2000. Mobility of Business People in APEC. Assessing APEC's Progress: Trade,Ecotech and Institutions, R. Feinberg and Y. Zhao (eds.) Singapore: Institute of Southeast Asian Studies. Wood, A. 1994. North-South Trade,Employment, and Inequality: Changing Foriunes in a Skill-Driven World. Oxford: Clarendon Press.

ChapterTwo

AnAnalvsis of61obalization andWageInequalitv inthePhilippines'. AnApplication oftheStolper-Samuelson Theorv Leonardo

A. Lanzona

Jr.

ABSTRACT rade liberalization and the subsequent globalization are seen to increase the demand for unskilled workers and consequently raise the wage of the unskilled relative to the skilled workers. However, evidence from other countries, especially in Latin America, fails to provide any overwhelming evidence to support this hypothesis. Greater trade openness has increasingly been associated with rising, not falling, wage inequality. The paper presents an empirical test of this hypothesis to the Philippines using a factor returns approach proposed by Leamer (1996). Based on the Stolper-Samuelson theory that links output prices with wages, the study considers technological change, export price movements and education (as an indicator of skills) as the key factors contributing to wage variability. Using a random effects model on industry panel data taken 1989to 1995, the paper then shows that the existing globalization process in the Philippines caused an increase in the incomes of all resource owners, but the increase in the returns to unskilled labor had been lower than the other factors. This meant that wage inequality widened over recent years, even though all resource owners were actually made better off. Nevertheless, the analysis on the product or subindustry level shows that unskilled labor in the few agriculture-based industries obtained higher incomes than the other resource owners because of increased total factor productivity. Furthermore, in natural resource-based industries, the rate of returns

The Filipino Worker in a Global Econorr,y

to all resources was lower over time, proving the sector to be less competitive. The results thereby indicate that despite the shortcomings of the present globalization process, its overall benefits have so far been extended, albeit not equally, to all resource owners. INTRODUCTION The controversy surrounding globalization revolves around two interrela'ted issues: (a) the effect of increased trade on the production of goods that are.being sold domestically and abroad, and (b)the effect of this change on the social conditions, particularly income distribution. Difficulties in the assessment of these issues stem from the problems of linking trade policy to long-term equilibrium growth and identifying its distributive effects, which are influenced by many factors, including the country's technological conditions and skill accumulation. While the experiences of various developing countries show the value of trade to growth as well as to general welfare improvement, there is less agreement on how trade liberalization affects the level and distribution of gains and losses to producers and workers (Krueger 1983). Recent studies indicate that while the. East Asian open trade experience has narrowed the wage gap between unskilled and skilled workers, the increased 'trade liberalization in Latin America has widened wage differentials (Wood 1997). The Hecksher-Ohlin (H-O) theory maintains that countries export goods that use intensively those resources that are relatively abundant at home and import goods that use intensively those resources that are locally scarce. Trade therefore increases the demand for the abundant factors, assuming the expansion of the export sector, and reduces the demand for scarce factors, assuming the contraction of the import-competing sectors. In low-income developing countries, where abundant unskilled labor is found and skilled labor is scarce, trade tends to increase unskilled labor wages and lower skilled wages, thereby narrowing the gap between them. However, for middle-income, developing countries, like the Philippines, where a band of skilled labor exists in select industries alongside a pool of unskilled labor in less advanced sectors, the impact â&#x20AC;˘ of international openness â&#x20AC;˘on wage equality is less certain. According to the Stolper-Samuelson theory, factor prices are dependent upon the effect of trade on product demand and product prices. Wage inequality

Chapter 2 : Analysis of Globalization and Wage Inequality in RP

between skilled unskilled and labor may increase if the product prices of goods produced by the less advanced sectors increase vis-a-vis the imported goods. For these sectors to be competitive, their prices may have to decrease, resulting ultimately in lower wages and increasing the wage gap between the skilled and unskilled. This study aims to determine the effects of globalization on the distribution of income, particularly wages, through an empirical model that account for factors affecting wage increases, including the country!s technological structure and the education levels. Moreover, it seeks to provide a methodology to measure the price effects of globalization as opposed to possible technological changes that can also affect export and product prices. Most of the studies have focused mainly on the effects of world prices and of technology, at home or abroad, on wage distribution (Jones and Engerman 1996). Another important issue, however, is to consider also how skills, perhaps due to education, can be able to influence whatever effects that globalization may have on wage inequality. In the Stolper-Samuelson theory, globalization is viewed as a "shock" that increases the foreign goods produced by unskilled workers associated with the increasing wave of economic liberalization around the world. However, the process of globalization results from the rising levels of involvement in the world economy, increashag interdependence, the establishment of global markets, prices and production, and the diffusion of technology and ideas (Lairson and Skidmore 1997). The three main components of globalization are: (1) the growth of foreign direct investments (FDI) due to financial liberalization and relatively costless international financial transactions; (2) the growth of trade due to the emergence of global markets and the reduction of trade barriers; and (3) the diffusion of global technology and innovation due to easier communication. These changes can be categorized primarily in terms of financial and trade liberalization, which in turn influence technological changes. Toapply the Stolper-Samuelson theory, it is then necessary to consider not only the price changes but the technical innovations as well. Previous studies on wage inequality sought to understand the effects of trade by measuring the so-called factor content of imports and exports, estimating the amount of skilled and unskilled labor embodied in exports as well as the amount of skilled and unskilled labor

The Filipino Worker in a Global Economy

needed to produce domestically the imported goods. The influence of trade on relative wages of skilled and unskilled labor can be then be inferred by calculating the net differences in demand for the two types of labor resulting from exports and imports. Several authors, however, pointed out the problems and difficulties with this factor-content approach. Burtless (1995) emphasizes that this procedure, because of its focus on the trade flows, fails to consider the important role of trade in determining product prices. Leamer (1996) claims that the Stolper-Samuelson theorem stresses the wage effects of product prices, not the level of products or inputs. Furthermore, he notes that the factor-content procedure fails to consider the changes in tastes and technology in the nontraded sector that influences external demand for labor as well as on the prices of the good. To determine the effects of globalization on wage inequality, the study aims to apply the Stolper-Samuelson theory, and will thus consider tracking the influence of trade on factor prices through the trends in relative prices of goods produced by different skill-intensive industries. The focus will be on the key industries, inclusive of certain subsectors that are characterized by differences in skill intensity and adequate exposure to the process of globalization. This paper also deals with the empirical issues on the estimation of the effects of globalization on wage inequality. The objective is to provide an empirical framework to measure the effects of increasing trade liberalization on the earnings of skilled and unskilled workers in selected industries in the Philippines. Despite varied data limitations, the empirical model used should be able to assess efficiently and adequately the effects of globalization on wage inequality. The rest of the paper is divided into the following parts: The second section discusses further the conceptual issues found in the model. The third section provides the empirical model to apply the theoretical framework. The fourth section describes the existing data and the choice of the industries to be considered. The fifth section presents the results of the empirical test, and the sixth section gives the conclusion. CONCEPTUAL ISSUES According to the Hecksher-Ohlin theory, countries will export goods that use its more abundant resource and will import goods that use scarce resources more intensively. Trade thus increases the demand

Chapter 2 : Analysis of Globalization and Wage Inequality in RP

for abundant factors, because of the expansion of export sectors, and reduces the demand for scarce resources because of the contraction of import-competing sectors. In turn, factor prices will change correspondingly, with prices of abundant factors increasing and those of scarce resources declining. In developing countries, where unskilled labor tends to be abundant and skilled labor scarce, trade tends to increase the wages of unskilled workers and lower the skilled wages, thereby narrowing the gap between them. Trade barriers (e.g., transport costs and tariffs) create wedges between the prices of goods in two countries and result in either no trade or autarky. These barriers will then keep the price of the exportable lower in the developing countries than in the developed countries, and the opposite for the importable. A reduction of trade barriers, and the resulting expansion of trade, would thus raise the price of exportable and lower the price of the importable in the developing country. Such a change in relative domestic producer prices would raise the wage of unskilled workers relative to that of skilled workers. This link, known as the Stolper-Samuelson theorem, exists because, as the Heckscher-Ohlin theory assumes, technology (that is, the production function for each good) is given. In other words, it assumes a fixed functional relationship between outputs of goods and inputs between the prices of goods and wages of factors. This outcome can be illustrated in a type of supply-and-demandcurve diagram adapted from Leamer (1995) and Wood (1997). In Figure 1, the downward-sloping line, dd, is the demand curve for unskilled labor in relation to skilled labor, which would prevail in a state of autarky. In the absence of trade, wages would be determined by the intersection of this demand curve with a supply curve (assumed for simplicity to be completely inelastic), whose position depends on the country's endowment of skilled and unskilled labor. With supply $2, which stands for a country's endowment of skilled and unskilled workers, the relative wage of unskilled labor would be at the low level, Wo. The demand curve in a country open to trade is the line DD. It crosses dd at B on the horizontal axis--if it had this skill supply ratio, even an open country would not trade. The developing country, which has a relatively large supply of unskilled labor, and hence is a net exporter of the unskilledlabor-intensive good, must lie to the right of B. The developed country must lie to the left of B. So, for a developing country, opening to trade shifts the demand curve in favor of unskilled labor

The Filipino Worker in a Global Economy

Figure 1. Effects of Openness on Relative Wages: Two Traded Goods Unskilled/Skilled Wages d

â&#x20AC;˘ $3

Unskilled/Skilled Workers 2

(DD lies above dd) and narrows the gap in wages. With a skill supply ratio Sv the relative wage of unskilled labor would rise fromw 0to w2. The open-economy demand curve DD has an odd shape, with two downward-sloping segments separated by a flat segment in the middle--to the right of B, there are two distinct segments in the developing-country range. The flat segment covers the range of skill supplies in which a trading economy would be diversified in the sense of continuing to produce both goods that are unskilled labor-intensive and skill-intensive. However, moving beyond this flat segment, a country with a high proportion of unskilled workers would not produce the skillintensive product. Such specialization puts a country on a segment of the demand curve that slopes downward, because increases in the relative wage-induced changes in the technique chosen to produce the single good. Trade may raise the relative wage of unskilled workers, whether the outcome is diversified or specialized. But the effects on wages of subsequent changes in the relative domestic supply of labor differ. In a diversified country (as at S,), relative wages are fixed by world prices, at w 1.Changes in the domestic labor supply, Unless they are big enoug h to affect world prices, do not change relative Wages; they alter only the

Chapter 2 : Analysis of Globalization and Wage Inequality in RP

composition of output and trade. By contrast, in a specialized country on a downwardMoping segment of DD, as at S2, changes in domestic labor supply do affect relative wages. For instance, an increase in the relative number of skilled workers would raise the relative wage of unskilled labor. The model can be extended to include many goods (differentiated by skill intensity) without changing the basic proposition that reduction in trade barriers will lead to an improvement in the wages of unskilled laborers relative to the skilled, assuming that goods exported are unskilled labor-intensive. Figure 2 is drawn with six, rather than two, goods. Instead of having just one flat segment, five surfaces, alternating with negative sloping segments, are found. In a less diversified economy, the changes in relative labor supplies will have little impact on the wages. However, in a situation where an infinite continuum of goods is being traded, it is expected that the demand curve will approach the straight dashed line, as shown in Figure 2. This denotes an infinite number of traded goods, reflecting differing skill intensities and relative wages in proportion to factor supplies. This analysis has two important

implications:

(1 If the H-O theory, as presented above, has any relevance to income-inequality trends in low-wage countries, globalization must have resulted in price increases in the country's exportables and price decreases in the importables. Such changes, according to the StolperSamuelson theory should be accompanied by increases in the wages for the kind of unskilled labor that makes up the bulk of employment in the country. In other words, it is not the relative supply of skilled and unskilled workers, but the set of world prices that will more significantly determine the relative skilled and unskilled Wages, as proposed by the Factor Price Equalization theorem. (2) The relevance of the factor content of trade (FCT) method used in many studies seems substantially appropriate only in cases where there is an infinite number of goods being traded. For a small country trading under competitive conditions, such a condition may be also be found since

20 Figure

The Filipino Worker in a Global Economy 2. Effects Goods

of Openness

on Relative Wages: Many Traded

Unskilled/Skilled Wages

"''

........... $3

Unskilled/Skilled Workers

prices will indicate the scarcity levels of such factors. However, in a setting where most firms trade on the basis of scale economies, then the value of FCT as a tool of analysis may be limited. These imply that, except for conditions approximating competitive market conditions, the relative prices of goods will be the critical factor, since these will ultimately determine the distribution of income, as reflected in the wages. Although factor supplies are generally likely to have some effect on relative wages, the effects of prices are expected to be the more relevant factor, as the markets will no longer be based domestically, but internationally. EMPIRICAL MODEL The empirical model that will be used in this study will build upon the U.S. study on wages and globalization by Learner (1996, see Appendix). Two main factors--technological changes and globalization--are assumed to affect the variability of wages. Furthermore, while technological progress and globalization "shocks"

Chapter 2 :Analysis of Globalization and Wage Inequality in RP

are seen to have perceptible effects on wages, greater skill is expected to either mitigate or reinforce these changes in wages, depending on whether the product in which these are being used has a comparative advantage. The empirical framework should not only disentangle the effects of technology and globalization on wages, but, more importantly, also distinguish these effects on the varied skills of workers. It is expected that these diverse factors of production, such as skilled labor, unskilled â&#x20AC;˘labor and capital, will be affected differently. The rates of return from globalization and technological change of these factors and ultimately wage inequality should be determined. Based on this factor returns model, the equation that will be used for separating the impact of globalization and technological change is given as follows: 3

_, = lnp,, -lnph , = lnp,, + 2 InTFP, = _-',0,kt_ k k=l

(1)

Given panel data on export prices, /3,, the total factor productivity, TFPj, and the shares of skilled and unskilled labor, and intermediate inputs, 01a ,, k=1,2,3, we can estimate this logarithmic equation. The TFP term in the equation basically suggests that technologically-induced price changes, /_h,, should be removed from the overall price effects that result solely from trade. Certain technological innovations can be realized that might keep wages high even in the face of increased foreign supply of labor-intensive imports. This means that even though product prices have declined, wages are kept high in the world market because of the factor-biased technology. The coefficient it indicates a "pass-through" factor indicating the extent to which the change in TFP is passed on to the economy in the form of lower prices. A value of it=l means that technological â&#x20AC;˘ improvements result in product export price reduction. This denotes that the price impact of globalization calmot be fully measured from the observed growth of prices, as the latter may ignore the effects of technological innovation in prices. We can thus interpret the relative difference in trade and the TFP, pg, as the proportional benefit from globalization in terms of its likely effects on prices. A positive value in the left-hand side of the

The Filipino Worker in a Global Economy

equation therefore indicates a greater return from trade than from technology. Furthermore, we can view the coefficients of the factor shares, _k, as the percentage changes in factor returns from globalization, and the net of technological changes measured by the TFP; These are the changes in returns to factor owners (or costs to firms) that are needed to keepthe zero economic profit conditions working even as changes in technology and product prices. A positive (negative) value of wk indicates a greater (lower) return to the factor (Hilton 1984). Because the model is seen in terms of changes over time, the overall timing trend of these variables is somehow captured. Nevertheless, because there may be unobserved individual sector and time factors involved in the change, random effects estimates may be more efficient. The measurement of the impact of globalization thus consist of three main stages:

on wages will

1) Measurement of the relative factor shares of workers by skill levels Using the available data on Philippine industries, wages, and education, the factor shares of labor inputs by skill levels will first be calculated. These shares can be calculated from the sectoral wages of individuals and level of employment per skill unit (lLeamer 1996). For instance, given the highest sectoral wage (Ws) and the lowest sectoral wage (wu), the level of employment for the skilled (S) and the unskilled (U) can be computed if the data for the earnings of workers (E) and the total employment (L) in the various sectors can be obtained. This can be done through the mapping of employment and earnings into the skilled and unskilled employment as follows:

This can be inverted into:

u -w.,.-w,,

w_,JLLJ

(3)

Chapter 2 : Analysis of Globalization and Wage Inequality in RP

From these, the factor shares, relative to total.value added (VA), for the highly educated workers, the uneducated workers, and intermediate inputs can be computed as follows:

0s = ws S / VA =-ws [(E - wc,L)/(w s - w_:)] / VA Oc,=wuU/VA=wu[(-E+wsL)/(Ws O_= rI /VA =1-0 s -0 u -0 x

-Wu)]/VA

(4)

The term OKin the share for intermediate refers to the share of intermediate inputs to VA.This can be estimated directly from the given costs of fixed assets and the value added. 2) Measurement of TFP To measure total factor productivity or TFP, this author first assumed the following Cobb-Douglas unit production function (see Pack 1.984): q,-- AkTzl -'_

(5)

where q_is one peso of value-added in industry i, kj is the capital output ratio, and zi is the total number of employees required to produce a unit of valued-added. The variable A is the efficiency index used to measure TFP. We can then rewrite this equation in logarithmic form as;

10gqj = log At + a log k, + (1- a) log z_

(6)

In this study, capital stock is measured in terms of the value of fixed assets and other intermediate costs rather than the flow of services. No attempt is made to disrupt the flow of services or the potentially different marginal productivities of the different components of the capital stock. Labor input is measured as total worker compensation to facilitate the distinction between the skilled and unskilled workers. The value of the output elasticities is clearly important for the calculation of total factor productivity. Tomeasure this, this author shall use the factor shares from the industry's total output. Of course,

The Filipino

elasticites

obtained

countries

differ

relative

developing

from production

depending

function

estimates

on the definitions,

of national

countries

Worker in a Global Economy

income.

The range

like the Philippines

from different

and often of variance

because

diverge

from

is greater, for

of the larger

deviations

of factor markets from the competitiveness assumption used to justify the equality of the appropriate elasticities and the observed factor shares (Pack

1984). Nevertheless,

given

the

industries

that

have

opened

substantially to the world market, the "as if" assumption about competitive markets will be used, and factor shares will be imputed to measure the required elasticities. 1 3) Regressions of Export Prices and TFP on the estimated Factor Shares The effects changes

in product

of globalization prices.

on wages can be inferred

However,

prices

resulting

in a bias in the estimates.

thus possibly

this problem,

one can derive the full effects of globalization

in product

prices,

changes,

on input shares.

improvements

by total

To disentangle

wage s, one must measure by changes in total factor Depending

conditioned

factor

the effects

product

in total factor

demand

productivity

To solve

by regressing productivity

of globalization

the effect of technological productivity, on wages.

upon

the

may "also be by total factor

productivity, changes

from

and

changes, supply

are expected

proxied

conditions, to influence

wages. For instance, under competitive conditions, if supply is fixed, improvements in total factor productivity can lead to higher wages as the demand infinitely

for the goods elastic,

technological

the

efficiency

for labor is reduced. well as the probable

increases.

potential

On the other

supply

may be choked

increase

by higher

The idea then is to consider intermediate cases.

hand, from

if supply

increased

wages if the demand these possibilities

EMPIRICAL STRATEGY AND DATA DESCRIPTION Using the above model, effect of globalization the Stolper-Samuelson

the paper

will then try to measure

the

on wage inequality in the Philippines. Following theory, the author assumes that the effects of

i Aside from the definition of the inputs, the estimate of TFP here differs from the growth accounting method of Cororaton and Caparas (1999)in at least two ways. First, the measure is derived in monetary levels rather than as growth rates. Second, the composition of industries is more restricted and includes those that are able to export extensively.These differences make the estimate more stable and less subject to variances than the previous study.

Chapter 2 : Analysis

of Globalization

and Wage Inequality

in RP

globalization on wages are associated with the changes in product prices. The empirical strategy data to be analyzed in this paper will then focus on capturing

the

different

disentangling

them from

facets

of globalization

the price effects

with

a view

of globalization.

Time Period of the Study: Clocking trade and financial liberalization policies The investment in line with

Because

savings,

FDI was

protectionist

economic

of the shortage considered

industrial

industries

of the Philippines

the Philippines'

strategy.

terms,

regime

desirable.

The

protection, situation,

stand-by

facility

credit way

subsequently measures

from

for reforms

expanded

in line with

the import

changed

stabilization the International in trade

and

of these was the passage

1990

Monetary

investment

the procedure investors

to register

of foreign only with

This were The

Investment

simplified

entry

Fund.

administration.

foreign equity in a domestic or export enterprise did not fall under a negative list. Furthermore, for the

the by a

Several important

of the Foreign

of this law liberalized

with

that

100 percent its activity

foreign

credit

supported

investment

in the Ramos administration.

of 1991. The enactment

requiring

the

substituting

favorable

program

were made just before the end of Aquino

most important

and domestic

of tax exemptions,

however,

of an economic

the

development

and so forth.

implementation paved

and

resources

However,

of the time,

were the only beneficiaries

market

condition

of government

strategy

has evolved over time

Act

by allowing as long as this law

investments

the Securities

and

Exchange Commission (SEC), unless they were seeking the Board of investments (BOI).

incentives

from

Since 1992, a more comprehensive market-oriented approach to economic structural reform has been followed. Under this approach, many key sectors, including the downstream and international aviation, telecommunications, as well as infrastructure

(through

oil, shipping, domestic and mining industries,

Build-Operate-Transfer

and Build-

Operate-Own schemes) have been opened to the private sector, including foreign investors. Ten foreign banks also were initially allowed to open branches. Trade policies, far, four major tariffs.

The

on the other

programs

first phase

hand,

have resulted of the Tariff

have evolved since in a substantial

Reform

Program

1980. So

reduction (TRP-I)

in was

'26

The Filipino Worker in a Global Economy

implemented

in 1981, covering

protection

rates

across

a five-year

industries

rates (EPRs) within the 30 to 80 percent TRP was implemented with the issuance 470 on 20 July tariff structure raw materials

1991, which

became

at 30 percent.

intermediate

off

protection

on 24 August

goods at 20 percent

TRP-II (EO 470), which was supposed by the third phase

liberalized

the trade

further

of tariffs toward

phase of (EO) No. 1991. The

for ease of customs

iiImet a number of objections considered a tariff calibration

by reducing

and simplifying and providing

vis-/t-vis foreign

goods

to end by December 1995. TRP-III the level and

level of EPRs across

administration,

for local manufacturers

and finished

of TRP in' August

environment

a uniform

global competitiveness

all sectors,

the tariff

structure

a level playing

competitors.

Finally,

thus field

as TRP-

from the business sector, the government scheme to serve as a framework for TRP-

IV vis-g-vis the pace of liberalization adjustments

at leveling

effective

range. The second of Executive Order

effective

1995 was overtaken

promoting

aimed

under TRP-II is such that locally produced and imported would have a tax of 10 percent and 3 percent rates of

duty, respectively;

spread

period,

and achieving

were contained

in the ASEAN countries.

The tariff

in EO 465 and 486, implemented

effective

22 January and 10 July 1998, respectively. TRP-IV provides a structure of 30-25-20-15-10-7-5-3 percent tariff reduction scheme instead of the previous clamor

30-20-10-3 percent for further Having

an analysis have already

structure

protection

looked

focusing

to respond

to the business

to "assist them to compete

at all these policies,

on the time period

been in place. This means

this paper

sector's

globally."

will then provide

when the effects of these pohcies that the study will only involve

the years covering 1991 to 1996. This time period, as opposed to starting from 1980, will have the following two advantages: (1) it will limit the number

of structfiral

and (2) it will capture globalization,

capital

factors

that need to be accounted

the full impact movements

of globalization.

have to be incorporated,

for in the study; In considering since interest

rates can affect the. demand for labor and correspondingly the wage rates. The main disadvantage of course is' that the number of observations limited.

that can account

for the impact

of globalization

will be

Industries to be examined: Identification of Key Industries The theory discussed in the second section considers the country's tradables. To focus on the impact of globalization

mainly on the

Chapter 2 : Analysis

of Globalization

labor

employment,

productivity,

only the top, fast-growing theory

also considers

globalization. change

the imports and

this author

condition

Hecksher-Ohlin theory sufficient to consider

leads

considers

costs

The

may be influenced

will then be expected

liberalization.

However,

the exports and the exporting industries In this case, the export price changes

this

in the country.

whose

inputs

in RP

exports

industries

financial

only by the costs of domestic Because

and earnings,

manufacture

Import-competing

with the trade

Philippines, independent.

and Wage Inequality

in the

are heavily importwill be affected not

but by the imported

to a broader

inputs as well.

representation

of the

2, analyzing the exporting industries will be both the effects of investment and trade

liberalization. To focus on the key industries, that have been in the top 20 from First, these globalization, highlighted. expected

uses the exportables

1989 to 1995 for a number

are the industries that probably and the effects of the liberalization Second,

the changes

to be more pronounced

of technological

innovations

The source

in these industries.

programs

for the particular of the data

Statistics that had been Commodity Classification

and wage Third,

rates

are

the effect

in these industries.

in this strategy is that assumptions of the are more evidently applicable for these

Although the recent

their overall effects be significant.

of reasons.

benefit from the trend will then be

in employment

will be more substantial

The underlying assumption Stolper-Samuelson model industries.

this author

may influence time period

in this paper

other industries,

in question

may not

is the Philippine

Trade

categorized using the Philippine Statistical (PSCC) code. Because the data on factor

inputs and technology trends are gathered from the Annual Survey of Establishments, which is based on the Philippine Standard Industrial Classification

(PSIC) code, there will thus be a need to match

data sets. In the absence codes,

the author

corresponding

of any objective

used the following

way of comparing

pairing

of industries

these two these two with their

PSIC and PSCC categories:

2Note that the Hecksher-Ohlin theory examines the consequences of trade on goods and their associated factors, rather than industries. However, since the exporting industries use imported goods along with domestic inputs, then each industry can also be seen as self-contained economies. Moreover, because the imports are used mainly as inputs, increased trade liberalization may induce more production of goods that uses imports whose costs have declined. Thus, the theory remains valid (though weakly) if globalization should still result in greater exports of goods that use the more abundant domestic resource.

The Filipino Worker in a Global Economy

PSIC â&#x20AC;˘ 3115

Industry

3125

Canning, Preserving and Processing Sea Foods Manufacture Desiccated Coconut

3114 3123 331.9 3530

Canning and Preserving of Fruits and Vegetables Sugar Milling and Refining Manufacture of Wood, Cork and Cane Products N.E.C. Petroleum Refineries

3116 3512 372

Production of Crude Coconut Oil, including Cake and Meal Manufacture of Fertilizers Nonferrous Metal Basic industries

3831 3909 3832

Manufacture of Electrical machinery and apparatus Manufacturing industries, N.E.C. Manufacture of Radio, Television and Communication Equipment and Apparatus Manufacture of Electrical Wires and Wiring Devices Manufacture of Ofc, Computing and Accounting Machinery Manufacture of Electrical Apparatus and Supplies N.E.C Manufacture of Motor Vehicle Parts and Accessories

3836 3825 3839 3845 38609

Manufacture Metal

3223 3222 3212

Embroidery Establishments Ready-made Clothing Manufacturing Kalitting Mills

PSCC 037.1 057,7 057.9

Industry Fish, prepared or preserved in airtight containers Coconuts, fresh, matured, dessicated Pineapples, avocados, mangoes, guavas and mangosteens, or dried and other fresh fruit, n.e.s. Centrifugal sugar, muscovado, and "panocha"

061.1 292.9 334.1.

422.3 562.9 682.1 764.1

and Repair of Furnitures

of Fish, Crustacea and other

and Fixtures Primarily of

fresh

Vegetable materials of a kind used pr!marily in brushes or brooms, hard seeds for carving, seaweeds and moss, dried Motor spirit (gasoline), including aviation spirit, other light petroleum oils obtained from bituminous materials (other than crude) and petroleum naptha Coconut (copra) oil and its fractions Fertilizers, manufactured Refined copper (including copper alloys other than master alloys), unwrought Electrical apparatus for line telephony or line telegraphy (including such apparatus for carrier-current line systems)

Chapter 2 : Analysis

PSCC 764.9

773.1 776.3 776.4 784.3 821.1 844.2

of Globalization

and Wage Inequality

in RP

Industry Parts and accessories of phonographs (gramophones) including record players and tape decks and T.V. image and sound recorders and reproducers, magnetic Magnet wire and insulated electric wire, cable, bars, strip and the like, n.e.s. Transistors, photocells (including photodiodes and phototransistors), diodes and similar semiconductor devices Electronic microcircuits Other parts and accessories of the motor vehicles of groups 722, 781,782 and 783 Chairs and other seats, whether or not convertible into beds, of wood, of metal, of bamboo, of rattan, of other materials, n.e.s. Undergarments (excluding shirts but including collars, shirt fronts and cuffs), of synthetic fibers or other fibers, other than knitted or croheted

845.1

Jerseys, pullovers, slipovers, twinsets, cardigans, bed jackets and jumpers, of cotton, wool or fine animal hair, or of other fibers, knitted or crocheted

845.9

Other outer garments and clothing accessories (other than gloves, stocking and the like), of cotton, of synthetic or of other fibers, knitted or crocheted, not elastic nor rubberized

The problem the estimated

effects

in considering

only these industries

of globalization

may be biased

may be that

upward.

Realism

requires the inclusion of nontraded goods in the model. The high ratio of trade to output indicates, however, transport costs, tariffs, and quotas have not been liberalization nontraded

substantial

barriers

was implemented

to trade,

goods does not necessarily

on relative prices, by globaliZation.

especially

alter the expected

for the industries

Using the data on export values we can compute dividing the

of these

the value of the product

export

price

nonmanufacturing following

for values trends and

and volumes

products

these

manufacturing

of of

effects

in the world Figures

market

3 and 4 show

products,

classified

products,

respectively.

sharp

of trade

for each industry,

For the nonmanufacturing

that recorded

the process the presence

that are clearly affected

to its volume.

points are important.

except for fish and fruits

even before

in full force. Moreover,

into The

exportables,

price increases

in 1990,

The Filipino Worker in a Global Economy

•Figure

3. 'Estimated Exportables,

Prices of 1989-1996

Top

Nonmanufacturing

5 - Fish x _CoconLI

I_S

- Fruits 4

-- Sugar Vegetable matrls, o Petroleum oils • Coconut oils • Fertilizers • Copper

3 .2

1989

Source:

1990

Philippine

Figure

1991

Foreign

4. Prices

1992 1993 Years Trade

Statistics,

1994

1995

1996

1991-1997

Top Manufacturing

Exportables,

1989-1996

400 Electrical apparatus --.Transmit ters :,, Sound equipment - Wires /'

300

o Transistors

j../-"

_200

,- Microcircuits

A Motor parts • Furniture

.- /

41,Undergarments O Jerseys

F ..... i00

_ 1989

Source

• Outer garments /.D

z_ -----"--1990 1991, of basic

_ 1992 1993 Years

data: Philippine

Foreign

_ 1994 Trade

_ 1995

__ 1996

Statistics,

1991-1997

Chapter 2 : Analysis the products and fruits, Copper

of Globalization

exhibit generally

and Wage Inequality

limited

variation

in RP

in these prices.

1990 was the year when the supply had also sharply

also had a lower supply of exports

31 For fish

decreased.

in that year and registered

also a significant increase in prices. Other products such as vegetable materials, coconuts, and coconut oils appear to indicate a stable rise in the prices. These prices fluctuated record slight increases. For the manufacturing generally

constant

transmitters,

increases.

For microcircuits,

in the demand

using

that displayed

5 and

these

graphs

industries, prices.

6 show

theory,

points

low variability

aside

one may conclude comparative

my calculations

sluggish

technical

in both of these

advantage

The low variability

improvements

the generally

are noteworthy.

First,

that

of TFP for the same

sectors.

and seems to complement

Several

in prices

for the good. If one were to interpret

and manufacturing suggests

significant

improvements

the opening of markets revealed the country's in manufacturing these two products. Figures

for microcircuits,

in the quality of the product,

the Heckscher-Ohlin

nonmanufacturing

in 1995 to

have also remained

except

the impressive changes

generally

the prices

the period,

and sound equipment

to possible

from the increases this result

exports,

throughout

transistors,

can be attributed

but had seemed

subgroupings,

in these

stable movement

despite

the by and large

the general

appears to be a gradual fall in the TFP. Several coconuts, fertilizers, microcircuits, undergarments

movement

products, such as and transistors,

registered significant increases in some periods, but unfortunately these improvements were not sustained as they also showed substantial declines

later. Second,

there were nonetheless

nonmanufacturing-based and vegetable

the TFP movements The general observed

demand

be reduced

has increased.

prices

of these

as markets However,

industries

The minimal,

reinforced

these

that recorded

highly

have been

coconut

oils

Third, while

cheaper

and generally upward higher

between tradable

opened,

these goods

and world

prices of some industries

if the cost of inputs has become

of inputs has increased. However,

to show some relationship

extent,

to increase

of TFP may have

fruits,

based group.

are minimal, these nonetheless remain positive. complementarity in the movements of TFP and the

To some

may be expected

These include

in the agriculturally

export prices appears

two variables. market

products.

materials

several cases of gains for

can

or the productivity declining,

pressures

estimates

in the prices.

TFP may have kept some

The Filipino Worker in a Global Economy

Figure

5. Estimated Industries

Factor

Productivity

of Nonmanufaeturing

t _k Fish

_ Coconut otis e Sugar

_- Vegetable matrls. @ Petroleum 2

/_//_

oils

_t"Copper

' 89

_/! 92

. 93

ÂĽ Fertilizers

Year

Source of basic data: Annual Survey of Establishments, various years; author's calculations

Figure

6. Estimated

Total

Manufacturing

Factor

Product

Productivity

Industries

2,5 _ Outer garments _- Jerseys 2

@-Undergannents [3"Transistors

E1.5

_- Electrical

apparatus

_" Sound equipment 0 Wires "_ 1 ua

_ Microcircuits tlt Motor pal"is

0.5

O Transmitters Furniture

t 89

â&#x20AC;˘ 90

i 91

i 92

I 93

I 94

I 95

Year

Source of basic data: Annual Survey of Establishments, various years; author's calculations

Chapter 2 : Analysis of Globalization and Wage Inequality in RP

these prices at a steady and more competitive level. In any â&#x20AC;˘case, the sectoral variability of TFP justifies the analysis of technological innovations into the analysis of globalization. Given these observed variances in the data, certainly time and industry factors have influenced these observed prices. Employment and Wage Incomes Figures 7 and 8 show the employment levels for these identified nonmanufacturing and manufacturing products, respectively. Despite the various structural changes occurring both here and abroad, the general movement has been relatively unchanging all throughout. This means that the industries that previously had high levels of employment--fish, coconuts, fruits, and sugar--continued to be the industries that employed the most number of workers. For the nonmanufacturing products, the same unresponsiveness of employment to the globalization process can be noted. The production of readymade clothes, such as jerseys, is seen to be the most labor-sintensive, while sound equipment industries are increasing the demand for labor. Wage incomes, however, appear to have been somehow influenced by the globalization process. One way of showing this is by analyzing the highest and lowest sectoral wage incomes for the three main sectors, i.e., agriculture, mining and manufacturing. Table 1shows these two levels of incomes for 1991and 1994from the Family, Income, and Expenditure Surveys. Note that there is no clear indication that only the wage incomes of the skilled or the unskilled have increased during the period, as indicated by the highest and lowest sectoral wages, respectively. Nevertheless, the manufacturing sector had a significant increase in the highest sectoral wages from 1991to 1994, and a decrease in the lowest incomes observed. This may be important since from the data on prices, it appears that only these sectors had benefited from globalization. Another way of viewing this phenomenon is to compare the incomes of highly educated households (with high school degrees and higher) and poorly educated households (with no high school degrees) from the Family, Income and Expenditure Surveys. Figures 9 and 10 show the movements of wage incomes between 1991 and 1994 for all industries. Two points are important. First, there is a significant difference in the wages found between the highly educated and poorly

The Filipino Worker in a Global Economy

Figure

7. Number of Employees Exportables, 1989-1995

in Top

Nonmanufacturing

40 - Fish 7.: :Cocoll

---Fruits

._r

_[] Sugar Vegetable 0 Petroleum

o _,

-,,/

matrls. oils

A Coconut ,

. ..- ... .....................

oils

â&#x20AC;˘ Fertilizers 0 Copper

"- ......... _10

uts

::::::::::::::::::::::

1989

1990

1991,

1992 Years

1993

1,994

1995

Source of basic data: Annual Survey of Establishments, 1989-1996

Figure

8. Number of Employees Exportables, 1989-1995

Top

Manufacturing

200 - Electrical

apparatus

_ Transfl_ itt cr:_ "" -Sound

cqttipment

Microcl rcuks A Motor

parts

[] Furniture _100

F'] Undergam_ents - """

. _ . . . _ . - ......... 50

- - " "

â&#x20AC;˘

Jerseys

Outer gttnx_nts

..-'--

0 1989

1990

1991

]992

1993

1994

1995

geal:5

Source of basic data: Annual Survey of Establishment, various years

Chapter 2 : Analysis of Globalization and Wage Inequality in RP Table 1. Highest Sectors Sector

and Lowest Wage Incomes

Highest

Sectoral

1991 ........ Agriculture

1,047,828

Mining Manufacturing Source:

Family

Income

Wage Income

in the Three

Lowest Secmral

1994

1991

Main

Wage Income ' "1994

840,000

316,500

500

542

3,550.878

5,439,798

150

and Expenditure

1,004,750

Survey.

1991-1994

educated families, suggesting that education is crucial factor in the determination of wage incomes. Second, the improvements from 1991 to 1994, when globalization was operative, are seen to be greater for the highly educated families than their counterparts. This is particularly so for such industries as agriculture, manufacturing, utilities, wholesale and finance. This suggests the high premium placed on education by much of these globalization trends. The data then appear to indicate that these industries have responded to globalization not through greater employment but through wage changes. This supports the Stolper-Samuelson theory that hypothesizes the independence of prices and wages to the composition and level of employment and resources. Table 2, Panel A, provides the means and standard deviations of the variables for all industries considered for the empirical test. Three main points can be made. First, prices have consistently increased during the period from 1989 to 1995. This can be because of the wide-ranging depreciation of the pesos (particularly in 1990) as well as the increased demand expected from globalization. 3 Second, the estimated TFP measure has on the average declined in this same period. This means that part of the increase in prices is due to the failure to innovate. Hence, there is a need to consider not only the price effects of globalization but also its possible technological effects if we are to apply the Stolper-Samuelson theory. Third, the share of factors generally has not change d significantly from the 1989 levels. In between these years, however, the share of unskilled labor has declined substantially. Capital share (mainly share of fixed assets) is' seen to be very erratic, experiencing substantial changes 3 These average figures can also reflect the composition of the exports recorded year. In which cases, if one high-priced product were to become more dominant year, its price would be given a larger weight in the estimated average price.

in the in one

The Filipino

Figure

Wage Incomes

of Households

Worker in a Global Economy with Low Education,

1991

and 1994, By Industry

1991

[-"] 1994 6O

0 Agri

Mtlfg Mining

Constr Transp Services Utilities Wholesale Finance Industry

Source of basic data: Family, Income and Expenditure Survey, 1991-1994

Figure

10. Wage Incomes and

of Households

with High Education,

1994, By Industry

200 150

_oo

,[ Agri

Mnfg

Mining

Constr Tmnsp Services Utilities Wholesale Finance Industry

Source of basic data: Family, Income and Expenditure Survey, 1991-1994

1991

Chapter 2 : Analysis of Globalization and Wage Inequality in RP

upwards and downwards. The share of skilled labor and intermediate inputs has remained steady, even as the former experienced a significant increase in 1994. A breakdown of these movements of these variables into three sub-groupings of industry is shown in the succeeding panels of the table. For agriculture-based industries, the changes are different from those indicated as the general trend. For one, the estimated TFP has remained stable from the 1989levels, suggesting technological innovation in these areas. This is in sharp contrast to the manufacturing-based industries that showed a steady decline after an increase in 1990, while the naturalresource-based industries registered abrupt and irregular fluctuations. Moreover, the share of unskilled labor in the value added of agriculture-based industries has steadily increased (with lower skilled labor and intermediate inputs shares) since 1993 when the full impact of trade liberalization was felt. In contrast, the other industries featured declining shares in unskilled labor. For manufacturing-based industries, capital and skilled labor shares have increased substantially, while for natural resource-based industries, there was a noticeable increase in intermediate input share. The general trend seems to indicate that as the value-added share of unskilled laborers in manufacturing-based industries has decreased, the share of unskilled labor in agriculturebased industries has increased. These points all seem to suggest that the movement of prices has been influenced by international markets as well as the country's foreign exchange movements. Furthermore, the changes in prices are transferred conceivably to changes in factor returns, as predicted by the Stolper-Samuelson theory. However, the effects on factor returns will seem to be different for each industry. RESULTS OF THE EMPlRIGAk TEST Table 3 presents four sets of estimates to measure factor returns from world export prices, total factor productivity, and globalization, which is defined as the sum of the first two factors. Respective breakdowns across different sub-groups are shown in the succeeding panels. As already discussed and as shown by the previous section, a number of unobserved industry and time effects could have affected the data. Hence, there is a need to consider the random effects models to determine the significance of these unobserved factors. Ordinary least squares and fixed effects estimates are shown in Tables 4 and 5.

Table 2.

Means and Standard

Deviations

of Sdected

Variables

Panel A. All Industries Variables

Years 1989

'Price

218.2471 (411,34)

Foreign

Exchange

Rate

I990

1991

269.6622

564.6169

t992

1993

537.7193 (1010.65)

1994

619.1570

(484,81)

(1057.77)

(1262.30)

21.74

24.31

27.48

25.51

0.4584 (0.26)

0.573i (0.33)

0.5572 (0.44)

0.5249 (0,30)

0.7232 (0.87)

0.00011 (0.00113)

0.0009 (0.00102)

0.0008 (0.00080)

0.0008 (0,00086)

0.2571 (0.15)

0.2447 (0.16)

0.2391 (0.14)

27.12

1995

672.9290

737.I713

(1498.82)

(1614.72)

26.45

25.70

(P:US$) Total Factor

Unskilled

Skilled

Capital

Productivity

Labor

Intermediate

Input

0.1542

0.1212

(0.11)

(0.08)

0.5875 (0.20)

N Notes:

0.6332 (0.17)

20 Figures

in parentheses

are standard

20 deviations.

0.1731 (0.17)

0.4364 (0.27)

0.4283 (0.17)

0.0004 (0.00031)

0.0005 (0.00027)

0.0004 (0.00028)

0,2527 (0.16)

0.2175 (0.13)

0.2829 (0.17)

0.25_ (0.t6)

0,1782

0,1924

0,1965

(0.24)

(0.13)

(0.25)

0.5870

0.5683

(0.19)

(0.29)

See text for the computation

20 of variables

0.5897 (0.22) 20

0,1802

0_ _

_, Â˘.a. "_

(0.14)

0.5201

0.5642

_,_ O

(0.21)

(0.18)

O _ :

Panel B. Agriculture-based

Industries

Variable

Years

Price

1989

1990

1991

22.8384

42.6892

24.5003

(24.42) Total Factor

Productivity

(40.72)

0.3852 (0.15)

Unskilled

Skilled

Labor

(0.17)

(20.57)

0.4182 (0.16)

28,9548

(21.78)

1.0879 (1.46)

(22.66)

0.4955

_'_

0.4306

(0.35)

(0.15)

0.00003

0.00033

0.00036

0.00035

(0.00003)

(0.00020)

(0.00025)

(0.00027)

0.2610 (0.17)

(0.08)

0.5906

0.2653 (0.18)

0.1237

(0.08)

0.6t48

(0.15) 6

0.1335

0.2416 (0,16)

0.1680

0.i810

(0.10)

0.6514

(0.11)

0.5912

(0.15) 6

0.2404 (0.I3)

(0.13)

0.6295

(0.09) 6

0.2148 (0.10)

0.1052

(0.08)

0,6062 (0.17)

0.2615 (0.13)

0.1327

(0.2I) N

(0.16)

(16.80)

26.8404

0,00004

0.i221

Input

0.3864

24.8957

1995

(0.00002)

(0.08) Intermediate

(20.71)

0.4063

1994

0.00005

0.2873

24.0388

1993

(0.00004)

(0.17) CapitaI

1992

0.5771

(0.12) 6

(0.11) 6

:_R:_

Panel C. Natural Resource-based

Industries 1989

Price

5.1218 (2.09)

Total Factor

Unskilled

Productivity

Labor

Skilled

Labor

Capital

Intermediate

Input

1991

23.9987

24.3298

(33.09)

(32.87)

t992

1993

1994

21.6645

19.9374

19,6468

(30.22)

(28.13)

1995

(27.97)

27,3436 (41.09)

0.1750

0.2833

0.2400

0.5837

0.9090

0_2360

0.2574

(0,10) 0.0008

(0.I1) 0.0004

(0,19) 0.0007

(0.66) 0.0004

(0.94) 0.0002

(0.06) 0.0003

(0.05) 0.0002

(0.00076) 0.0617

(0.00033) 0.0260

(0.00085) 0,0720

(0.00050) 0,0438

(0.00014) 0.0273

(0.00027) 0.0489

(0.00020) 0.0394

(0.06) 0.2173

(0,01) 0.1138

(0.09) 0.3636

(0.04) 0.1796

(0.01) 0.3882

(0.04) 0.1682

(0.02) 0.1049

(0.26)

(0.05)

(0.36)

(0.12)

(0,59)

(0.19)

(0.04-)

0.8598

0.5636

0.5844

0.7826

0,8554

0.7201 (0.32)

1990

(0.051 3

0.7762

(0,45) 3

(0.131 3

(0.58) 3

(0.16) 3

(0.01) 3

Panel D. Manufacturing-based

Industries 1989

Price

1990

382,9588 (504.78)

Total Factor

Productivity

Labor

Skilled

Labor

Capital

0.5756

0.7431

958.6509 (1227.70)

0.7369

1994

1106.7230 (1563.97)

0.5670

(0.51)

(0.25)

(0.21)

1203.5090

1317.0610

(1892.0t)

0.4736

g_ _"

1995

(2032..56)

_,_

0.4588

0.4736

(0.25)

(0.19)

_" g_

0.0012

0.0013

0.0005

(0.00106)

(0.00095)

(0.00071

(0.00081)

(0.00034)

(0.00027)

(0.00029)

0.2940

0.2954

0.2724

0.3027

0.2708

0.3699

0.3214

(0.14)

(0.12)

0.2199

0.2004

(0.13)

0.1168 (0.08)

0.5497 (0.17)

1006.5770 (1283.72)

1993

0.0016

(0.07) Share

1992

0.0018

0,1546

tnput

460,4648

(0.34)

(0.12)

Intermediate

1991

(597.06)

(0.26) Unskilled

0.5862 (0.14)

(0.t3)

O,1481

(0.12)

0.2177

O. 1712

(0. lO)

(0.33)

(0.12)

(0.14)

(0.17)

0.5782

0.4782

0.5574

0.4096

0,4778

(0.15)

(0.34)

(0.09)

(0.17)

(0,14) 11

_,_ 11

The Filipino Worker in a Global Economy Fixed

approach

effects

to taking

models

account

are generaUy

of differences

seen

to be a reasonable

between

industries

over time

that are viewed as parametric shifts in the regression function (Greene 1990). These effects can then be interpreted as applying only to the cross-sectional

units

of the study,

or the included

industries,

and no

longer to additional ones outside of the sample. cases, it may be more appropriate to consider

However, in most other these industry-specific

constant

cross-sectional

which

terms

as randomly

distributed

case, it will be more acceptable

section

was

drawn

from

a larger

then, the model can be modified than

extremely

the

small

in this paper. the model

former.

sample

over time.

to approximate effects

However,

properties,

the so-called

a random

there

effects model.

Hausman

to be more

is uncertainty

a problem

cross-

In this case

model is believed

In this case, it is necessaryto

using

units. In

to assume that the sampled population

In view of this, the random efficient

across

about

its

that we obviously

have

test the appropriateness

test. This test is designed

determine whether there are systematic differences between the two models. Note that the test shows the robustness of the random effects model

for the combined

as well for the estimates

estimates

of prices

for export

and technological

prices

and

the

innovation

TFP. However,

for subgroupings are seen to be less reliable. The random estimates found in Table 3, Panel A, indicate

for aU industries capital

is the

significant lower

effects

control

returns

However,

concerned,

capital

variable)

from

and

skilled

the observed

are seen for unskilled

technological

(reflected

innovations

labor

capital

and skilled labor but more favorable

means

that the prices

productivity somewhat

are somewhat

of the unskilled increased

arising

from

prices

do not benefit

improvements

by the seeming

units

unskilled

have

to be biased

labor

productivity

than

both

inputs.

by improvements

Although

and

inputs?

and intermediate,

lack of productivity

and

prices, against

to intermediate

inputs.

since

positive

in export

and intermediate

decreased

labor

the use of intermediate in total factor

labor

movement appear

that,

in the constant

This in the

although

improvements higher

the other

raise the rate of return

export inputs, from

4The estimated coefficients are interpreted as the differences ,from the constant that is supposed to reflect the rate of return from capital, the control variable. Insignificant coefficients then show no change from the constant. If the coefficients m'e negative but lower than the constant, this means that the rate of return from the associated factor is still positive but lower than the rate of return from capital.

Chapter 2 : Analysis Table

3. Random

of Globalization Effects

and Wage Inequality

Estimates

of Factor

in RP

Returns

Panel A. All industries Price

TFP

Globalization (Price + TFP)

Urtskilied Labor Share (%)

4,8226 *_-_ (2.62)

skilled Labor Share (%)

0.0055 (0.35)

lntemled.tate

input Share (%)

0.0072 (1.43)

,0140"*(2.09)

Constant

1,3945"* (2.03)

,0124"* (4,79)

5,7024"*

1,8339"*-

3,7444**(1.94) 0,0147 (0,89) .0040 (0.56) 4.4333**

(7,13)

(7.27)

(5.23)

Wald test

10,72

26,54

5.02

R - sq (overall)

0.003

O.19

Rho

0.73

0.34

0.75

48,01

48.18

15,03

gausmal_ N

140

0.1.1

140

Notes: Figures in parentheses are absolute values of zwalues. **3 refer to 5 and 10 percent levels of significance. Wald tests and R-sq (overall) are used to test the modd's overall fit. Rho measures the proportion of the variance explained by the error term. Hausman test is used to determine whether there are systematic differences between the fixed effects and random effects models.

Panel

B. Agriculture-based

Estimates Price

TFP

Globalizatio_ (Price + TFP)

Unskilled Labor Share (%)

Skilled Labor Share (%)

intermediate

input Share (%)

3.5039

8.4235*

(1,71)

(1.67)

0.0175

0,0149

0.0032

(L.13)

(l.49)

.0074 (0.76)

Constant

7.1347"

(0.90)

2.0341"*

,0014 (0.14) 1.4765 _-

(0.17) ,0135 (1.08) 1.0475

(2,14)

(1.84)

(0.88)

Wald test

1.75

10.98

4.50

R - sq

0..14

0.24

0.06

Rho

0.66

0.01

0.59

Hausman

0,76

43.21

14.48

N See notes

in Panel

The Filipino Worker in a Global Economy

Panel C. Natural

Resource-based

industries

Price

TFP

Globalization (Price + TFP)

Unskilled Labor Share (%)

15.6762

Skilled Labor Share (%)

Intermediate

3.7699 (0.54)

0.35880**

-0.0865

0.2724*

(2.73)

(1.07)

(1.79)

Iaput Share (%)

.0150

Constaat

Wald test

l1,9063

(1.38)

,0144*_

(0.90)

.0294 *_

(1.62)

(2.53)

(2,74)

0.1310

-2.1585"*

-2,0275 =*

(0.15)

(4.00)

(1.99)

13.1,9

16,64

8.74

R - sq

0.44

0.49

0,34

Rho

0,00

0.00

Hausman

0.00

27.03

0.00

See notes in Panel A.

Panel D. Manufacturing-based

Industries Plice

TFP

Globalizattoa (Price + TFP)

Unskilled Labor Share (%)

-5.8771 _* (2.50)

Skilled Labor Share (%)

0,0370* (1,71)

intermediate

Input Share (%)

-.0307"* (2.70)

Consta:0t

9.1469 *_

1.7069"* (2.77)

-4.2479" (1.81)

0.0004

0.0403 _

(0.08)

(1.86)

,0105*_ (3.58)

-.0217" (1.91)

-1.3888"*

7.9289 *_

(8.14)

(4_99)

(7.02)

15.81

23.90

9.94

R - sq

0.118

0.32

0.10

Rho

0.37

0.25

0.39

It ausman

1.06

14.29

2.39

Wald test

iN See notes

.... in Panel A.

Chapter 2 : Analysis Table

of Globalization

4. Ordinary Returns

Least

and Wage Inequality

Square

Estimates

in RP

of Factory

45 Share

Panel A. All Industries Price

TFP

GlobalJzation (Price + TFP)

Unskilled Labor Share (%)

2.5495 (I,00)

Skilled Labor Share (%)

0.0172 (1,12)

Intermediate

Input Share (%)

- .0173" (1,68)

Constant

4.8035"* (5.48)

1.1377 _ (1.71)

3,6872 (1.36)

0,0228 'v*

0,0400 *_'

(5,65)

(2,44)

,0153"* (5,64)

- .0021 (0.19)

- 2,3721"*

2.4313"*

(10.34)

(2.61)

Adj, R - sq

0,08

0.27

0.11

F - Lest

5.08

17.84

6.64

140

Notes: Figures in parentheses are absolute values of t-values. **,* refer to 5 and 10 percent levels of significance.

Panel B. Agriculture-based

Estimates Price

TFP

Globalization (Price + TFP)

Unskilled Labor Share (%)

Skilled Labor Share (%)

Intermediate

Input Share (%)

9.8005

7,0748 _

16.8753"*

(1.58)

(1,68)

(2,56)

0,0240"

0.0150

(1.65)

(1.52)

,0164

.0008

(1.14) Constant

1,2173

0.0390 _" (2.51) ,0171

(0.08)

(1.12)

- 1.4420"

- 0.2247

(1.03)

(1.80)

(0.18)

Adj. R - sq

0.09

0.18

0.31,

F - test

2,40

3.95

7.02

N See notes

in Panel

The Filipino Worker in a Global Economy

Panel C. Natural

Resource-based

Industries

Price

TFP

Global[zation (Price + TFP)

Unskilled, Labor Share (%)

Skilled Labor Share (%)

- 15,6762

3,7699

- 11.9063

(1,38)

(0,54)

(0,90)

- 0.0865

0.27N*

0.3588 "_ (2,73)

Intermediate

Input Share (%)

Constant

(1.07)

.0150

(1.79)

.0144"*

.0294 **

(1,62)

(2.53)

0.1310

- 2.1585 **

- 2.0275**

(2.74)

(0,15)

(4.00)

(1.99)

Adj. R - sq

0.34

0.41

0.22

F - test

4.40

5.55

2.91

.TFP

Globalization

See notes in Panel A,

Panel D. Manufacturing-based

Industries Price

(Price + TFP Unskilled Labor Share (%)

- 6.3713 *_ (2.39)

(2.83)

(1.63)

Skilled Labor Share (%)

- 0.0298

0.0062

- 0.0236

(1.49) Intermediate

Itaput Share (%)

Constan't

- ,0198"

1.9345 *'_

(1.21) .0147"*

- 4.4367 _

(1.15) - .0052

(1.76)

(5.10)

8.4121 _*

- 1,8322 **

6.5798**

(7.36)

(6.61)

(8.64)

(0.45)

Adj. R - sq

0.16

0.31

0.08

F - test

5.67

12.31

3.10

N See notes

in Panel

Chapter 2 : Analysis Table 5.

of Globalization

Fixed Effects

and Wage Inequality

Estimates

of Factor

in RP

Returns

Panel A. All Industries Price

TFP

GlobalizatJon (Price -_TFP)

lOnskilled Labor Share (%)

Skilled Labor Share (%)

Intermediate

Input Share (%)

- 5.9839** "

0,8899

(3.22)

(1.29)

(2,66)

- 0,0203

- 0,018P'*

_0.0384**

(1.19)

(2.83)

(2.18)

- .0154 _* (2.28)

Constant

.0089** (3.54)

6.2317"

- 0.9643**

- 5.0940**

- .0065 (0.94) 5.2674"*

(8.56)

(3.56)

(7,03)

F - test

4.89

13,83

4,25

R - sq

0.03

0.02

0.12

Rho

0.80

0.75

0,84

140

Notes: Figures in parentheses are absolute values of t-values. *%*refer to 5 and 10 percent levels of significance.

Panel B. Agriculture-based

Estimates Price

TFP

Olobalization ('Price + TFP)

Unskilled Labor Share (%)

Skilled Labor Share (%)

Intermediate

Input Share (%)

Constant

2.5911

(I,3143

(0.64)

(0,10)

0,0132

- 0.0549*

(0,70)

(3,77)

.0057

- ,0008

2.9054 (0,60) - 0.0418 _: (1,85) .0049

(0,58)

(0.11)

(0.42)

2.2600 _*

0.5424

(2,25)

(0.70)

(2.34)

2.8024**

F - test

0.24

8.75

3.30

R - sq

0.14

0.18

Rho

0,73

0.92

0.88

See notes in Panel A.

The Filipino Worker in a Global Economy

Panel

C. Natural

Resource-based

Industries

Price

TFP

Globalization (Price + TFP)

Unskilled ,Labor Share (%l

- 10.0065"

- 6.4069

(1,66) Skilled Labor Share (%)

Intennediate

Input Share (%)

(0,97)

(1,92)

0.0605

- 0.0714

- 0_0109

(0,85)

(0.92)

(0.11)

.0029

.0033

(0.53) Constant

- 16.4134_

(0,54)

2.1383"*

- 0.9764

.0062 (0,79) 1.1619

(3.68)

(1.53)

(1.41)

F _test

1.82

5.82

7.34

R - sq

0.04

028

0.01

Rho

0.91

0.64

0.89

N See notes

21 in Panel

Panel D. Manufacturing-based

Industries Price

TFP

Globalization (Price + TFP)

Unskilled Labor Share (%)

Skilled Labor Share (%)

Intermediate

Input Share (%)

, - 5.6620 _*

1.3441 *_

- 4.3179"

(2,29)

(2.17)

(1,77)

- 0.0397

- 0.0101

- 0.0498 *_

(1.56)

(1.58)

(1,98)

- ,0350"*

.0067""

- .0283 "_

(2.83)

(2.18)

Constant

9.4284 _*

- 0.8613"*

F - test

(7,46) 4.61

(2.73) 6.50

(6,88) 3.32

R - sq

0,17

0.15

0.09

Rho

0.38

0.52

0.44

See notes

in Panel

(2.32) 8.5671 _*

Chapter 2 : Analysis

of Globalization

and Wage Inequality

in RP

investments in unskilled labor? earned by owners of unskilled

However, these increases in productivity labor do not offset their lower returns

from export globalization.

relative

prices,

implying

This overall assessment, we view the breakdown share returns

however,

by industry.

in agriculture.

wage

inequality

is somewhat

arising

from

modified

when

Panel B shows the estimated

Note that all factor

shares receive

factor positive

returns equal to roughly 2 percent (as coefficients, except the constant, are statistically insignificant). Nevertheless, investments of unskilled labo r generate return

increases

in the total productivity,

on these resources

relative

to capital.

causing

a higher

Hence, if increases

total

in total

factor productivity are transferred fully in the form of lower prices and higher demand for the product, the wage returns of unskilled labor will amount

to roughly

for the

8 percent

in agriculture.

The results for the other industries all suggest other inputs. The outcomes for the natural

industries

(Panel C) however

indicating

that

competitiveness industries

the

indicate

three

a lower rate of return

exporting

products

in the face of globalization.

(Panel D), the estimated

a higher return resource-based

returns

are

for all inputs, losing

their

For manufacturing-based from

prices and total factor

productivity indicate that all factors generate positive returns, although some returns are greater than others. Unskilled labor are able to earn only about

3.5 percent

return,

bring in a rate of return benefited, labor

the retums In summary,

are smaller,

while

the owners

close to 8 percent.

of the other

Hence,

factors

while all inputs

are

for unskilled labor are moving slower than others. relative to skilled labor, the returns to unskilled

indicating

that the country's

exports

are becoming

skiUed-intensive. the price effects

After accounting for the returns from technology, i.e., from lower productivity, the returns to unskilled labor

are nonetheless the movements

shown to have increased. What matters, however, across industries over time? Increased investment

are in

As already discussed, because the available data may be influenced by a number of industry-specific effects, random effects estimates are seen to be more efficient than the OLS estimates (Table 4), where unskilled labor is seen to have the same rate of return as capital from globalization. 6The main results of the fixed effects estimates (Table5) appear nonetheless to confirm the results of the random effects model. The only difference seems to be the less insignificant returns from productivity of the unskilled labor units, and the greater difference in rate of returns between unskilled labor and the other input. Hence, controlling for industry-specific conditions alone can be misleading. Without accounting for time trends, one can attribute higher wage inequality to globalization increase wage inequality, and view technology innovations to be ineffective in raising unskilled labor productivity.

The Filipino Worker in a Global Economy

unskilled

labor is seen to cause a higher

factor productivity. Furthermore, industries, such as natural resource be lower.

return

due to increased

total

if we allow the closure inefficient based-industries, the inequality will

CONCLO$10N Globalization unskilled

labor

shown

to have

globalization unskilled

has not taken

resources lower

labor

earns

process

advantage Unskilled

returns

process.

globalization

full

in the country. relative

This means

to other

that

significantly

relative

lower

is expected

to bring

according

agriculture-based

industries

this inequality.

This sector

to these

in technology

can be expected

sector

claimed.

results,

shown

the

have become

world market The country's

export

system,

industries

but fail to generate that

these

tend

which

value-

to unskilled

labor

produced

by the

lead to favorable process

results,

measured

not the existing

is the real culprit of the existing manufacturing

skilled labor,

to favor

the

in the agricultural

industries

and intermediate

use of such

will have to consider

especially

skills in the

is seen to favor unskilled

The country

from the globalization Furthermore, another

inefficient

a higher

the country's

high exporting on capital,

prices

innovation,

not been sustained. benefit

and,

in technology, the increased. Given

prices and technology,

processes,

too dependent

as the

technological

the

is crucial in reducing

inequality

that upgrading

may not necessarily

accumulation

wage inequality.

Technological

case,

development

to obtain

In this case, the g!obalization

of changing

skill/education

inputs,

the

inputs,

industries.

manufacturing terms

from

in this sector, the returns

This seems to suggest is often

inputs

the skilled employees,

to be higher, thus reducing

manufacturing

are

In which

added for unskilled labor and, with improvements contribution of unskilled labor can be further improvements

inputs

to the other

returns.

for export competition has been

abundant

labor

about some wage inequality,

favoring, first, the owners of capital, second, third, the owners of intermediate inputs. Nevertheless,

of the

inputs.

labor,

has

restructuring

its

sector if labor is to

and if wage inequality is to be reduced. source of inequality is the presence of

that can slightly benefit some factors of production, enough

low-return

returns

industries,

for everyone.

The study here shows

particularly

those

under

natural

Chapter 2 "Analysis of Globalization and Wage Inequality in RP

resource-based industries, tend to exacerbate the inequality problem. The results thereby indicate that despite the shortcomings of the present globalization process, its overall benefits have so far been extended, albeit not equally, to all resource owners. Two conditions can address this problem. First, as already discussed, improving technology, which ultimately means improving the returns of unskilled labor, is called for. Efforts within the Asia-Pacific Economic Cooperation (APEC) for economic and technical cooperation should then be encouraged. Second, the closure of inefficient industries that only benefit selected resource owners, but leave others with substantial losses, should be allowed. Further liberalization that reduces protection industries is thus recommended.

to inefficient

These results nevertheless are exploratory and subject to a number of errors. The major shortcomings of the paper are similar to Learner's (1998) paper and the Mincerian wage model. This can be listed as follows: a)

The estimates are based on one special type of Hecksher-Ohlin model that presumes that labor demand is infinitely elastic and that globalization is primarily a product price shock that determines the returns to factor inputs. In this model, skills matter, but only in terms of how prices have already determined its likely returns. In this case, the supply of such qualities will not affect the returns. b) The separation of observed changes in prices and technology is at best questionable. The assumption of a "pass-through" value of unity in the regressions is doubtful. c) The data on prices, and total factor productivity--the dependent variables--are all measured with error. This means that more detail have to be incorporated. In particular, future work needs to consider further product-mix changes, as well as the possibility that factor supply can have an impact on factor returns. There may also be a possibility that marginal demand for labor, and ultimately the wages, is determined internally from the labor found in nontraded goods sector. In any case, the results here remain consistent with the Stolper-Samuelson model, which adheres to the HecksherOhlin assumption, it provides empirical evidence to the view that globalization, as it is presently implemented, does bring about wage

The Filipino Worker in a Global Economy

inequality to some extent. Nevertheless, moving will not necessarily result in any improvements. not to impede

globalization,

away from this process Hence, the solution is

but to design appropriate

technologies

and

to reduce protection of particular industries, in order to give way to other industries that will use our more abundant resources more efficiently.

Chapter 2 : Analysis

of Globalization

and Wage Inequality

in RP

APPENDIX Similar framework

to the Stolper-Samuelson

theorem,

is based on a set of zero profit conditions

vector of product

inputs per unit of output.

conditions

dPi = E

(1996)

prices, w is the vector of factor costs and A is the matrix

of input intensities, zero-profit

the Leamer

p = A'W where p is a

produces

Differentiating

the changes in product

one of these

prices for sector i:

(Ai*dwk + dAi*wk)

(A.1)

Âą

The inputintensity, definedasAik= vlk/ Qw canbe differentiated as:

Substituting

this into the standard

total factor productivity,

measurement

of the growth of

we obtain:

In which case, using (A.1), the change in. product linked with factor cost changes

and technology

changes

prices can be into the

following: P_ = Ek 8i*Wik --T_Pi = 8i_ --T_Pi

(A.2)

This then isthe fundamentalconditionthatservesas basisfor decomposing theimpactof globalization and technologyon factorprices. To do this, theequationcanbe separatedintoparts:one partcan be due to technology

(t) and the other that is due to other factors (g), where g stands

for globalization

as well as encompassing

where _i(t)= @iQ(t)- TFPi

_ (g)= 8/,(g) _ :_(t)+_(g)

demand

shifts. Hence,

The Filipino Worker in a Global Economy In these equations,

that can be consistent growth

and product

there are many values

with this set of equations, price changes. The problem

of the g-effect on wages given the data on TFP is that to disentangle

the

globalization effects from the technological effects on product prices, a world wide demand and supply model that allows for different elasticities in each sector will be needed. Since this will mean very large costs, Learner suggests a more convenient alternative which assumes all sectors have the same "rate of technological

pass-through"

/_i(t)= -ITFP

to product

where ;%the pass-through rate, conceptually supply. If world wide supply is completely input

technologies,

the pass-through

side. A value of 2:1 means exactly captured

prices, i.e.,

depends on the demand and fixed as is the case with fixed

rate is determined

that that the technological

by the product

price reductions,

on the demand improvements

are

which is the appropriate

response for a small sector Cobb-Douglas utility with fixed expenditure shares. Moreover, with ;_=1, if supply is infinitely elastic, potential increases in Supply due to technological

improvements

result in exactly

reductions in product prices. In which case, further increases impeded by lower prices.

offsetting

in supply are

Given alternative values for 2, the expected changes in factor prices that are associated with technological change can be written as: -ITFP

i = l_iw(t

) - TFP i

(A.3)

or equivalently,

After allowing

for the effects of technological

prices, the residual of the product price variability

change

in product

is the globalization

effect:

Chapter 2 : Analysis To determine changes

of Globalization

and Wage Inequality

the impact of this globalization

are regressed

in RP

on wages, the product

price

with the factor input shares, as in the following:

Pi + 2TFPI = O_w(g)

(A.4)

The Filipino Worker in a Global Economy BIBLIOGRAPHY

Burtless, G. 1995. International Trade and the Rise in Earnings Inequality. Journal of Economic Literature 23: 800-816. Cororaton, C. and M.T. Caparas. 1999. Total Factor Productivity: Estimates for the Philippines. PIDS Discussion Paper Series No. 99-06. Makati City, Philippines: Philippine Institute for Development Studies. Greene, W. 1990. Econometric Analysis (Second Edition). Englewood Clifts, NJ: Prentice-Hall. Hilton, R. S. 1984. Comparative Trade and Relative Returns to Factors of Production. Journal of International Economics 16: 259-270. Jones, R., and S. Engerman. 1996. Trade, Technology, and Wages: A Tale of Two Countries. American Economic Review, May (Papers and Proceedings) 86:35-40. Krueger, A. 1983. Trade and Employment in Developing Countries. Vol. 3: Synthesis and Conclusions. Chicago: University of Chicago Press. Lairson, T. and D. Skidmore. 1997. International Political Economy: The Struggle for Power and Wealth (Second Edition). Fort Worth, TX: Harcourt Brace College Publishers. Leamer,

E. 1995. A Trade Economist's View of U.S. Wages and Globalization. In S. Collins, ed., imports, Exports and the American Worker. Washington, D.C.: Brookings Institution.

Pack, H. 1984. Total Factor Productivity and Its Determinants: Some International Comparisons. In G. Ranis, etal. (eds.) Comparative Development Perspectives, Boulder, CO: Westview Press.

ChapterThree

TradeLiberalization andinternationalMigration: ThePhilippineCase Fernando

7l".Aldaba *

ABSTRACT

in the Philippines. Specifically, it looks at the relationship of he paper international migration trade andexamines migration.theItdeterminants proposes an ofeclectic migration model and shows by regression analysis that goods and labor mobility are substitutes in the medium and long terms. In the short run, as economies expand due to market reforms, migration may still continue. Other determinants of international migration include the economic growth of the country and specific factors related to the destination countries like wage rates and the existence of networks. Political stability in the Philippines did not turn out to be significant. The key policy prescription is to continue with the economic reforms such as improving trade openness to increase the employment and income possibilities of the Filipino people. In the short run, government needs to ensure the protection and welfare of the overseas contract workers. INTRODUCTION The long years of protectionism in the country had long been cited by various studies as a major factor for the country's slow growth path in the past three decades. Trade liberalization was seen as an agent of growth and structural change leading to higher incomes and reallocation of production and consumption. Since the 1980s, the Philippines has embarked on trade reforms through the elimination of quantitative restrictions and tariff reduction. These series of reforms had significantly reduced the average level of effective protection from * Assistant professor,

Ateneo de Manila University.

58 44 percent

The Filipino Worker in a Global Economy in 1983 to 24 percent

in 1995. During the same period,

however, an increftsing number of Filipino workers left the country to seek better employment and higher wages in various parts of the world. Overseas contract workers officially deployed rose from 36,035 in 1976 to 747,696 in 1997. This trend appears to contradict the expected migration patterns proposed in theory. In his classic article International Trade and Factor Mobility, Nobel prize winner Robert MundeU proposed that "Commodity movements are at least to some extent a substitute for factor movements." Theoretically, he showed that an increase in trade impediments encouraged factor movements under certain assumptions. In view of current developments, 'this paper aims to examine empirically whether trade and international migration are complements or substitutes using Philippine data. It also reviews the major factors for overseas migration in the Philippines using econometric analyses. Finally, it examines the role of trade liberalization--whether it helped to reduce or decrease international migration during the past ten years. The research is significant given the important role overseas contract workers (OCWs) play in the Philippine economy. Recent studies have shown that in the developing world, international labor mobility will continue to increase as a response to increasing incomedifferentials globally. For a developing country like the Philippines, remittances have provided the much-needed dollars to the economy. On the other hand, continued increases in overseas workers deployed may have deleterious effects on the local labor market. This may result in the shortage of a skilled workforce needed to sustain economic growth. The study hopes to enlighten policy makers on the relationship of exports and the migration of workers. The government intervention necessary in creating and maintaining the level of human resources effectively can be determined. The paper is organized as follows: the second section provides an overview of the literature tackling trade and international migration; the third section discusses the theoretical underpinnings of the determinants of migration and of the "substitutability" Of goods and labor exports; the fourth section examines Philippine data on international migration; the fifth section focuses on the various regression analyses conducted to determine the significant factors affecting international migration; the sixth section tackles the labor

Chapter 3: Trade Liberalization and International Migration market effects of continued seventh section summarizes implication of the study.

international migration; and, finally, the the findings and elaborates on the policy

CONCEPTUAL UNDERPINNINGS Jurado and Sanchez (1998) discuss the importance of "temporary labor migration" (TLM) or international migration to the country's employment levels. In their study, migration and labor data were reorganized, resulting in an increase of 0.2 percentage points in the employment rate. The study also estimated that every TLM family or household would be receiving P80,000 per annum from a relative working abroad, increasing average real wages for the Philippines. According to the study, "the only way to deal with TLM is to decisively improve the economy so that TLMs can persuade themselves that it is in their interest to come home." Presumably, trade liberalization, as it expands the economy and increases employment and wages, would be able to reduce the number of TLMs. Alburo (1.993) analyzes the relationships between trade, remittances from OCWs, and the domestic economy. He cites the previous protectionist policies and weakness of the domestic economy as the driving force for international migration. Remittances from OeWs are used only in a limited manner for real and productive investments. He concludes that the Philippines is still far from turning points in trade and labor migration unlike South Korea and Thailand. Amjad (1996), who likewise does a comparative analysis of the .Philippines and Indonesia, also comes up with a similar conclusion for both countries, basically because of the domestic economies' failure to generate sufficient jobs for their respective populace. Alburo (1998) computes the ratio of merchandise exports .to .remittances for the Philippines, Thailand and South Korea. The estimates he gathered for the latter two countries tend to support fl_eargument that there is substitution between goods exports and labor exports, because as trade accelerates, the apparent social returns (the ratio) from exports rise relative to migration. However, in the case of the Philippines, the ratio even fell from 11.7 in 1978 to 5.1 in 1993, the latest year of his estimation. Nevertheless, there are clearly other factors affecting international migration. Gonzales (1998) provides an integrated and comprehensive evaluation of Philippine labor migration from the

The Filipino Worker in a Global Economy

following dimensions: historical, demographic, social, psychosocial, economic and political. In his book he also discusses policy implementation challenges and areas for further Philippine transmigration policy research. He presents both qualitative and quantitative information gathered from a wide array of primary and secondary resources. Bohning (1.998)also identifies the factors that reduce Filipinos' employment opportunities in countries affected by the current crisis and then carries out two rounds of simulation to estimate the orders of magnitude involved. The first round consists of simple employment elasticity exercise while the second accounts for anticipated sectoral, occupational, and other impacts. According to the estimates, some 45,600 Filipinos working abroad will be affected because of the crisis, most of whom will come from Malaysia (32,500). Lim (1998), in his paper on the social impact of the crisis in the Philippines, notes that there is increasing pressure among OCWs to send bigger remittances due to the declining household incomes in the local economy. Massey et al. (1993) provides a more comprehensive view of migration in his review of the various theories of international migration which include the micro- and macroexplanations of neoclassical economics (e.g., Lewis 1954, Ranis and Fei 1961,Harris and Todaro 1970, Todaro 1976 and Borjas 1990), the "new economics of migration" (e.g., Stark 1991,Taylor 1986, Lauby and Stark 1988and Katz and Stark 1988), dual labor market theory (e.g., Piore 1979), world systems theory (e.g., Wallerstein 1974), network theory and institutions theory. Neoclassical economics focuses on an individual's decision to migrate based on differentials in wages and employment conditions between countries and on migration costs. The "new economics of migration," on the other hand, factors in the situation in various markets, not only labor markets. It looks at migration as a household decision to minimize risks to family income or to overcome capital constraints. Dual labor market theory and world systems theory do not consider such microlevel decision processes but emphasize the forces working at higher levels of aggregation. The former links immigration to the structural requirements of modern industrial economies while the latter views it as a natural consequence of economic globalization and market penetration across national boundaries. Network and institutions theory describes the role of relatives, friends, and institutions in facilitating and maintaining the flow of migrants from one country to another.

Chapter 3: Trade Liberalization and International Migration

Nevertheless, Schiff (1994) shows that trade liberalization in either the sending or receiving country is likely to increase migration in the long run, although in the short term the effect is ambiguous. This varies from the typical Hecksher-Ohlin (H-O) conclusion that trade is a substitute for migration. In such a framework, trade liberalization by reducing price differentials between factors leads to a decline in international migration. Schiff (1994) utilizes the same H-O framework but adds migration costs and financing constraints to the model, causing divergence as a result. Martin (1993) proposes that there is a migration analog to the well-known demographic transition. Just as a country's population temporarily grows faster when death rates fall before birth rates, so an established labor migration swells temporarily as a country restructures for accelerated economic growth. In economies that fail to adopt outward-oriented and market-driven economic policies, economic growth will slow down and emigration pressures will be accentuated by increasing demographic trends. In addition, Martin (1993) also looks at the trade-enhancing effects of migration, aside from being substitutes or complements. For example, he discusses that the U.S., as the world's first "universal nation," will be able to use diverse immigrants to forge trade links to their countries of origin. Thus, immigration is able to increase trade possibilities. Also, a portion of all remittances by these workers is spent on imports, thereby increasing trade. Schiff (1996) studied particular cases to determine the relationship between trade and South-North migration. Opening markets in the North and providing foreign investment and foreign aid to sending countries are more likely to slow down migration from Eastern Europe to the European Union than from Africa to the European Union, or from Latin America to the 'United States. According to Schiff, two results hold irrespective of the degree of internalization of migration externalities: the South gains from trade liberalization in either the North or South and the North gains from imposing an immigration tax. Schiff and Lopez (1995) add four factors to the standard H-O model--labor skill levels (skilled or unskilled), international labor mobility, migration costs and financing constraints. They examined two types of simulation--Case 1 to countries in the post-demographic transition stage with a stable population (e.g., Eastern Europe and the former Soviet Union) and Case 2 to countries with rapidly growing

The Filipino

populations (e.g., Egypt, E1 Salvador, trade ].iberalization raises emigration raises emigration average

Worker in a Global Economy

Mexico and Morocco). in Case 1, of the unskilled while protection

of the skilled. Thus, trade liberalization

skill level of the labor force and increased

In Case 2, trade reduces

liberalization

emigration

raises

of the skilled.

Alburo migration Thailand,

utilizing

representations

Asian

between

of trade

and migration

South

(1) a comparison flows;

relationship

between, trade and migration;

comparative

advantage

an exporter

trade

and

Korea,

and

of graphic

(2) testing

a statistical

(3) a comparison

of revealed

for goods with that of services.

to an importer

it. and

skill level rises though

the relationship

methodologies:

of turning

lowers

of the unskilled

countries--Philippines,

three

show the existence

the

is ambiguous,

(1994) examines

for three

protection

emigration

The average

the net effect on total emigration

improves

points where

a country

His conclusions shifts from

being

of labor.

Substitution Between Migration and Trade in the H-O Framework From

the

international achieves

2X2X2

factor

Hecksher-Ohlin

mobility

are substitutes

the same world equilibrium

the other. (South)

The H-O model,

being abundant

framework

coupled

in capital

for explaining

Decreasing liberalization no longer resulting

increase

from this situation

and incomes,

thereby

liberalization

in the sending

the short adjustment consistent certain

run,

eventually

with the "migration

country

The economic

or both)

resource of Martin

history,

for goods

in employment

trade

However,

unemployment

are weeded

will

expansion

migration.

may increase

transition"

economic

and migration to more trade

since the demand

human

labor

to less migration

leads to increase

sectors more

analytical

of goods (i.e., commodity

international

country

triggering

trade leads

is reduced

economy.

decreasing

stage in a country's

a useful

If international

or destination

necessary,

as uncompetitive

phase,

provides trade.

in the trading

in the sending

either

of the North

wage differential

restrictions

that

with the assumption

substitntion between in either countries

make labor mobility

and prices

in the sense

and

in one lowers

(labor),

in either the sending

trade

and that an increase

North-South

mobility is assumed further, occurs as trade liberalization and as the North-South (Schiff 1997).

Framework,

out during outflows.

in the

This is

(1993). Thus, at a and migration

may

Chapter 3: Trade Liberalization and International Migration

become temporary complements. This period of adjustment may be long or short depending on whether a country is able to implement the necessary trade reforms. In the long run, though, the economic expansion brought about by liberalization will decrease migration as nationals begin to find better jobs and higher wages in their own country. Complementarity Under Certain Assumptions Schiff (1997) nevertheless contends that if some of the assumptions underlying the H-O model are changed, trade and migration may be complements. Complementarity between migration and trade obtains if one imposes identical factor endowments in both countries but relaxes one of the following assumptions: a) constant returns to scale, b) identical technologies, c) perfect competition, d) absence of domestic distortions. As such, free trade does not result in factor price equalization. For example, several studies have obtained varying results when an economies of scale assumption is utilized. Some exhibit complementarity while others show ambiguity, depending on the specific model used. In addition, when oneconsiders migration costs and financing constraints, complementarity may again be shown. Migration costs may be prohibitive and difficult to finance for new migrants in developing countries like the Philippines. According to Schiff (1997), migration costs include: a) travel costs; b) information costs on the safest and cheapest routes, jobs and housing opportunities; c) cost of obtaining various documents (passport, visa, work permits); d) cost of living in the destination country; e) costs paid tO agents or brokers who bring the migrants from their origins to the destination country; and f) social and emotional costs. Potential migrants, according to Schiff, also have little or no collateral to access credit to finance the migration costs mentioned above. They usually have to rely on their savings or through other means to be able to migrate. These include subsidies from relatives or friends who are already in. the destination countries or advance payments from which are deductible their future wages. The latter, though, are a major source of onerous and exploitative arrangements for the migrants. An H-O Model with Migration Costs and Financing Constraints Schiff (1998) proposes a one-period framework, assuming identical individuals in the South with the following wage relations:

The Filipino Worker in a Global Economy

1) 2)

Wo<Ws<Wo+ W <Wn-C

Where Ws is the actual wage in the South, Wois the subsistence wage, C is the cost of migration, and Wnis the wage in the North. The South is relatively labor-abundant. W < Wnbecause of protection in one or both countries. Equation 2 suggests that labor in the South would like to migrate because their wage is less than that of the North, less migration cost. Equation 1 implies that the wage in the South is less than the subsistence wage, plus the migration cost. This indicates that people cannot pay for migration costs, and thus migration cannot take place. If trade liberalization occurs in the South, Ws increases to Ws'. if the South is small, Wn is unaffected. As long as trade is not fully liberalized in the South or, protection exists in the North, Ws'remains less than W. There are three possibilities: 1) 2) 3)

W'<Wo+C Wo+C<W'<W Wn--C<W'<W

-C n

Under 1), the financing constraint continues to be binding and migration does not take place. In 2), migration can be financed and thus it occurs. And in 3), there is no incentive to migrate, as local wage is already high enough. Thus, according to Schiff, in a developing economy, skilled workers are constrained by the North-South wage differential while the unskilled ones by migration costs. Alburo's Turning Point Hypothesis The turning point hypothesis of Alburo (1996) states that trade and migration are substitutes as economic growth is sustained over the long run. As accelerated export expansion fuels economic growth, migration rates and actual remittances decrease. A country reaches a turning point where it is transformed from a labor-exporting country to a labor-importing one. Alburo determines such turning points through a computed ratio of remittances and exports. However, implicit also in this hypothesis is the fact that in the short and medium run, a developing country like the Philippines may find its exports and remittances growing relatively at parallel rates as its growth strategy maximizes all

Chapter 3: Trade Liberalization and International Migration

opportunities to earn foreign exchange to cover its import and capital requirements. Martin (1993) also suggests that increased migration catalyzes human linkage and network among various sectors of the different countries, triggering more trade and foreign direct investments. He adds that a portion of remittances are used to pay for imports or to finance export-oriented activities. In this sense, there is a stage in a developing economy where trade and migration are complements rather than substitutes. An Eclectic Migration Model From existing studies in the Philippines, key determinants of international migration:

the following are the

a) Expected income differential. Following the new economics of migration, as discussed in the survey of literature, expected income differentials play an important role in a worker's decision to migrate from one geographical area to another. Thus, the key variables affecting international migration will be the Philippines' employment rates, wage rates, and economic growth rates as compared to those of the destination countries. b)

Travel and related costs. These refer to the required expenditures of a migrant worker to be able to work in another country such as application and processing fees, plane fares, and possibly start-up costs. Recent changes in technology and greater competitiveness in the transport industry would have decreased these costs while inflation or the cost of money (and even exchange rate adjustments) automatically increases the cost of such expenditures. However, government policies (e.g., improved regulation. of overseas employment agencies) may also affect these costs.

Existence of networks. According to the literature, networks are defined as possible support systems provided by relatives, friends, or other institutions in the destination

countries. The wider the network, the bigger the possibility of labor migrating to such a country. d) Political stability of a sending country. This is another important factor in migration. Various episodes in the

The Filipino Worker in a Global Economy

country's history showed migration rates increased as the political situation deteriorated. The 1983crisis was a primary example, especially where it concerned the exit of the middle class and highly skilled labor during that segment of our history, Immigration rules in destination countries. The number of migrants is also determined by the openness of a certain country, whether explicit or implicit, to accept foreign labor. Countries with inadequate labor stock will tend to be more lenient with regard to working visas while others with excess supply will be relatively more strict. Albnro (1993) notes that in Asia, while many countries have strict migration policies, implicitly they allow undocumented workers to enter, as this type of labor is cheap and needed for the competitiveness of their industries.

However, for the purpose of this study, an eclectic migration model is proposed. Several determinants of international migration in the Philippines may be lumped together in the following variables. a) Income variable. Given Schiff's exposition on migration costs, this variable will tell us whether the financing constraint is binding or not. According to Schiff (1998), a positive sign is proof of the existence of this constraint. b) Economic condition variables. These are typical "push" factors that catalyze migration decisions. They may refer to a country's economic growth, cost of living and unemployment situation. These variables are typically compared with those of the destination countries as inputs to the final decision making of an individual. c) Trade variables. Assuming these factors are fixed, these variables verify whether traded goods are substitutes or complements to international labor mobility. d) Political variables. These include political stability in the sending country, peace and order, and possibly immigration rules of host countries. Most of the time, they are very difficult to measure.

Chapter 3: Trade Liberalization and International e)

Migration

Social and cultural factor. These include the existence of networks in the receiving countries and the support mechanisms for the migrant in both the sending and destination countries. These variables typically cannot be measured.

DATAANALYSIS Only available data on migration in the Philippines was utilized in the study. Data was gathered from the National Statistics Office (NSO), the Philippine Overseas Employment Agency (POEA), and other agencies dealing with international migration. An aggregate time series data was compiled from 1975 to 1998. Aside from using aggregate statistics, the study was also able to assemble disaggregated data particularly those relating to the number of overseas workers and their remittances from the top 11destination countries (including the United States) from 1990 to 1998. These countries absorbed approximately 80 percent of all OCWs deployed in 1997 and 1998. This study is therefore the first to analyze econometrically a panel data of migration statistics. Growth Rates of Migrant Workers, Remittances and Exports Table i shows OCWs deployed, yearly remittances, exports, GNP and GDP data in absolute terms from 1975 to 1997. In terms of migrant workers deployed per year, they increased 1,975 percent from 36,036 in 1975to 747,696 in 1997. Remittances, on the other hand, jumped 5,474 percent from US$103,000.00 to US$5,741,835,000.00. Goods exported from the Philippines grew olfly tenfold from around US$2.2 billion in 1975 to US$25 billion in 1997. Table 2 shows the growth rates per year of OCWs deployed, remittances made and goods exported. The rate of OCW deployment peaked at around 56 percent in 1980 while the highest rate of increase in remittance (i.e., 78 percent was recorded in 1978. Export growth registered 34 percent in 1979and 29 percent in 1995. The average growth rate of migrant workers in 22 years is 16.5 percent, remittances 21.9 percent, and exports 12.2 percent. It is interesting to note that during the crisis years 1984, 1989, and 1990, the number of OCWs deployed even decreased. This may be due to the fact that travel .and other migration costs had skyrocketed during those times. The only time remittances decreased was in 1984, the year after the Aquino assassination.

Table 1. Migration, YEAR

Trade and Growth Data

OCW Deployed

RE,MITr._MCES

EY_PORT$

(in US$ 000)

GDP

(in US$ 000)

0ct US$ 000)

1975

36,036

103,000

2,294,410

452,086,000

454-,260,000

1976

47,835

111,000

2,573,680

490,058,000

494,265,000

1977

70,375

162,960

3,150,890

518,426,000

574,954,000

1978

88,__t

290,8_0

3,424,870

546,769,000

548,950,000

1979

137,337

364,74_

4,601,198

581_7_,000

579,989,000

1980

214,590

421,270

5,787,790

608,599,000

19_1

266,243

545,870

5,720,4_0

628,335,0

630,462,01) 0

6445,17,4.,000

653,467,000

609,768,000

1982

314,284

8!0,480

5,020,590

1983

434_207

944,450

5,005,2.90

655,953,000

665,717,000

1984

350,982

658,890

5,390,650

598,039,000

616,962,000

1985 1986 1987

372,784 378,190 449,271

693,704 695,660 808,810

4,628,950 4,841,780 5,720,2_

556,074,000 579,136,000 605,864,000

571,883,000 591,423,000 616,926,000

874,070

7,074,190

652,570,000

658,583,000

1,001,911

7,820,710

689,209,000

699,449,000

1,209,009

8,186,030

724,386,000

720,692,000

O_ ",t _'

1988

4Ti,030

1989

. 458,626

1990

446,095

1,649,574

8,839,510

726,819,000

726,523,000

199 2

1991

686,457

615,019

2,202, 382

9,824,310

736,043,000

718_941,000

1993

696,630

2,229,582

1994 1995

719,602 654,022

3,008,117 3,868,378

1996

660,122

1997

Source:

747,696"

NSO

and

POEA

11,374,810

746,921,000

734,156,000

13,482,900 17,447,190

786,136,000 824,525,000

766,368,000 802,224,000

4,243,641

20,542,550

884,226,000

849,121,000

5,7_.,835

25,227,7(10

931,116,000

893,017,000

_'_

_."

Chapter 3: Trade Liberalization and International Migration Table 2. Growth Rates of OCW Remittances Growth YEAR

Growth

Rate

of OCW

(in percent)

Rate

Remittances (in percent)

and Exports of

Growth

Rate

Exports (in percent)

1975 1976

32.75

7.77

12-17

1977

47.13

46.81

22,43

1978

25.39

78.48

8.70

1979

55.64

25.40

34,35

1980

56.25

15.50

25.79

1981

24,07

29.58

- 1A6

1982

18.04

48.47

- 12.23

1983

38.16

16.53

- 0.30

1984

- 19.17

- 30.24

7.70

1985

6.21

5,28

- 14.13

1986

1.45

0.28

4.60

1987

18.80

16.26

18.14

1988

4,84

8.07

23.67

1989

- 2.63

14.62

10.55

1990

- 2,73

20.67

4.67

1991

37,87

36.42

7.98

1992

11.62

33.53

11,14

1993

1.48

1.24

15,78

1994

3.30

34.92

18,53

1995

- 9.11

28,60

1996

0.93

9.70

17.74

1997

13.27

35.30

22.81

Source:

POEA

29.40

The Filipino Worker in a Global Economy

Destination Countries Table 3 shows the distribution of migrant workers among destination regions (i.e., Africa, Americas, Asia, Europe, etc.). From 1984 to 1996, OCWs deployed in Asia noticeably increased almost four times, in Europe three times and in the Americas less than double. Over time, the number of migrant workers to Africa, Oceania and other Trust territories remained almost the same. In terms of land- and seabased workers, the former increased by 30 percent and the latter by 250 percent in 13 years. For land-based workers, the regions whose economies experienced relatively high or moderate growth rates over the said period attracted an increasing number of migrant workers like Asia, Europe, and the Americas. In terms of composition in 1996, about 36 percent of land-based workers deployed went to Asia while 46 percent worked in the Middle East. In. 1984, 84 percent went to the Middle East and only 12 percent landed jobs in Asia. Of the top ten destination countries, Saudi Arabia was still the top country of destination, followed by Hong Kong, Taiwan, Japan, and the United Arab Emirates. Exports/Remittances Ratio Table 4 shows that remittances per OCW deployed have increased over the years. In 1975 the average remittance was only US$2,858 per worker deployed, increasing more than double to US$7,679 in 1997. Todetermine whether we are approaching a turning point based on the analysis of Alburo (1998), we shall update his computations using his latest data in 1993.Table 4 shows that the ratio even decreased from 5.1 in. 1993to 4.39 in 1997. In the mid-1970s, this ratio was already in the range of 19-23. Alburo (1998) argues that turning points occur only with sustained and accelerated growth rates of exports. In the case of the Philippines, trade reforms were seriously implemented only during 'the Ramos years. Exports started growing at a faster rate only in the mid1990s only to slow down again during the crisis. EMPIRICALANALYSIS To date, Alburo (1998) is the only study in the Philippines that has tried to examine the trade-migration relationship via statistical analysis. He regressed the following equation to test his turning point hypothesis:

Table 3. Number

of Deployed

Overseas Filipino

Workers by Region

LAND

of Destination

MIDDLE AFRICAS

ASIA

EUROPE

EAST

OCEANIA

TRUST

SEA

TERRITORIES

BASED

TOTAL

YEAR

BASED

1984 1985 1986

300,378 320,494 323,517

1,843 1,977 t,847

2,515 3,744 4,035

38,817 52_838 72,536

3,683 4,067 3,693

250,210 253,867 236,434

913 953 1,080

2,397 3,048 3,892

50,604 52,290 54,697

350,982 372,784 378,214

i987 I988

382,229 385 117

1,856 1,958

5,614 7,902

90,434 92,648

5,643 7,614

272,038 267.035

1,271 1,397

5,373 6,563

67,042 85,913

449,271 471,030

1989

355 346

9,962

86,196

7,830

241,081

1,247

7,289

103 280

458,626

_',

1990 1991 1992

334 883 489 260 549 655

1,273 t,964 2,510

9,557 13,373 12,319

90,768 132,592 134.776

6,853 13,156 14,590

218,110 302,825 340,604

942 1,374 1,669

7,380 11,409 11,164

111 212 125 759 136 806

446,095 615,019 686,461

__.. "_.

1993 1994

550 872 565 226

2,425 3,255

I2,228 12,603

168,205 194,120

13,423 11,513

302,975 286,387

1,507 1,295

8,890 8,489

145 758 154 376

696,630 719,602

1.,741

AMERICAS

(1984-1998)

_. O

1995

488 62I

3,615

13,469

166,774

10,279

234,310

1,398

7,039

165 40t

654,022

1996

484 653

2,494

8,378

174,308

11,409

221,224

1,577

4,869

175 469

660,122

0_'._

1997 1998

559 227 562 384

3,517 5,548

7,058 8,210

12,626 15,682

221,047 226,803

1,970 2,062

5,280 6,483

188,469 193,300

747,696 755,684

_. C3

Source:

235,129 221,257

POEA

".4

The Filipino Worker in a Global Economy Exports-Remittances YEAR

Ratio and Remittances

per OCW

EXPORTS/

REMITI'ANCES/

REMITI'ANCES

OCW DEPLOYED

1975

22_27641

2858.332

1976

23.18631

2320.477

1977

19.33536

2315.595

1978

11.77538

3296.087

1979

1.2.61499

2655.803

1980

13.73891

1963.139

1981

10.47942

2050.27

1982

6.194588

2578.814

1983

5.299688

2175,115

1984

8.181411

1877.276

1985

6.672803

1860,874

1986

6.95998

1839.446

1987

7.072415

1800,272

1988

8,093391

1855.657

1989

7.805793

2184.593

1990

6.770859

2710.205

1991

5.359312

2681.826

1992

4.460766

3208.332

1993

5.101768

3200.524

1994

4.482173

4180.251

1995

4.510208

5914,752

1996

4.840784

6428,571

1997

4.393665

7679.371

National Statistical Yearbook, NSO and POEA

Chapter 3: Trade Liberalization OCW -- f (exports,

and International

Migration

exports 2) for the years

1978-1991

However, the regression was beset with positive autocorrelation. His results showed that the variable exports squared (exports 2) correlated negatively

with the number

of migrant

workers

and was statistically

significant. Exports, on the other hand, were directly related to the number of OCWs deployed but was insignificant. We tried to run a similar regression

for an extended

the following Table

results

5. Dependent

Ordinary

time period

from

1975 to 1997 and obtained

(Table 5): Variable:

Least Squares

OCWs Deployed

(OLS) N=23

Variable

Coefficient

t.statistics

Ctmstant

- 159444.6

- 2.45*

Exports Exports 2 R2= .855540 Adj R2:- .841094

104.35

7.66_*

- 0.0029

- 5.54**

F-statistics = 59.223 Durbin Watson = .856128

Note: **. *denote 1 and 5 percent level of significance, respectively. The above results export

variables

estimates (1998)

are very similar statistically

may not be accurate

uses

eventually exports

are again

these

results

decrease

of international

due to first-level

as proof

migration.

have a positive

that

However,

sign, which means

migrants

to Alburo's

significant,

moved

regression.

though

autocorrelation.

rapid the

increases other

that exports

in the same direction

The

coefficient Alburo in exports

variable,

actual

and the number for the past 23

years. Aggregate Determinants of International Migration: Extending Alburo's Model The previous

regression

as possible determinants discussed in the eclectic affect international to implement

labor mobility.

the eclectic

considered

only the export

variables

of international migration. However, as was model, there are various factors that tend to The following

model discussed

empirical

model tries

above using aggregate

data.

The Filipino Worker in a Global Economy Y=flX

+ E,

where

Y is the aggregate number of migrant workers deployed; Xis a matrix of determinants, which includes an income variable

(real wage

situation

variable

lagge d one year),

(growth

and inflation),

exports,

of total

ratio

political

economic

rate of GDP lagged one year;

unemployment protection

and

trade

variables

to GNP

rate), and political

and

variables

(actual effective

( a dummy

for

stability);

]_ is a vector of coefficients; is the error term.

The hypothesis

is basically

and

that "negative"

economic

indicators

(i.e., low GDP growth rates and high'unemployment and inflation rates) are correlated to decreases in. migration. Trade variables (e.g., exports, exports squared, ratio of total trade to GDP, and effective protection rates) were included separately (the first regression included ol_ly the Alburo variables

while the second

the ratio of trade

to GDP) to ascertain

and migration.

A positive

and migration

are substitutes

less worker outflow.

sign for trade/GDP

For the variables

a positive

sign means

rate is correlated

leaving

the

will result

the financing

exports

and exports squared, of both variables.

country.

political

instability

Of the best estimation.'

with a decrease

is correlated An increasing

in the number

This is logical

constraint

is net binding

may be due to the fact that various the

potential

migrant

may also mean goods

given

in financing

of migrant

the .increasing

opportunities for employment during an expansion economy. Real wage has a.positive sign but is statistically Thus

trade

that trade

sign means the financing constraint is bin.cling, incomes may also increase migration. For the

with greater migration. Table 6 shows the result workers

rates and

between

rate means

will rely on the signs and coefficients

dummy,

GDP growth

the relationship

or that trade liberalization,

A negative

For real wage, a positive and therefore increased political

used protection

sign for the protection

and labor are substitutes. the implication

regression

phase of the insignificant.

on the Philippines.

mechanisms

are present

his or her migration

This

to assist costs.

For

Unemployment and inflation rates tmnaedout to be statistically insignificant in previous runs.

Chapter 3: Trade Liberalization Table

6. Dependent

Ordinary

and international

Variable:

Least Squares

Migration

OCWs Deployed

(OLS) N=22

Variable

Coefficient

t. statistics

Cons_an_

52065.050

0.26

GDPgrowth rate

- 171.79.290

- 2.71"*

13699.520

1.16

- 3632.275 _30881.258

- 1.48 - 2.34*

Real wage (1-year lag) Effective protection rate 2 "lh'ade/GDP Exports

185.0708

Exports squared Political stability Dummy R2= .935 Adj R _= .90

3.60**

- .003054

- 3.96"*

- 29098.260

- 0.62

F-statistics = 29.188 Durbin Watson --2.368

Note: See Table 5. example,

employers

deductible

from the future

be financed network

usually advance

by relatives,

of the worker,

trade

decrease

liberalization effective exports

variables,

validates

the

international affect overseas

we get similar

labor

in the informal

that

mobility.

also turn

sign, implying

This

worker

rate variable

assertion

variables

has a negative

migration.

will reduce

protection

Some of the costs may

and other benefactors

and the export

Total trade/GDP

may

of the worker.

agencies,

both here and abroad.

Total trade/GNP significant.

salary

friends,

travel costs to recruitment

clearly

mobility

that increased

means

to other

out to be that

trade

countries.

is not significant.

However,

signs as in the Alburo

The for the

regression.

This

accelerating

export

growth

reduces

The political

stability

variable

does not

migration.

A Panel Data Estimation The previous

regression

so-called

"pull" factors,

affecting

workers

outflow.

external

economic

factors

may be criticized

because

it lacked the

since we dealt only with the domestic In the next estimation, (i.e., growth,

the author

unemployment,

factors included

and inflation

2This may be correlated with exports and trade/GDP. Dropping this variable does not alter the result.

The Filipino

in destination

countries)

that might affect the outflow

the Philippines.

In the estimation

unemployment,

inflation,

and the various

Worker in a Global Economy

these factors

and GDP differentials

host countries.

Exports

between

for "trade

Yis the number of migrant a specific country; Xis a matrix

The differentials

openness.

of determinants

were computed

the Philippines

workers

''3 The

deployed

including

variables for each country; fl is a vector of coefficients; E is the error term

from

into the

the Philippines

to and from

were also used as regressors to substitute following is the regression equationh

where

of workers

were integrated

dummy

and

as the Philippine

rate less than

the destination country rate. Table 7 shows the results of the regression. All the "differential" variables turn out to be insignificant. However, the country-specific time and across variables toward

dummy countries

not explicitly these

variables

are all significant. specified

countries

controlling

for fixed effects

This implies

in the model

are relevant.

affecting

One important

over

that other movement

variable

is the

average wage in these countries. In addition, immigration rules and the existence of networks are key factors that may affect migration to the eleven destination countries. These noneconomic factors (e.g., political and cultural) have always been cited in the literature on OeWs in the Philippines. squared

The Alburo

to the destination

regression

involving

significant.

The exports

have

significant

increased

(i.e., Philippine

countries)

only

internal and

exports

and exports

have similar signs as in the previous variables.

of destination

coefficient

imports

in migration.

variables

countries

a negative

by the Philippines

Both

are statistically

to the Philippines sign.

This means

tend to be correlated

At first, this may seem to be the wrong

also that

to decreases sign. But upon

further analysis, increased imports by the Philippines economic expansion, as the destination countries include

also mean the United

3 Another variable used turned out insignificant.

countries

4 The equation

was 'total trade

is constrained

of the Philippines

by the availability

to destination

of data to represent

key variables.

but

Chapter 3: Trade Liberalization Table

Dependent Destination

Ordinary

and International

Variable: Country

Least Squares

Number

of OCWs Deployed

Coefficient

Constant

t-Statlstic

-57314.7

RP exports

-host country

RP - exports

exports

Inflation

- RP

-2.48**

- 16,48

- 3.08**

-2.45 differential

- 0.01

5446.65

differential

1..23

268.1.7

D1 (KSArabia) D2 (Hong

3.22**

-0,002

GDP differential Unemployment

- 1.55

44.60

- host countcy

- country

to the

(OLS) N = 70

Variable

Host

Migration

0.36

347744.3

Kong SAR)

6.91 **

161441.4

4.21"*

D3 (Japan)

142945.7

4.14 *_

D4 (UAE)

153002.8

3.24 _'*

D5 (Taiwan)

152795.9

3.69 **

D6 (Kuwait)

139651.5

2.94"*

D7 (Singapore)

114898.2

3.11"*

D8 (Qatar)

139147.2

2.80"*

D9 (Brunei)

112497.2

3.03 _*

D10 (Italy)

72962.83

Time trend

- 3525.72

R 2 = .942001

F-statistics

Adj R 2 = .923039

Durbin

Note:

See Table

States

= 49,68013

Watson

where

most of our capital

one can conclude

export and import

A Household-Level

derived

used

the

determine contribution

on Philippine

Family

imports trade

from

come from.

openness overseas

From

that induces

migration.

This

the first regression.

Estimation

The two previous data

that greater

growth may lead to reduced

is the same conclusion

specific

= 1.095549

and Japan,

the results,

1.89* - 1.53

Incomes

the effect

regressions migration.

Survey

liberalization

per capita

aggregate

and country-

In this estimation,

Expenditure

of a trade

to household

utilized

income.

household

regime

the author data

on the migrant's

This was implemented

The Filipino Worker in a Global Economy

by comparing the results of two regressions based on the 1991(the preliberalization regime) and the 1997(the post-liberalization regime) data. The first regression was done by Edgard Rodriguez in an article entitled "International Migration and Income Distribution in the Philippines," published in the Economic Development and Cultural Change. The same empirical model was utilized for the 1997 data. The key variable to look at is a dummy for households with at least one remitting migrant. "fable 8 is a summary of the results. The coefficient of the dummy variable for remitting migrants decreased from its 1991 level. This implies that the share of remittances in household incomes declined after trade liberalization policies were implemented in the Philippines. The growth years after 1993 may have also increased the share of domestic sources in household incomes. Thus, trade and migration may indeed be substitutes as economic growth is accelerated by the export of goods due to trade reforms. LABOR MARKET EFFECTS OF CONTINUED MIGRATION ....

INTERNATIONAL

While trade liberalization has been continuing in the Philippines, more reforms are needed to fully liberalize the trade sector. Other market_ and sector-related reforms (e.g., competition policy) are still necessary to sustain the current economic recovery. Governance should still be improved to facilitate such reforms and move the economy toward a higher-growth path. Thus, continued labor migration overseas in the next ten years may not be farfetched. In such a.scenario, sustained worker outflow may have the following positive and negative effects on the economy: 1) Reduction of unemployment and underemployment rates. As Jurado and Sanchez suggest, international labor migration alleviates the unemployment and underemployment problem in the Philippines. In addition, the income contribution of remittances has the typical consumption multiplie r effects on the economy. However, remittances being transformed into investment expenditures are relatively small (Alburo 1994), as OCW families do not usually engage in entrepreneurial activities. Yet as the economic environment changes, remittances utilized for business may also increase.

Chapter

Table

3: Trade Liberalization

8. Dependent

N = 24,782

(1991);

Variable:

and

International

Per

Capita

Migration

Household

Income

39,519 (1997)

Variable

1991 FIES data (t-values)

Constant

1997 FIES data (t-values)

8.543 _* (177.98)

9.302** (238.51)

Age (years)

0.018"* (9.00)

.015"* (7.50)

Age squared/100

- 0.017"*

- .014"*

Household head:

(8.50) Primary

education

0.233** (12.26)

High school education

0.515"* (25.75)

Tertiary education

1.104"* (52.57)

(7.00) 0,195"* (13.00) .599** (37.44) 1.188 ** (69,88)

Male

- .083**

.Married s

(5.19) - _004

(9,54) - .025"

(0.25)

(2,08)

No. of children (< 15 years)

-.177"* (59.00)

No, of young adults (15-25)

- .050 _* (16.67)

No. of adults (.25 years)

.027 ** (5.40)

Households remitting

with migrants

Urban (%)

.418 ** (32.15) .299** (33.22)

Adjusted R squared F-Statistic Note: Figures in parentheses

.44 1622.27 are t-values. See Table 5.

s The only variable that does not turn out to be significant.

- .1.24"*

-.194 ** (97.00) - .044** (14,67) .031"* (7.75) ,334 _* (37.11) ,397 *_ (56.71) .459 2775,6

The Filipino Worker in a Global Economy 2) Skill shortages and decreases in productivity. The productivity of the relatively experienced workers who migrate cannot be fully replaced by new recruits and also, skill shortages coupled with wage increases may lead to the adoption of capital intensive technologies with adverse implications for future employment (Athukorala 1993). 3) Supply shortages. Still in terms of labor supply, certain types of labor may suffer some shortages (i.e., specialized skilled labor such as quality software makers) after continued overseas migration. In the long run, this situation will have tremendous effects on the labor market and the economy as a whole, since such types of labor are crucial to sustaining a growth momentum. Even key social services like health and education may suffer with continued skilled labor outflow? Since current wage and salary differentials across countries are very wide, firm-specific remedies (i.e., efficiency wages) that address such a problem in the short run will not suffice, as these firms struggle to become competitive in a global economy. However, sustained economic expansion, if it occurs despite such labor constraints, may eventually lead to the return of such skilled professionals as what had occurred in Taiwan, South Korea, and even Malaysia. 4) Loss of investments in human capital. The emigration of the more educated and experienced individuals is not merely a transfer of labor services but also of human capital; they carry with them investments in health, education, and nutrition. Thus the inadequacy of human capital in developing economies may even worsen (Lanzona 1998). 5) Deterioration of social capital. Another important effect of worker outflow is related to social capital. As Schiff (1998) points out, social capital, like the family, is gravely affected by sustained migration. Philippine studies have also discussed such effects, especially on maintaining marriages and child rearing (Gonzales 1998). Effects on social capital eventually translate into economic effects, particularly those

TheWorldBankestimatesthatthe numberofphysiciansandnursesper 10,000persons in the Philippinesdecreasedfrom 7.3 to 1.5and 8.8to 2.4,respectively,from 1965to 1984.

Chapter 3: Trade Liberalization related

and International

to productivity

and

the

Migration

development

of human

capital. Table 9 shows countries

from

the skill category

1992 to 1998. Around

OCWs were composed managerial

workers.

40 percent

percent

25 percent

of professional,

migrating

to other

to 30 percent

technical,

of the

administrative,

This fact more or less matches

Overseas Employment educational attainment than

of workers

and

the 1995 Philippine

Administration (POEA) data on the highest of overseas workers, indicating that while more

reached

to 30 percent

college,

graduates

comprised

only about

of the total.

About the same percentage can be derived from the Commission on Filipino Overseas data on educational attainment from 1986 to 1996 (1996 Yearbook of relatively workers

of Labor

robust

Statistics).

growth,

the

to the total number

Except

for 1996, which

percentage

of overseas

was a year

skilled

of the relatively migrant

workers

has been

relatively stable at 25 percent to 35 percent. Economic theories suggest that skilled workers are relatively more mobile than unskilled ones. Thus, in economic Table 10 elaborates In 1996,

crises, they are the first to get out of the country. this assei_ion.

only 22 percent

college. This means

of the employed

that the percentage

labor

of college-level

force reached workers

leaving

the country was greater than those actually employed. OCWs and emigrants who reached college comprise around 40 percent or more of all those

who

Philippines

leave

the country.

is gradually

losing

an increasing

workforce,

assuming

secondary

levels. The Economist

country growth

that such workers

with the third highest

migrating

and working

path, the exodus

in this era of globalization. the availability

Contrary

percentage

or post-

the Philippines

as the

educated

will continue, our growth

to the "migration

7South Africa ranked first.

and

possibilities

financing

its

especially

also requires

Thus, government

costs

citizenry

resumes

that will entice these skilled individuals

which limits the migration

the

of its skilled

our economy

sustaining

that

college

of having

7 Unless

of our skilled workers However,

implies

have reached

probability

overseas.

this

even ranked

of such skilled workers.

formulating policies to their native land. hypothesis,

In a sense

should

start

to return constraint"

of the relatively

less

oo t_

Table 9.

Deployed

Overseas

Filipino

Workers

SKILL CATEGORY Professional.

Technical

Administrative Clerical

and Related

and Managerial

and Related

Workers

Sales Workers Service

Workers

Agricultural, Fishermen Production

Animal Husbandry, and Hunters

Forestry,

and Related Workers,

Transport

Equipment Invalid

Operators

Category/Others

Classified GRAND Source:

and Laborers

by Skill

POEA

(1992

- 1998)

1992

1993

1994

1995

1996

72,848

36,055

199"/ 51,38I

1998

65,385

74,218

43,981

495

405

385

352

305

572

385

4,943

3,801

3,709

3,377

3,169

3,632

2,881

55,576

2,725

2,576

2,284

2,090

1,938

2,637

2,510

82,443

89,154

90,967

8I ,318

84,745

76,644

80,917

1,920

1,706

1,204

972

822

546

388

94,528

92,664

85,816

81,859

403

200

3,074

214,149

205,791

Workers,

_._

_:_'_--_

k_ 75,683

85,829

75,222

Not Elsewhere 692

TOTAL

Category

260,594

506 256,197

258,986

1,367 221,241

219,246 _,_

Chapter 3: Trade Liberalization and International

Migration

skilled workers, workers who have reached elementary and high school levels comprise around 40 percent of the overseas contract workers. Thus, as mentioned in the previous chapters, certain mechanisms facilitate the migration of such relatively less skilled workers. However, these workers are also vulnerable to labor contracts that are oppressive and discriminatory because of their weak bargaining leverage. CONCLUSIONS AND POLICY RECOMMENDATIONS The study tried to ascertain the determinants of international migration, including its relation with trade variables. From the data and regression analyses, the following conclusions are drawn: 1) Among the internal factors that account for migration, the growth of the economy still proved to be a major determinant. (Other variables like inflation and unemployment did not turn out to be significant.) However, this conclusion was derived without regard for external factors. When the external factors were included, only the trade variables and country-specific factors became relatively more important. Thus, it is possible that unique factors in each country may affect overseas labor migration like the existence of networks or the implicit policy of foreign labor accommodation. The political stability dummy variable was also statistically insignificant. 2) The financing constraint may not be binding on the Philippines, as various mechanisms are present to facilitate overseas migration. These include employers' advances for travel costs or support from networks both here and abroad. Thus greater liberalization and economic growth may indeed stem migration trends in the long run. 3) Trade and migration are substitutes but only with accelerated export growth. The ratio of trade to GDP showed a negative sign, thus implying that goods and labor mobility aresubstitutes. However, in the aggregate data regression analysis, a positive relationship between exports and the number of OCWs was derived, though squaring the volume of exports yielded a coefficient with a negative sign. This means that only through accelerated export expansion

The Filipino Worker in a Global Economy would migration slow down. The same result was obtained from the panel data estimation. Since actual exports are also positively related to the number of OCWs in both time series and panel data estimation, it is clearly possible that trade and migration are complements during the adjustment phase of liberalization. The other trade variables like the effective protection rate did not turn out to be significant. The variable exports of OCW destination countries to the Philippines (or imports by the Philippines from such countries) was also found to be significant with a negative sign. Increasing imports are usually associated with economic expansion and thus with the slowing down of international migration. 4) An alarming percentage of our OeWs are highly skilled workers. The adequate supply of such workers is key to our "competitiveness" in inducing both foreign and domestic capital to invest within our shores. They are also important in expanding and sustaining economic growth. Unless government is able to reverse the tide, our labor market for highly skilled labor may soon become tight.

The key policy prescription is to continue with the economic reforms, such as improving trade openness, to increase the employment and income possibilities of'the Filipino people. Trade liberalization, as it promotes labor-intensive export orientation, greater competition, and efficiency toward output growth in the economy, will reduce labor migration in the medium and long run. However, in the short run, government has to rely on both commodity and labor exports to provide the impetus to growth and alleviate employment pressures. In this regard, government during this phase must be able to craft policies that will maintain certain types of skilled labor (e.g., engineers, software programmers and specialists), which are also needed for catalyzing economic expansion. At the same time, government should establish support and protective mechanisms for OCWs susceptible to onerous labor contracts, as migration continues during the early stages of economic expansion. Sustained growth with higher incomes and very low unemployment rates will hopefully make the majority of Filipinos stay and work within the country, and lure back those who are employed abroad.

Chapter 3: Trade Liberalization and International Migration

BIBLIOGRAPHY

Alburo, F. 1993. Remittances, Trade and the Philippine Economy. Asia and Pacific Migration Journal 2(3):269-283. .

1994. Trade and Tnrning Points in Labor Migration. Asia and Pacific Migration Journal 3(1):49-80.

.1998.

Exporting Goods or Labour: Experiences of East, South and Southeast Asia. In Globalization of Labour Markets, edited by Memedovic, Kuyvenhoven and Molle, Kluwer. Amsterdam: Academic Publishers.

Amjad, R. 1996. On the Way to a Migration Transition. Asia and Pacific Migration Journal (5) 2-3: 313-338. Athukorala, P. 1993.International Labour Migration in the Asian Pacific Region: Patterns, Policies and Economic Implications. Asia Pacific Economic Literature (November):28-57. Battistella, G. and M. Asis. 1999. The Crisis and Migration in Asia. Quezon City: Scalibrini Migration Center. Bohning, W. 1996. Conceptualizing and Simulating the Impact of the Asian Crisis on Filipinos' Employment Opportunities Abroad. Asia and Pacific Migration Journal 5(2-3):339-368. Fields, G. 1994. The Migration Transition in Asia. Asia Pacific Migration Journal 3 (1): 7-30. Gonzales, J. 1998. Philippine Labour Migration: Critical Dimensions of Public Policy. Manila: DLSU Press and Singapore: Institute of Southeast Asian Studies. Lanzona, L. 1998. International Migration and Self-Selection: Consequences and Policy Implications for APEC. Unpublished.

The Filipino Worker in a Global Economy

Lim, J. 1.998.The Social Impact and Responses to the Current East Asian Economic and Financial Crisis: The Philippine Case. Seoul: United Nations Development Programme and Korea Development Institute. Massey, D., J. Arango, G. Hugo, A. Kouaouci, A. Pellegrino and J. Edward Taylor. 1993. Theories of International Migration: AReview and Appraisal, Population and Development Review 19(3) September: 431-466. Rodriguez, E. 1998. international Migration and Income Distribution in the Philippines. Economic Development and Cultural Change. Chicago: The University of Chicago. Ong, P., L. Cheng, and L. Evans. 1994. Migration of Highly Educated Asians and Global Gynamics. Asia and Pacific Migration Journal 1(3-4):543-567. Sanchez, T. and Jurado, G. 1998. Temporary Labor Migration in the Philippines. Paper presented at the symposium on Philippine Economy: First Quarter Accounting and Assessment of the Estrada Administration, 22 September, NEDA sa Makati Building, Makati City, Philippines. Schiff, M. 1998. Trade, Migration and Welfare: The Impact of Social Capital. World Bank Working Paper Series No. 2044. Washington, D.C., United States: World Bank. Schiff, M. 1998. South-North Migration and Trade: A Survey and Policy Implications. World Bank Working Paper Series No, 1696. Washington, D.C., United States: World Bank. Schiff, M. and A. Lopez. 1994. Migration and Skill Composition of the Labour Force: The Impact of Trade Liberalization in Developing Countries. World Bank Working Paper Series No. 1493. Washington, D.C., United States: World Bank.

ChapterFour

Factors Influencing theObservanceoftheCoreIL0 Lab0rStandards byManufacturing Companies Divina M. Edralm * "Global markets, global technology, global ideas, and global solidarity can enrich the lives of people everywhere, greatly expanding their choices. The growing interdependence of people's lives calls for shared values and a shared commitment to the human development Human

of all people."

Development

Report

1999

ABSTRACT

degree of compliance by manufacturing companies with the the six his paper aimed toLabor determine the factors thatlabor influence core International Organization (ILO) standards ratified by the Philippines. Using descriptive and comparative research designs, a survey of 125 unionized and nonunionized manufacturing firms in Metro Manila was conducted among 175 respondents from both union and management representatives. Results revealed that among the six core labor standards, equal remuneration and freedom from discrimination in employment and occupation were highly complied with, while freedom of association and protection * Professor,

of the right to organize were least complied with by the

De La Salle University - Manila.

The Filipino Worker in a Global Economy

manufacturing firms. Overall, the firms' level of conformity with the six labor standards is only satisfactory, with no significant difference in the average degree of comphance based on their characteristics except for the level of profitability and the type of respondent. Results further showed that what management and labor consider as significant facilitating factors affecting the degree of labor standards compliance are the workers' efficiency, productivity, and harmonious relations with management; and the employer's corporate social responsibility of adherence to the laws and respect for the rights and fair treatment of employees. The findings also showed that the significant blocking factors to full compliance with the core labor standards are related to the management's concern about the high cost of operating the business; the inefficiency and low productivity of employees; the government's legal requirements, which are impractical or unrealistic for the company; and the workers' fear of losing their jobs due to high unemployment, absence of clear guidelines and qualifications for employees, and non-adherence by management to labor standards. INTRODUCTION Globalization is not really novel, it started way back in the early 16th century and the late 19th century. But the contemporary era of globalization is different due to its distinctive features. Globalization today is characterized by (1) new markets foreign exchange and capital markets linked globally, operating 24 hours a day, with dealings at a distance in real time; (2) new actors--the World Trade Organization (WTO) with authority over national governments, the multinational corporations with more economic power than many states, the global networks of nongovernmental organizations (NGOs) and other groups that transcend national boundaries; (3) new tools--Internet links, cellular phones, media networks; and (4) new rules--multilateral agreements on trade, services and intellectual property, backed by strong enforcement mechanisms and more binding for national governments, reducing the scope for national policy" (Human Development Report 1999). Thus, this present-day phenomenon is giving rise to numerous opportunities for millions of people all over the world and offering enormous potential to eradicate poverty in the 21stcentury. Due to a lot of advantages and gains that globalization could give, many countries

Chapter 4: Observance of the the Core ILO Labor Standards

and states around the world since the 1980s have seized the opportunities for economic and technological globalization. This is also due to the intense discussions on the General Agreement on Tariffs and Trade (GATT) under the Uruguay Round of negotiations, where trade liberalization became a collective global concern. The main objective of the GATT is to increase world trade by improving access to goods and services among its member countries. As a result of this participation, these countries and states have to adopt adjustment processes and structural reforms to enable their respective economies to benefit from the new global order. Trade liberalization of markets worldwide became a vital feature of structural adjustments necessary to cope with globalization. As a consequence, many countries outside of the industrialized countries and the newly industrializing East Asian tigers (e.g., Chile, the Dominican Republic india, Poland, Turkey) have unilaterally liberalized their economic policies. Moreover, the rapid dismantling of trade barriers among nations was facilitated by the establishment of the WTO on 1 January 1995 with its comprehensive and binding character, and other regional groupings such as the ASEAN Free Trade Area (AFTA) and the Asia-Pacific Economic Cooperation (APEC) (Conferido and De Vries 1998). The WTO, which replaced GATT, facilitates the implementation and operation of all agreements and legal instruments in connection with the Uruguay Round trade agenda and provides a forum for all negotiations. It also reiterates the objectives of the GATT, namely, to: (1) raise the standards of living and income; (2) ensure full employment; (3) expand production and trade; and (4) use world resources optimally (DOLE 1994). Aside from administering WTO trade agreements, the WTO also (1) serves as a forum for trade negotiations; (2) handles trade disputes; (3) monitors national trade policies; (4) provides technical assistance and training for developing countries; and (5) ensures cooperation with other international organizations. Like many other countries, the Philippines considered membership in these regional and international bodies as an opportunity for increased trade, new technologies, more foreign investments and expanding media, increased economic growth, and human development. The government is optimistic that, in the long run, workers will benefit from the trade opportunities offered by globalization through the promotion of internationally competitive industries (Barranco-Fernando 1995). Thus, the government laid the foundations for globalization in

The Filipino

1981 by implementing also followed

tariff reforms

by the passage

Worker in a Global Economy

and import liberalization.

of R.A. 7844 (Export

and R.A. 7916 (Special Zone Act) in 1994 and boosting export orientation. However, benefits,

20th century

globalization,

has social repercussions

its social

repercussions

Development

Act)

1995, respectively,

thus

in spite of its multifaceted

(Lee 1997). It may benefit

include

unemployment,

human rights, marginalization and vulnerability to international

of people, changes.

to issues of employment,

distribution

income

development, and labor standards. industries have to undergo a painful international

This was

competitiveness.

poverty,

only a few. violation

and instability These concerns

of societies are related

or equity, human

Statistics

security,

Particularly in the Philippines, process of adjustment to achieve

Industrial

adjustments

might

resulted in costcutting and rationalization measures, often work rotations and retrenchment. The report of the Bureau and Employment

(BLES)

of the Department

have

involving of Labor

of Labor

and

Employment (DOLE) on employee termination revealed that in 1995, when the GATT-WTO took effect, the total number of terminated workers

increased

to 59,858. Of this number,

32,462 lost their jobs due

to closures, while another 19,558 were laid off. The remaining 7,838 were either placed in job rotations or had their work time reduced. The manufacturing (DOLE 1996).

sector accounted

More importantly,

for 80 percent

since the Philippines

of these displacements joined this global market

competition framework, there have been shifts in employment patterns that defy conventional work settings and labor requirements. That some traditional

work arrangements

and labor legislation

difficult

to enforce

problem

of child labor (Conferido

of the National children

has given

Statistics

showed

that

Office

among

million worked. Findings

1988) indicated

the country.

Children

subcontracting

to labor

children

aged

survey

5-17 years

of working

old, about

that child labor had become

are exposed to poor working arrangements,

3.7

in the manufacturing such as electronics,

toy, handicrafts,

prevalent

environments,

hired

and paid less than the minimum

processing into exports),

and the

and De Vries 1998). The 1995 report on the national

wage. Those working products

now prove more

subcontracting

of other studies (ILS 1996; UP 1993; Del Rosario

1986; UPIIR through

rise

sector leather,

food, textile,

paper,

are engaged garments plastic,

in those (some

are

and rubber

Chapter 4: Observance of the the Core ILO Labor Standards

items. Data is scarce on the actual extent of child labor standards violations arising from trade liberalization in the country, but it is reasonable to expect that intensified economic activities brought about by liberalization might have contributed to their rise (Conferido and De Vries 1998). Similar to globalization, the issue of trade and international labor standards is not new but predates even the creation of the ILO in 1919,which declares that "universal and lasting peace can be founded only on the basis of social justice." The idea of international labor legislation and the work of the ILO was originated by Daniel Le Grand, a Frenchman who, from 1840 to 1853, repeatedly appealed to several European governments for joint agreements on labor legislation as a means of eliminating merciless competition (ILO 1982). The ILO, as a standard-setting and the only tripartite body of the United Nations, was established to undertake joint international action to improve labor conditions worldwide. As such, one of its main features is to develop international labor standards, which are intended to be universal in nature. However, it has no power to impose trade sanctions for violations of standards but relies instead on voluntary compliance and peer pressure. To date, it has a total of 174member states and countries. Since its foundation, a system of international labor standards have evolved based on the adoption of international conventions, which have the force of international law on ratifying countries. ILO Conventions are designed as obligation-creating instruments which have to be ratified, while Recommendations are standard-defining guidelines for national policy action. As of October 1996, 180 Conventions have been adopted (with differing degrees of ratification) and backed up by a supervisory machinery and 185Recommendations. The contents of the principal Conventions and Recommendations adopted since 1919are on basic human rights (freedom of association, freedom from forced labor and freedom from discrimination), employment, conditions of work, social security, industrial relations, employment of women, employment of children and youth, seafarers and fishermen, other special categories of workers, labor administration and tripartite consultation. The Conventions on basic human rights are the most important of all ILO Conventions and are in fact also the Conventions which have been ratified by the largest number of countries (ILO 1982). Furthermore, ILO data have shown that international labor standards

The Filipino Worker in a Global Economy

continue to exert their influence on both developed and developing countries. This reality may be attributed to the nature of the ILO Conventions, which have built-in flexibility that makes them applicable to all countries regardless of their levels of development. The Philippines, which became an ILO member on 19May 1948, has ratified 30 ILO Conventions. Six of these are part of what are now referred to as the seven fundamental workers' rights or core Conventions, which are central to the activities of the ILO (DOLE 1998). These labor standards, as elaborated in the book entitled International Labor Standards in the Philippines (DOLE 1998) are: 1. Freedom of Association a) Freedom of Association and Protection of the Right to Organize (ILO Convention No. 87) b) Right to Organize and Collective Bargaining (ILO Convention No. 98) 2. Abolition of Forced Labor (ILO Convention No. 105) 3. Equality of Opportunity and Treatment a) Equal Remuneration (ILO Convention No. 100) b) Freedom from Discrimination in Employment and Occupation (ILO Convention No. 111) c) Minimum Age of Admission to Employment or' Freedom from Child Labor (ILO Convention No. 138) Since the Philippine government has ratified these six core labor standards (except for the Forced Labor Convention No. 29 of 1930,which preceded the Abolition of Forced Labor Convention No. 105of 1957), its obligation is to ensure full compliance by the concerned parties. However, various reports and studies seem to indicate that in the Philippines, partial compliance with core labor standards is attributed to a number of factors. Some of these factors are: â&#x20AC;˘

The Marcos Administration's policy of interfering with union organization and limiting collective bargaining in the export processing zones to encourage foreign investments there (Barranco-Fernando 1995).

â&#x20AC;˘

The prevailing high unemployment and underemployment rate, as reported by the BLES of DOLE (1989-1997), has placed the workers under less secure and more flexible terms

Chapter 4: Observance of the the Core ILO Labor Standards and conditions unionized. *

â&#x20AC;˘ *

â&#x20AC;˘

of employment

even if the firms

93 are

The trend toward increasing flexibility of the labor process as manifested in the reduction of the core of permanent workers and the increase in the proportion of temporary and casual workers; the minimizing of influences from external trade unions by either eliminating unions or establishing a controllable (company) union; the increasing use of women, apprentices, and migrants; and the expansion of subcontracted productions and services, etc. (Edgren 1990). In fact, the most pervasive form of flexibility, especially in labor-intensive industries like garments, are job and service subcontracting. This is a strategy to reduce labor costs through lower wages, lessening of benefits and overhead costs, and dociling of militant trade unions. The government has achieved little success in its promotion of the national program of work ethics/values development. Weak trade union movement due to splits in the different labor groups, low level of unionization, comprising only at about 10percent of the total labor force, as well the existence of numerous labor groups with differing political ideologies. The rare usage of grievance procedures in organized firms and the lack of an effective mechanism to process employee grievances in nonunionized companies. The economic crisis and increased competition here and abroad have made it difficult for some companies and industries to survive, and have thus had to resort to costcutting measures such as retrenchments, lays-off, and lowering of wages and benefits, which are all disadvantageous to workers.

Compliance with the labor standards, on the other hand, can be credited to factors such as the existence of legal restrictions (Labor Code). At the firm level, trade unions have been adapting to management initiatives toward instituting flexible work arrangements, industries that expand and become more profitable have been able to hire more workers and grant them better benefits. There is growing maturity in both labor and management greater employer support for government policy initiatives in industrial relations since 1987 and higher awareness of

The Filipino Worker in a Global Economy

structural adjustments among employers, employees and government, thus cushioning their negative impact. Some successful private firms have initiated their own value development programs, which seek to upgrade the compensation system and improve working conditions and relationships. In recent years, greater pressures for enforcement of international labor standards have emerged in the United States and some European countries due to repeated violations of labor standards by many countries (Golub 1997). Moreover, the increasing public awareness of exploitative labor practices and the political repercussions of popular anxieties over job losses in the industrialized countries have raised the issue of a social clause in international trade agreements by these industrialized countries (Lee 1997). In this regard, there were numerous proposals to incorporate a provision about labor standards in the rules of the WTO. A 1994 ILO document puts it this way: "Social clauses are guarantees that a growing number of advocates wish to incorporate in international trade agreements to ensure that the gradual liberalization of markets is accompanied by improvements in conditions of work, or at least by the elimination of the most flagrant abuses and forms of exploitation." This clause would require each WTO member to enforce certain labor standards such as the prohibition against forced labor, discrimination, child labor and the guarantee of the right.s of workers to associate freely and engage in collective bargaining with employers. Failure to abide by these core labor standards would subject a country to international trade sanctions. However, the introduction of such a social clause has provoked debates in the WTO. The debates revolve around the issue of whether or not a social clause should be included in trade agreements (Leary 1996). The proponents of a social clause advocate a link between international labor standards and the liberalization of international trade. The idea is that violations of agreed international labor standards would be grounds for invoking trade sanctions. The labor standards usually referred to in this context are "core" ILO standards relating to the freedom of association, the right to collective bargaining, the prohibition of forced labor, equality of treatment and non-discrimination in employment, and minimum age (Conventions Nos. 29, 87, 98, 100, 105, 111and 138). These standards have human rights dimensions and constitute fundamental framework conditions for the exercise of labor

Chapter 4: Observance of the the Core ILO Labor Standards

rights. Parallel to this are major concerns coming from an economic perspective, which, according to Lee (1997), are as follows: 1) Whether harmonization of labor standards across countries is necessary to ensure fairness and a level playing field in international trade relationships. The broad case for harmonization rests on the argument that some domestic policies, such as rules relating to market entry for foreign investors and environmental and labor standards, have an effect on a country's international competitiveness. For instance, countries with low environmental and labor standards would be gaining an unfair cost advantage vis-avis trading partners with higher standards. In that case, policy harmonization is essential to ensure a "level playing field" in international trading arrangements; 2) Whether there is a problem of a "race to the bottom" with respect to labor standards that has to be dealt with through cooperative international action. The basic mechanism through which this is expected to happen is the pressure to cut costs of production in search of higher export shares and to fight off import competition. This is reinforced by the competition for foreign investment in which the lowering of labor standards is used as an inducement to potential investors; and 3) Whether there should be a link between trade liberalization and labor standards, and the feasibility and potential effects of such link. This rests on the notion that common international standards would constitute an infringement of national sovereignty. The basic point here is that notions of what constitutes fair labor standards and good industrial relations practices are relative and culture-specific. It has been argued that "universally condemned practices (such as slavery) are rare. Indeed, the reality is that diversity of labor practices and standards is widespread in practice and : reflects, not necessarily venality and wickedness, but rather diversity of cultural values, economic conditions, and analytical beliefs and theories concerning the economic (and therefore moral) consequences of specific labor standards."

The Filipino Worker in a Global Economy This

social

clause

issue

has

been

met with

a very

strong

opposition from developing countries as well. Opponents of such moves had countered that the allegations that '_low-wage labor and worker exploitation throughout the developing countries, Far East, had led to a situation of unfair competition were merely should

protectionism

(Saunders

1997).

On the other hand, the ILO policy on the social clause is that it be incentive-oriented, where member states should be

encouraged progress

dressed-up

particularly in the or social dumping"

to pursue

a genuinely

and trade liberalization

active

policy to ensure

that

go hand in hand (Muntarbhorn

One ILO report argued that, in the long term, minimum contribute to economic progress, industrial innovation,

social 1999).

labor standards and sustainable

development. By the same token, a 1996 OECD study on the impact of the social clause showed that the differences in core labor rights have little effect

on competitiveness

in the medium

from the South have only marginal

and long term. Imports

effects on employment

in the North.

In the Philippines, discussions on the social momentum in the mid-1990s when more progressive pursued of firms

this issue, convinced that it can significantly as well as the status of workers. Various

Alternatibong

position Lingap

papers

Panlegal

were and

gained centers

affect the future

presented

the

clause labor

in the

Democratic

Sentro

Labor

Caucus-

sponsored First and Second Input Discussions with the Academe. These were held on 1 August and 18 September 1996, respectively, preparatory to the holding of a National Conference on the Social Clause on 16-19 October 1996. The conference focused on the implementation of international

labor standards

then determined said social 1.

clause,

which

trade

for the opposition

through

a social clause.

to the imposition

of the

were as follows:

The social clause different Countries

vis-a-vis

the reasons

does not take into account

that there

human rights standards between and Third World Countries.

First

are

World

A specific country may have its own unique characteristics and distinct circumstances compared with other countries so that "governments

may have already

taken direct actions

aimed

labor

such

at improving

employment, government

directly wage

policy

standards,

raising

wages

in the public

as increasing

by means sector

of a

and setting

Chapter 4: Observance of the the Core ILO Labor Standards

minimum wages for the private sector." Implementing international labor standards through a social clause will prevent governments from making necessary changes in their own labor standards. 3. Governments have to balance social values and responsibilities with those that tend to reduce the number of options available to workers. 4. Enforcing standards is perceived to be difficult. In addition, labor standards cannot be entrusted to an institution that is known to be composed of protransnational corporations and procapital interests--the WTO. 5. The sanctions as a tool to enforce the labor standards might not be judicious because it could "penalize other sectors not party to the violation." In addition, it would be "difficult to penalize countries with small or very weak fiscal position. Trade sanction can greatly affect a country's economy. 6. international labor standards focus more on industries in the export sector as well as workers in the formal sector, thereby failing to address the labor concerns of workers in the informal sector and in nonexport industries. Consequently, the documents presented in the National Conference on the Social Clause held in 16-19October 1996 in Quezon City, Philippines highlighted these points: 1. 2.

The concept behind the social clause is the proposed linkage of trade and labor rights bodies/blocs; A social clause is a proposed provision in a trade agreement to enforce certain labor rights as a condition for continued enjoyment of all the benefits and privileges in the trade agreement; There are arguments for and against the linkage of trade and labor rights related to protectionism and economics.

Prior to these two caucuses on the social clause, the TripartiteWorkshop on "The General Agreement on Tariffs and Trade (GATT) and the Social Clause: Implications For Philippine Business and Labor" was held on 14-15 July 1994 in Sulo Hotel, sponsored by the ILO, University of the Philippines School of Labor and Industrial Relations

The Filipino Worker in a Global Economy

and Friedrich Ebert Stiftung. The respective positions of employers, labor, and government on the topic were presented. Atty. Ancheta Tan, president of the Employees Confederation of the Philippines (ECOP), presented the employees' view of the social clause: The social clause agreement would require compliance with certain labor standards for trade agreements and concessions. If you are a developing country you are always at a disadvantage unless there is a level playing field. The business community, the employers' organizations and the developing countries are against the social clause because it is contradictory when viewed in the light of our liberalizing trade. We are trying to remove the barriers to trade among countries but at the same time restricting it because we are compelling developing countries, exporting countries, to observe certain standards, otherwise they do not give trade concessions. It is a one-way transaction. It is restricting developing countries from being competitive with their industrialized neighbors. And so we feel from the business point of view that the social clause will not only restrict business activities, but it will also penalize workers. If you insist on compliance with certain standards, which you cannot meet, you will have to retrench. You will have to close shop, among other counterproductive measures. We feel that in the end we are defeating the purpose of liberalization if there should be a linkage between compliance with certain labor standards with that of trade agreements. Finally, one objection to the social clause is the fact that this is a way of forcing ratification of certain standards of the International Labor Organization. Right now, compliance with labor standards is voluntary. But with a social clause, you are actually forcing indirectly the State to ratify these conventions. The government's "Philippine Government

position, contained in the paper entitled Policy on the Social Clause: The Local

Chapter 4: Observance Perspective,"

of the the Core ILO Labor Standards

was presented

the Undersecretary

by Bienvenido

for Labor Relations

Laguesma,

99 who was then

of DOLE. He said:

The Philippine position on this issue has always been clear The Philippine

government

of labor standards.

must likewise undergo

a constant

only to minimum

different simplified

should

and basic standards.

Above

range which

to accommodate

of each country.

uniformity.

allows for

the peculiar

Universality

to mean absolute

as the

labor standards

be a flexible

applications

conditions

evolutionary

Labor Organization

main forum. But ideally, universal these, there should

labor standards

of human development and must utmost respect at all times. These

process, with the International pertain

to the upliftment

A system of universal

is an essential aspect therefore be accorded standards

is committed

should

Standards

not be should

not be applied so rigidly as to exact the same degree of compliance

from

development. on nations

countries

with

different

may

remains

uneven.

have fallen. Special

But

Tariff and nontariff

the global trading

and differential

therefore necessary to allow developing to compete

The workers' paper

entitled

with developed

position,

adoption

ones:

on the other hand,

the social clause proposal

of a social clause within

push to the labor movement's standards At the concluded:

and productivity end

of the

and less developed

was articulated

"GATT and the Social Clause: Implications

supports

field

treatment

Labor and Industrial Relations." Atty. Ibarra Malonzo, National Federation of Labor, indicated that labor: "...

There is no Sense in forcing equal standards that are decidedly unequal.

barriers

countries,

levels

in a

to Philippine president

of lCFTU. The

WTO will give a strong

efforts to improve (the) labor of our farms and factories.

conference,

the

following

points

were

100

The Filipino Worker in a Global Economy 1. There is a need for a continuing study and review of the concept and mechanics of the social clause and its impact on labor and business; 2. That labor's position is to link compliance with labor standards to international trade agreements; 3. That the employers' position is supportive of the government's official position, which is not to link labor standards with international trade agreements; 4. That there is a consensus on the need to improve labor standards in the context of global competitiveness and within the overall framework of human and national development.

It is evident from various documentations that the social clause has been and continues to be a controversial issue. The debate has raised broad questions related to political, economic and moral concerns. More so, the debate has helped in creating an apparent identity positions between labor and management. Given the importance of knowing the effects of trade liberalization on worker rights, and taking into consideration the debate on the highly controversial issue of the social clause, this paper aims to:

1. Determine the degree of compliance by companies with the six core ILO labor standards ratified by the Philippines; 2. Identify the factors which hindered the companies in implementing the core labor standards; 3. Find out the factors which facilitated the companies' observance of the core labor standards; 4. Determine the present stand of labor and management on the inclusion of a "social clause" in international trade agreements like the WTO-GATT; and 5. Identify policies that would ensure the protection of basic labor rights and adherence to the core labor standards, while opening markets, increasing growth, creating jobs, and sharing the benefits of trade more fairly.

Chapter 4: Observance THEORETICAL

of the the Core ILO Labor Standards

FRAMEWORK

This study was based are the theory

of corporate

on two conceptual

social performance

The basic theory

of corporate

of markets and local

Philippines,

for example,

principle), equal

worldwide measures

the public's

employment

principles society

adoption capital

free

(an ethical a "social

companies

is based

of international, investments. The

enterprise

right to a safe workplace

opportunity

These

The importance of corporate has been underscored by the

and the to attract

supports

is viewed to create that permits

undertakings.

and the force field theory.

social performance

economic, legal and ethical principles. social responsibility for human rights opening national

101

(an economic

(a legal principle)

principle).

contract"

Together

between

to act as moral

agents,

and these

business

and

in individual

companies, managers try to implement the principles of the social contract in their decisionmaking processes and in their company policies.

This theory

was used in this study as a guiding

principle

for

analyzing the degree of compliance of manufacturing companies with the core ILO labor standards and for determining their stand regarding the inclusion

of a social

clause

in international

protect labor. Since the Philippines has ratified its core labor standards, firms to implement or prevents

firms

that specifically

these from

In which

case, what hinders

with the standards

are the factors

affect the firms.

The force field theory social

agreements

is an active member of the ILO and it is the social responsibility of the

said standards. complying

trade

psychological

factors.

on the other This assures

hand

focuses

that every

on various

social behavior

the result of an equilibrium process between driving and restraining forces (Lewin 1935, 1957). The driving forces push one way; the restraining

forces push the other. The outcome

acceptable

reconciliation

framework

was utilized

hindering

factors

labor standards system,

in this study to determine

influencing

the degree

by manufacturing

the study

that emerges

of the two sets of forces.

of the core ILO

Moreover,

of of

will also depend

causes

using Lewin's

of the degree

the State and society in general.

the multiple

and

compliance rather than focused on a single cause. The extent to which these factors can affect the compliance labor standards

examined

the facilitating

of observance

companies.

is a socially

This theoretical

upon the degree

of enforcement

In the light of globalization,

set by

the political,

102

The Filipino Worker in a Global Economy

social and economic conditions in the country can evolve towards greater enforcement of these standards as other countries increasingly are being more concerned of the social responsibility that corporations show towards their workers. As a member of APEC, the Philippines is being implicitly asked to make a clear stand on the social clause. Based on these theories, the following operational framework, as shown in the schematic diagram (Figure 1), illustrates the dynamic interrelationships of the major variables that were investigated. Figure 1. Operational

Framework

Independent Variables

Dependent Variables Degree of Compliance

Company Characteristics

• • • • • •

with ILO core labor

standards 1, Freedom of Association 1.1 Freedom of Association and Protection of the Right to Organize (ILO Convention No. 87) 1-2 Right to Organize and collective Bargaining (ILO ConventionNo, 98) 2. Freedom from Forced Labor 2.1 Abolition of Forced Labor (/Lo

Unionized or nonnnionized Nature of business "Iype o1'owners Fonn of ownership Size (based on employment) Size (based on capitalization)

Convention No. 105) 3, Equality of Opporttmity and Treatment 3.1 Equal Remtmeration (ILO Convention

• Level of profitability

3.2

Freedom from Discrimination in Employment and Occupation (ILO Convention No. 81) Minimum Age of Admission to

Critical Factors • Facilitating/Helping

3,3

Hindering/Blocking

Employment or Freedom from CHILD Labor (ILO Convention No, 138) Stand on the Social Clause of Management and Labor

Intervening

Variables

I Socio-economic_political situations brought about by globalization

METHODOLOGY Descriptive and comparative research designs were employed • to achieve the objectives of the study. A survey was conducted among 125 unionized and nonunionized manufacturing firms in Metro Manila. A total of 175 respondents from both union and management sides answered the

Chapter 4: Observance of the the Core ILO Labor Standards"

103

survey questionnaire. Convenience sampling was used as a method in the selection of samples. This nonprobabflity sampling technique was used due to the sensitive nature of the research information needed to be collected from the companies. As such, many companies refused to answer the survey form. Table 1 presents the distribution of the actual samples. An aggregate of 75 nonunionized and 50 unionized enterprises participated in the study. Of this sample, 12subindustries were covered, with the most number of establishments coming from the food and beverage (24) and the fewest coming from the footwear and leather products sectors (3). Table 1. Distribution of Sample Manufacturing of Respondents N on Unionized Type of Subindus_y

M;magement RcplX:sentatives

Uniollized

Firms and Type

Overall

.... Mgt.

Union

Rep.

Finals

Reps.

Food and Bevemge

2. 3.

Textile and Wearing Apparel Chemical Products

14 7

8 6

22 13

30 19

4. 5.

Plastic Products Steel, Metal and Ii_an Products

4 8

4 6

8 14

12 20

6. 7,

Footwear Furniture

2 4

1 1

3 5

4 6

a'mdLeather Products and WoodProducts

Paperand Paper Products

9. MachiJ_e.cy and Equipment 10. Rubber Ptx_ducts

5 3

1 1

6 4

7 5

11,

Electronic

12.

Others (Cemmics, Ntm_cplates, ev.'.)

125

175

Products

Total

The nine-page survey questionnaire, which was translated to Filipino and pretested, focused on gathering data related to company profile, union profile, degree of compliance with the six core ILO labor standards, critical facilitating and hindering factors in implementing the core labor standards, perception if the union is helping the company to become globally competitive, stand of management and labor on to the inclusion of a social clause in international trade agreements, and suggestions that would ensure the protection of basic labor rights and adherence to the core labor standards. Compliance with the six core ILO labor standards was measured by generating about four to seven

104

The Filipino Worker in a Global Economy

items for each core labor standard, totaling to 33 items based on the provisions or articles of ILO Conventions ratified by the Philippines. The 33 items were pretested using the test of Friedman chi-square to determine their reliability. The resulting reliability test was p<_ 0.05. The results of the test showed the following: (1) freedom of association: p =.1191; (2) right to organize and collective bargaining: p =.1056; (3) abolition of forced labor: p =.6692; (4) equal remuneration: p =.2585; (5) freedom from discrimination: p =.2114;and (6) freedom from child labor: p =. 1993. Since the determination of the degree of compliance with core labor standards is the main focus of the study, a five-point Likert scale (5 - strongly agree; 4- agree; 3 - neither agree nor disagree; 2 - disagree; 1 - strongly disagree) was used in each of the 33 generated items to measure objectively such degree of adherence to the core labor standards. Then the average computed score was converted to this norm to interpret the degree of observance with the labor standards: 5 = full compliance; 4.00-4.99 = high compliance; 3.00-3.99 = satisfactory compliance; 2.00- 2.99 = fair; 1.00-1.99 = low Compliance. The rating given by the respondents to each of the items was used to compute for the mean rating for each of the labor standards. As an example, items 1 to 13were averaged to compute for the mean rating for ILO Convention No. 87. To get the overall mean rating, all 33 items were considered in the computation of the average score. For unionized firms, ratings of union and management representatives were averaged to get the mean rating of compliance of a unionized company. The collected data were analyzed with the aid of the Statistical Package for Social Science (SPSS) program. The percentage, mean and simple ranking were utilized for the descriptive part. Totest significant differences in the mean scores between the groups (unionized vs. nonunionized, by nature of business, type of owners, by form of ownership, by size of company based on employment and capitalization, by level of profitability, by number of years of existence, and other characteristics), a nonparametric tool (Kruskall-Wallis One-Way Anova Test) using the chi-square (x2)test statistic was applied. To compare the responses of union and management representatives, the Wilcoxon Matched Pairs Signed Ranks Test was used. The confidence level of cr -0.05 was the basis for determining the significant outcomes.

Chapter 4: Observance of the the Core ILO Labor Standards

105

FINDINGS Profile of Companies One hundred and twenty-five manufacturing companies located in Metro Manila participated in the survey. These firms, which represented the 12 subindustries in the manufacturing industry, were composed of 75 nonunionized and 50 unionized establishments. Classified by type of owners, 38.40 percent are Filipino-Chinese, 31.20 percent are Filipino, 19.20 percent are multinationals, and 11.20 percen t are Chinese. By size of employment, 52.80 percent are large, 38.40 percent medium, and 8.00 percent small. Moreover, these firms, which are predominantly corporations (73.60%), have been in existence for an average of 21 years, with some of the establishments operating for at least two years and others for as long as 40 years or more. Last year, 78.40 percent of the firms claimed that their level of profit was average, 10.40 percent experienced a low level of profit, 6.4 percent incurred a loss, and only 4.80 percent managed to break even (Table 2). A typical participating manufacturing company, therefore, is non-unionized, comes from the food and beverage industry, owned by Filipino-Chinese, large in size, both in employment and capitalization, registered as a corporation, has been operating for 21years, and had an average level of profit last year. In unionized companies, unions were found to have been operating for an average of 14.50 years. They have an average membership of 331 employees. Of those surveyed, 30 (60%) were independent local unions and 20 (40%) were federated or affiliated workers' organizations. The federated local unions have been affiliates of federations, like the Kapatiran ng Makabayang Obrero (KAMAO), National Federation of Labor (NFL), Federation of Free Workers (FFW), Lakas Manggagawa sa Pilipinas (LMP), Obrero Manggagawang Filipino, United Filipino Service Workers (UFSW), Kilusang Mayo Uno (KMU), Confederation of Free Workers (CFW), and Philippine Transport and General Workers, Organization (PTGWO), for an average of eight years. Eighty-four percent (84%) of the unions have existing CBAs while 16 percent stated that they do not have a CBA yet (Table 3). Degree of Compliance with core ILO Labor Standards Six ILO Conventions or what are now referred to as core conventions or labor standards related to the fundamental workers'

106

The Filipino

Table

2. Profile

of Participating

Manufacturing

Classification A.

Percentage

Un:iorlized

Nonunionized

125

100

Food and beverage

19.2

Textile and wearing apparel

17.6

Chemical products

10.4

Plastic products

6.4

Steel, metal, and iron products

11.2

Footwear and leather products

2.4

7. 8.

Furniture and wood products Paper and paper products

5 7

4 5.6

9. 10.

Machinery and equipment Rubber products

6 4

4.8 3.2

Electronic products etc.)

9 125

7.2 100

By type of owners 1

Filipino

Chinese

11.2

Filipino - Chinese

38.4

Multinational/Transnational

19.2

125

31.2

100

By form ofownership 4

Single proprietorship

Partnership

Corporation

Total

Companies

Frequency

lbtal

Economy

12. Others (ceramics, nameplates, Total

in a Global

Unionization

Total B. By nature of business

Worker

23 10

18.4 8

73.6

125

100

Size (based on employment) 1.

Small (less than 20 employees)

Medium (20 - 99 employees)

38.4

8.8

Large (100 and more employees)

52.8

Size (based on capitalization) 1.

Small (P5 million and less)

Medium (P5 million - P20 million)

35.2

Large (more than P20 million)

51.2

125

100

Total

13.6

Chapter 4: Observance Table

of the the Core [LO Labor Standards

107

2. Continued... Classification

Frequency

G. Level of profitability 1. Loss 2. Break _even

8 6

6.4 4.8

3. Low profit 4. Averageprofit Total

13 98 125

10.4 78.4 100

Number of years of existence 1. 2-10 2. 11-10 3. 21-10 4. 31-10 5. More than 40 _lbtal

48 32 16 6 23 125

38_4 25.6 12.8 4,8 18.4 100

Averagenumber of years of existence

rights

Percentage

ratified

by the

Manufacturing

Philippines

companies of compliance

Liken

(5 = full compliance;

scale

are the

main

focus

of the

in Metro Manila were surveyed

their degree

3.99 = satisfactory

with these labor standards

compliance;

4.00-4.99 2.00-2.99

study.

to determine

using a five-point

= high compliance;

= fair compliance;

3.00-

1.00-1.99

low compliance). Based

on the

representatives, freedom

equal

from

Convention

responses

remuneration

discrimination No. 81) were

association and protection 87) was the least observed level of conformity there

by the unionized

ILO Convention in the individual rating

(ILO

highly

management

complied

No. 100) and

and occupation with,

while

(ILO

freedom

of the right to organize (ILO Convention No. labor standard (Table 4). Overall, the firms'

difference

in the average

and nonunionized

unionized

is only satisfactory degree

companies,

test. However,

there is a significant

among

and

Convention

in employment

One Way Anova

ILO labor standards, of compliance

175 union

with the six labor standards

is no significant

Kruskall-Wallis

of the

of compliance

as indicated in taking

difference

and nonunionized

and

in the mean firms,

by the

each of the rating

except

for

No. 100. The results of having a significant difference labor standard but no difference for the overall mean

may be attributed

to the variance

within the sample.

Chi-square

108

The Filipino Worker in a Global Economy

Table 3. Profile of Participating

Unionized

Manufacturing Frequency

A, Number of years of e;,ds_ence 1. 1-10 2. 11-20 3. 21-30 4. 31-40 5. More than 40 "lbtal

Firms

Percentage

26 1.4 6 1 3 50

52 28 12 2 6 100

Average number of years of existence B. Number of union members 1. 15-30 2, 31-60 3. 61-90 4. More than 90 Total

14.5

Average number C. Affiliatior_ 1. Independent 2. Federated 2btal

of members

331

30 20 50

60 40 100

6 2 2 2 1 1 1 1 1 3 20

0 10 10 10 5 5 5 5 5 15 100

3 11 4 2 20

15 55 20 4 100

D. Federations to which the unions are affiliated 1. KAMAO 2. National Federation of Labor 3. F'ede,-ation of Free Workers 4. Lakas Manggagawa sa Pilipinas 5. Obrero Manggagawang Filipino 6. United Filipino Service Workers 7. Kilusang Mayo Uno 8_ PTGWO 9. Confederation of Free Workers 10..Name of Fedet-ation .Not indicated Total .E. Num.be, of yea,'s of affiliation with the federation 1. Less tha_ ayear 2. 1-10 3. 11-20 4. 21-30 Total Average number of years F. CBA Status 1. With CBA 2. Without CBA Total

of affiliation

7 6 5 32 50

14 12 10 64 100

8 42 8 50

84 1.6 100

considers variance in the computation of the test statistic. Table 4 shows how the mean rating of compliance differs for each of the labor standards, although no significant difference of results was obtained when the overall mean rating was considered. The mean rating of the degree of observance of the labor standards by the union and management representatives in the

Table 4. Significance of Tests on and Degree Compliance with Core ILO Labor Standards by ManufacRtring Companies Freedom of Association and Protection of the Classification

of Firms

Unionized vs. N_onionized I, Unionized 2. Nc_aunionized

B. By nat_e

Abolition of Forced Labor

Equal R_aumeration

Freedom from Discrhlfi_nation in Eanpto_anent and

Minimum Age of Admission to Employment or

Overall

Right to Organize (No. 87)

(No. 98)

(No. 105)

(No. 100)

Ooeupation (No. 81)

Freedom from Child Labor (No. 138)

;_2=39.1192"*

g2= 3Z0633"*

Xz=11.2669

g2= 2,4246**

X2= 5.02D**

_2 = 4,4845**

g 2= 0.0320**

3.80 3.10

3.83 3.27

3.43 4.03

3.89 4.15

3.89 4,I0

3.73 3,99

3.76 3.78

_. 0_

Z2 =14.7112"_

;(2= 21.0193"*

7_2=6.4701"*

X2=9.3131**

g2 = 18.2543"*

X2=13.7193*_

_:= 6.6587**

Food and beverage

3.57

3.81

3.63

4.40

4.04

3.80

3.87

T_'xtile and wearing apparel

3.32

3.92

3.91

4.28

3.80

3.76

3. 4. 5. 6. 7. 8. 9, 10, 11,

Chemical products Plastic products Steal,mdal andiron products Footwear and leather products Furniture and wood products Paper and paper products Machinery and equipment Rubber products Electronic products

3.00 3,77 3.56 3.67 3,20 3.04 2.95 3.29 3.26 3.63

3.51 3.75 3,43 3.89 3.25 3.00 3.43 3.58 3.29 3.46

4.07 3.93 3,76 3.27 3.56 4.14 3.52 3.95 3.56 3176

4.05 4.14 4.03 3.87 4,12 4.23 3.75 3.20 4.14 3.64

3.79 4.15 4.02 4.11 4,27 4,I7 3.79 3.44 3.93 3166

4.02 3.91 3.88 3.75 4.15 4.46 4.17 3.88 3.89 3.25

3.74 3.94 3.78 3.89 3.76 3.84 3.60 3.56 3,68

[2i

othffs

of btL_iness

Right to Organize and Collecti_ Bargaining

_., ÂŁo i

3157

Table

Continued...

Classification

of Firms

(No. 87)

(NO. 98)

(No. 105)

(No, 100)

(No, 81)

(No. 138)

Overall

By type of owners 1, Filipino 2, Chiilese 3, Filipino_Chinese 4, Multinational

7..-': 5.9981'* 3.17 3 r45 3.49 3 A7

2 : 1,3060"* 3.41 3.61 3.53 3,49

Zz=6.2694 ** 4.01 3.24 3.75 3,85

_2=4.4416'* 4,24 3.76 4.09 3.82

Xz = 2.2487** 3,97 3,86 4_10 4.03

7,2 = 4.5540** 4,01 3,72 3.90 3.73

7,2=4,6280** 3.80 3,61 3.81 3.73

By form of o_aership 1. Single proprietorship 2, Partnership 3, Corporation

7,: = 1.7718"* 3,29 3,22 3.43

_'_= 3r3590'* 3 A6 3.23 3.53

42 = 1,4285"* 3.71 3.99 3.79

42 = 0.9420** 3.90 4.02 4.09

g'_= 0.0488** 3,98 3.98 4.03

7`2= "1.1137"* 3,92 4,13 3,85

_Z : 0,9798** 3,71 3,76 3.79

By size o[ empl%,ment 1. Small (below 20

;2 = 19,4622'* 2.62

X2 = 9.5779' , 3,22

2 = 0.6551'* 3,86

gz : 2,1587'* 3,82

z = 0.0912'* 4,45

Z2 = 0.3364** 4,00

:(2 = 4,5315"* 3,66

3,23

3.37

3.75

4.15

3.95

3.89

3.73

3.61

3,63

3.81

4.01

4.00

3.86

3,82

Z2 = 6.7113'*

Z_ = 7,6717'*

. 7,2 = 1.6416'*

_ = 0.9932**

_ = 3,3987**

Zz • = 0.7059**

Z_ = 61848**

e_ ,._

3,17 3.29

3.41 3.36

3.88 3.89

3.90 4.01

4.32 4.01

4.03 3.88

3.78 3,74

3.50

3,62

3,70

4,U

3.94

3,84

3.79

_" g_ _'3 _"

;¢2= 7.6278** 4.04 3.31

7,2 = 4,7766** 3.91 3.32

Xz =13.1601'* 4.28 4.23

g-'= 5.2683** 4.15 4.37

X: = 5,4050** 4.10 4,22

7,"= 5.7269** 4.08 4,23

2 = 9.8917'* 4.09 3.95

3.42 3.33

3,40 3,48

329 339

4,14 3,98

3.67 3,87

3.67 3 35

2. 3,

employees) Medium (20-99 employees) Large (100 and above

employees) By size of capitalization 1. 2. 3.

Small (Jess than P5 million Medium (between P5 artd P20 million) Large (above P20 million)

G. By level of profitability 1, Loss 2. Break-even 3. 4,

Lowpr0fit Average profit

. 4.09 4.01

_. _.

L'_ ¢5

Table 4. Continued... classification H.

of lrlrms

Bynumberofyearsof existence of company l. 2-10 2. 3. 4.

1t-20 21-31 31-40

than

By respondent Union Management

By number of years existence of union

87)

(NO. 98)

(No.

105)

(No.

100)

(No.

81)

Z2= 13,4199 *_

X2= 13.0333"*

Z2=3.t401 **

X2=2.4103 **

Xz= 7.2664**

3,14

3.29

3.91

3.99

4.21

3,40 3,52 3.85

3.44 3.81 3.62

3.67 3.83 3.94

4.12 3.99 3,78

4.02 3.91 3.85

3.59

3.71

3.54

4,30

3.67

(No. :_z

138)

O_rall X2= 1.4557"*

4_ '"

3.99

3,76

3.93 3.91 3.97

3.76 3,83 3.83

3.56

3.73

2.7949** =

(No.

:_ =-1.4902"* 3.75 3.86

_z = -2.7004"* 3.66 4.01

Z2 _-6.0228 3.62 4.18

7(.z = 1.5400"*

_2 = 3.2762"*

;_z = 2.2900**

Xz =-2.7084 3, 71 4, 08

g2_1,2424"*

g2 ='3-4141"* 3.56 4.2l

Z 2 =-2-6289.* 3.53 3.93

_(2 =-2.9155.* 3.72 4.04

Z 2 = 3.4914"*

Z z = 1.7279"*

Z 2 = 0.9006**

1. 2.

1-10 tl-20

3.68 3.93

3,73 4,01

3.46 3.36

3.87 3,99

4.04 3.88

3.82 3.85

3.77 3.84

3. 4. S.

21-30 31-40 More

4.01 4.07 3.76

3.85 4.17 3.8I

3.23 4.50 3.50

4.02 3,80 3,40

3.67 3.88 3.06

3,25 3.88 3.25

3.67 3.7 5 3.46

;_z = 4.4420** 3.98 3.50 3.14

X2 = 7.5673,_ 3.74 3.46 3,85

_z = 7.7914"* 3.06 2.67 4.04

that_ 40

By number 1, 15-30 2. 31-50 3, 61-90 4.

of union

members

thax_ 90

;_z=2.6452"* 3,81 3.95 3,70

gz = 1.8540"* 3.74 4.00 3.78

;g2

.H57"* 3.80 3.79 3.88

_(_= 2.5433** 3.69 3.56 3.73

3.92

3,92

3.56

3,93

3.91

3.67

3.82

_(2 = ,0521, _ 3.74 3.89

Z _-=,2366 ** 3.86 3.80

Xz = .7337** 3.30 3.62

Z _-= .0395** 3.85 3,95

Z2 = 3.8451"* 3, 82 3.98

Z_ = L9804"* 3.60 3.91

_2 = 1.5077"* 3,70 3_86

Z _ =6.1947"* 3.93 3.15 4.18 3.50

Z2=3ATS2 ** 4.00 3,95 4.22 3_75

_z = 3,1030"* 4.11 3.81 4.08 4,08

;(2 = 0.9121_ 3,7l 3.92 4,03 3.94

Z2 = 3.4654_ 3,80 3.72 4A7 3,84

___ C)

"t G3 g_

By affiliation Independet_t Federated

By number of years af_liated 1, Less thaal role year 2, 1-10 3. 11-20 4, 2_-30

X 2 = 3.4878** 3.60 3.77 4.23 4.00

Z 2 =4.2098 3.45 3,70 4.25 3,79

_'_

Table 4. Continued... Classification N.

of firms

By CBA status 1, Existence ofa CBA 2. Absence ofa CBA Overall mean response

Note:

_2 test statistic

is significant

(No. 87)

(NO. 98)

(No. 105)

(No. 100)

X z = 13,0048"* 3.98 2.85 3.38

X 2 =5_892I**

X2 = .3429**

_:2=3,858t**

y2 = .2831"*

g2 =0.6617"*

X2: 3.0509**

3_90 3.48

3.40 3.55

3.93 3.67

3.90 3.7)

3.72 3.73

3.81 3.51

3.50

3.79

4.05

4.02

3.88

3.77

when p_< 0.05, which means

** indicates 1 percent degree of significance @ Mean responses based on the 5-point Likert = fair compliance; 1:00-1.99 = low compliance

that there

Scale (5 = full compliance;

is a significant

4:00-4.99

difference

(No. 8I)

between

= high compliance;

(No. 138)

the mean response

3:00-3,99

of the groups

= satisfactory,

compliance;

Overall

under study.

2:00-2.99

_r" r_

Chapter 4: Observance of the the Core ILO Labor Standards

113

unionized establishments differed significantly as a whole in all the standards. However, in analyzing each of the six core labor standards independently, management's and union's assessment of degree of observance did not differ significantly on the freedom of association and protection of the right to organize. Among the unionized establishments, those with a satisfactory degree of compliance with the core labor standards have more than 90 union members, federated, affiliated with a federation for about 11-20 years and have an existing CBA. Unionized firms' degree of observance of the core ILO labor standards did not also differ significantly when they are classified by the number of years of existence, number of union members, federation affiliation, number of years affiliated with a federation and existence of a CBA. By nature of business/subindustry, the plastic products, followed by the footwear and leather products have the highest degree of overall core labor standards conformity while the rubber products group has the lowest degree of overaU sufficient observance of the labor standards. The freedom of association and protection of the right to organize (Convention No. 87) is satisfactorily implemented by the plastic products subindustry, and is implemented at a fair degree by the machinery and equipment sector. The right to organize and collective bargaining (Convention No. 98) is satisfactorily obeyed by the food and beverage firms, and least implemented, though still a satisfactory level by the paper products subsector. The abolition oflCorcedlabor (Convention No. 105) is highly followed by the paper and paper products subgroup, and less relatively conformed with by the foot wear and leather products subgroup. Equal remuneration (Convention No. 100) is highly complied with by the food and beverage companies, and satisfactorily by the rubber products establishments. Freedom from discrimination in employment and occupation (Convention No. 81) is highly kept up to standard by the textile and wearing apparel sector, and less done according to law by the rubber products group. Freedom from child labor (Convention No. 138) is highly implemented by the paper and paper products subindustry, and satisfactorily observed by the firms in the other sector subindustry. The Kruskall-Wallis One-Way Anova test (;d) for independent samples revealed that there is no significant difference in the degree of

114

The Filipino Worker in a Global Economy

core labor standards compliance by nature of business/subindustry as a whole and on a per core standard basis except for the right to organize and collective bargaining. By type of owners, the Filipino-Chinese owners have the highest satisfactory degree of overall core labor standards compliance, while the Chinese owners have the lowest satisfactory degree of overall observance of labor standards. On a per labor standard basis, the Filipino owners are frequently implementing equal remuneration, abolition of forced labor, and freedom from child labor; and least satisfactorily abiding by the freedom of association and protection of the right to organize and right to organize and collective bargaining. The statistical test again showed no significant variation in the average level of rating of firms on their keeping up to the labor standards based on type of ownership. Classified by form of ownership, those owned by corporations tend to meet the labor standards with a higher satisfactory degree. On the other hand, those owned by single proprietors seem to fulfill the laws with a lower degree of satisfaction. Based on their compliance with individual core labor standards, single proprietors least comply with the abolition of forced labor and equal remuneration; those owned by partnerships have the least satisfactory observance of the ILO Conventions No. 87 and No. 98. The corporations' least rating relates to freedom from child labor. Although the One-Way Anova test for independent samples confirmed that in these three forms of ownership, their degree of conformity with the six core labor standards do not differ meaningfully. Grouped by size of employment, the large firms have the highest average degree of compliance with labor standards, followed by the medium-sized establishments and by the small enterprises. On the individual core labor standards, small enterprises scored lowest in implementing the ILO Convention No. 87 but rated highest in the observance of ILO Convention No. 81.As a whole, there is no significant difference in the mean rating of labor standards implementation. On a per core labor standard basis, significant variations appear on freedom of association and protection of the right to organize and on the right to organize and collective bargaining. By size of capitalization, the large companies sufficiently comply with the laws, followed by small firms and finally by medium enterprises. The large firms' highest degree of keeping up with labor standards is

116

The Filipino Worker in a Global Economy

however, confirmed that there are no significant differences in the mean level of obeying the laws as an entire set of core labor standards taken together. responses

On a per labor standard basis, significant variations are shown concerning ILO Convention Nos. 87 and 98. Firms

with

relatively

high

observing

the Core ILO Labor

the plastic

products

subindustry,

size (both in capitalization have been existing 1999 (Table 5).

Table

satisfactory

Standards

average

are nonnnionized,

owned

registered

for 11-30 years and experienced

Characteristics Average Standards

of Firms

Rating

with Relatively

of Compliance

with

ILO

Average

Labor

Rating

3.78 in 1999

existing

4.09

for l J-30 years

3.83 3.79

size of employment

3,82

6. Large

capitalization

3.79

7_ Filipino-Chinese

owned

8. Plastic

manufacturing

products

3,81 company

3.94

On the other hand, enterprises with relatively low satisfactory rating of compliance with labor standards are unionized, belong

to the rubber

products

capitalization,

sector,

small-sized

proprietorship, operating in 1999 (Table 6). Overall,

the

owned

degree

medium-sized

registered

as single

for more than 40 years, and had a low profit

firms'

of compliance

the level of profit

by Chinese,

in employment,

level

is only satisfactory,

the level of profitability standards

Core

5. Large

average

large

corporations,

4. Corporation

standards

High Satisfactory

1, Nonunionized 2, Did not profit

average

belong

a loss in income

Clmracteristics

3. Company

rating

by Filipino-Chinese,

and employment),

of conformity

with

no significant

based on their characteristics

and the type of respondent.

is a primary

consideration

set by the government.

and labor will have differing of the six core labor standards

the

It also confirms

in their respective

that

in the

except for

This means

in adhering

view s with regard

six labor

difference

that

to the labor management

to the implementation companies.

Chapter 4: Observance Table

of the the Core ILO Labor Standards

6. Characteristics

of Firms

Average Rating Standards

with Relatively

of Compliance

117

Low Satisfactory

with

ILO

Characteristics

Core

Average Rating

1. Unionized 2. Had low profit in 1999 3. Company existing for more than 40 years 4. Single proprietorship 5. Small size of employment 6. Medium capitalization 7. Chinese owned 8. Rubber products manufacturing company

It deserves Conventions human those

to be pointed

rights and freedoms

out that the freedom

on freedom

that among

of association

are

firms. If such standards

that workers

are not able to express

less negotiating

strength

place

that are the principal

us to the findings

manufacturing

protection

3.76 3.67 3.73 3.71 3.66 3.74 3.61 3.56

(Nos. 87 and 98) have a unique

This brings

Labor

of association

among

concerns

the basic of the ILO.

the six core labor standards, least

complied

with

are not fully followed, their needs

in collective

and are not able to actively

by the it means

and aspirations,

bargaining, participate

have

do not enjoy

full

in the framing

and

implementation of economic and social policies be it at the enterprise, national and global levels. Perhaps, in the final analysis, any degree of compliance with any of the labor standards depends not only on the efforts of the trade union movement on its own, but to a large extent on the political firm, national support

will and action taken to ensure

their full observance

and global levels by the government,

at the

with or without

the

of employers.

Facilitating Standards

and Hindering Factors in Implementing the Core Labor

Full compliance to the fundamental

rights

with the ILO core labor of the workers

the owners/management of the manufacturing remains to be an elusive dream for the workers in the data on the degree

of compliance

standards

appears

pertaining

to be a tall order

for

firms. Therefore, it to achieve, as reflected

with the core labor standards.

118

The Filipino Worker in a Global Economy

Facilitating Factors In spite of the findings that companies are not actually able to fully abide by all the core labor standards as mandated by the government, best efforts are exerted to conform with these standards over the years. The respondent firms identified many critical factors that facilitated their compliance with labor standards (Table 7). The top five most frequently given pivotal factors which were perceived to be instrumental in implementing the core labor standards, at least satisfactorily, are: (1) efficiency and high productivity of employees; (2.5) sincerity of management to ensure that labor standards are enforced; (2.5) harmonious labor-management relations; (4) management's full adherence to the philosophy of respecting the rights of workers; (5.5) fair treatment of employees; and (5.5) management is aware and well informed on labor standards. The beneficial factor which was the least mentioned by the respondents is that the "union officers are well-informed and aware of labor standards." Moreover, management representatives' number one commonly stated critical assisting factor is "sincerity of management to ensure that labor standards are enforced," while the union representatives viewed it to be the "presence of a union to protect and fight for workers' rights." The least identified critical helping factor by management is "union officers are well-informed and aware_of labor standards," while "efficiency of management in ensuring that the labor standards are fully forced" was cited by the union. It can be noted that what management and labor consider as significant facilitating factors affecting the degree of labor standards compliance are basically related to the contribution of workers in terms of efficiency productivity and harmonious relations with management; and to the employer's corporate social responsibility of adherence to the laws and respect for the rights and fair treatment of employees.

Chapter

Table

4: Observance

of the the Core ILO

Factors that Help Labor Standards

Labor

Companies

Comply

Management Facilitating

Factors

1. Practical/realistic laws and government policies for companies 2. Presence of clear guidelines and specified qualifications of employees 3. Efficiency and high productivity of employees 4. Trust between union and management 5, Management awareness

oflabor standards

I 19

with

Union

Rank

Freq

Core

ILO

Total

Freq

26.40

9 18.00

24.00

8_5

28.80

7.5

6 12.00

24.00

8.5

36.00

12 24.00

5.5

32.57

Rank Freq

Rank

16.80

10 20,00

32,00

6 12.00

26.29

5,5

32,80

3.5

11 22.00

29.71

13,60 16.5 4,80 20.5

16 32.00 23 46.00

2 1

33 29

18.86 16.57

11 14.5

Management's full 41 adherence to the philosophy of respecting the rights of workers 7. Existence ofaCBA 17 8. Presence ofaunionto 6 protect and fight for workem' rights 9. Intense competition for 19 talented/skilled workers, which ]cads management to take good care of them 10. Efficiency of 28 management in ensuring that labor standards are fully enforced 11. Open communication 36 between union and management 12. DOLEregulafly 22 monitot_ the enforcement of labor standards 13. Company practices are 17 in consonance with labor standards 14. Continuous dialogue between union and management

Standards

17.71 12.5

15.20

6 12.00

14.29

16.5

22.40

2.00

16.57

14.5

28.80

7.5

8 16.00

10.5

25.4

17.60

14.29

16.5

13.60

16.5

9.71

16.00

20_00

6.00

15 30.00

3.5

120

The Filipino Worker in a Global Economy

Table 7. Continued... Facilitating

Ma nagem

Factors Freq

ent

Union

Rank

Freq

Tota l

Rank

Freq

Rank

15. Harmonious labor nlanagclIl en t relations

32.80

3.5

30,00

3.5

32.00

16. Union officers who are diligent i.n ensuring that labor standards are enforced

4.80

20_5

24,00

5.5

10.20

21,60

8.00

17.71

12.5

1:4

11,20

10.00

10.86

19_ Sincerity of management in enforcing labor standards al?e enforced

40.00

12.00

32.00

2.5

20. High profits o1_the company 21,. Fair treatment of employees 22. 'Union o[ficers who arc well-informed about labor standards

12.80

12.00

12.57

31.20

14.00

26.29

5.5

4.00

16.00

10.5

17. Global outlook/perspective of management .18. Global

2.5

outlook/perspective of workers

7,43

Hindering Factors The inability of firms to faithfully implement the provisions of the labor standards is attributed to numerous hindering factors, as shown in Table 8. The five most commonly cited compelling factors for companies' non-compliance with labor standards are: (1.5) high costs of capitalization; (1.5) intense competition for available jobs due to high unemployment leads workers to be fearful of losing their jobs; (3) (4)

inefficiency and low productivity of employees; lack of sincerity from management in ensuring that labor standards are enforced;

Chapter 4: Observance of the the Core ILO Labor Standards Table 8. Factors that Hinder/Block Companies of Core ILO Labor Standards Management Hindering

121

in the Observance

Union

Total

Factors

1. Impractical or unrealistic laws and government pohcies for companies 2. Absence of clear

Freq

Rank

Freq

25.60

19.20

35,20

Rank

Freq

Rank

12.00

17,5

21,71

5.5

28.00

4,5

21,71

5.5

16,00

14,5

29.7]

14.40

28.00.

4.5

1.8.29

16,00

32,00

20.57

8.80

24.00

7,5

13.14

17.60

10.5

24.00

7.5

1,9.43

16.80

12,5

20.00

],0.5

17.71

31.20

34.00

32.00

1.5

7.20

20.5

8.00

20,5

7,43

37.60

18,00

12.5

32.00

1,5

17.60

10.5

30.00

21.14

20.00

7.5

26.00

9.71

20.00

7.5

16.00

18.86

guidelines and specified qualifications of employees 3, Inefficiency and low productivity of employees 4. Lack of trust between union and management 5. Lack of management awareness of labor standards 6,

Management does not fully adhere to the philosophy of respecting the rights o1:worker_ Absence of a CBA

8. Absence of a mlion to protect and fight for workers' righ ts 9. Inmnse competition for available jobs leads to workers' fears of losing their jobs D, IIlefficiency of nlallagelllellt ill ensur_llg that the labor standards are fully enR,rced 1.1, High costs of capitalization 12, Lack of openness and sincerity in corll olunication between u.rljOllalldnlanagettI t:llt 13, h'regular monitoring by DOLE of the enforcement oflabor standards 14. Company practices that are not in cori_onance with present labor standards

1,4.5

122

The Filipino Worker in a Global Economy

Table 8. Continued... Management Hindering

15.

Union

Total

Factors

Lack of con.tinuous

Freq

12,00

7.20

Rank

Freq

20.00

10,5 25

14,29

20.5

18.00

12.5

10.29

18.5

6,40

22.5

4.57

6.40

22.5

14.00

16 15

8.57

16.80

12.5

10,00

19 26

14,86

29.14

Rank

Freq

Rank

dialogue between union and management 16. Antagonistic labormanagement relations 1.7, Union officers who are not concerned in

ensuring that labor standards ace enforced 18.

19.

Lack of a global outlook/perspective management

Lack of a global outlook/perspective among

workers

20.

,Lack of management sincerity in ensuring that labor standards are enforced

32.00

22,00

21.

High labor costs/economic

11.20

17,5

12.00

17.5 20

11,43

1,7

23.20

2.00

22 30

17.14

11.20

17.5

8,00

10.29

18.5

difficulty due to Asian crisis 22, 23.

Unfair treatment

employees Union officers are noL well-infomaed about labor standards

20.5

(5.5)

absence of clear guidelines and specified qualifications of employees; and (5.5) the laws and other policies of the government are not practical/realistic for the company. It frequently for union that leads mentioned

can also be noted that management representatives' most identified barrier is the "high cost of capitalization," while representatives it is the "intense competition for jobs due to workers' fears of losing their jobs." The least frequently barrier has to do with "union officers who are not concerned

in ensuring that labor standards are enforced" and "lack of a global outlook/perspective of management" according to employers, while

Chapter 4: Observance of the the'Core ILO Labor Standards

123

unions refer to "union officers who are not concerned in ensuring that labor standards are enforced" and "unfair treatment by management." The findings succinctly show that the significant blocking factors to full compliance with the core labor standards are related to the management's concern about the high cost of operating the business; the inefficiency and low productivity of employees; the government's legal requirements which are impractical or unrealistic for the company; and the workers' fear of losing their jobs due to high unemployment, absence of clear guidelines and qualifications for employees, and nonadherence by management to labor standards. Effects of the Union on the Competitiveness of the Company in the Global Market The current focus on international competitiveness is simply a way to dramatize the need for high productivity growth. High productivity in the long term will lead to a rise in the standard of living of its people. In this regard, both management and union representatives of the unionized manufacturing firms were asked whether a union helps or is an advantage for the company in becoming globally competitive. Out of the 80 respondents who replied to this question, 62.16 percent from management said no and 95.50 percent from the union said yes (Figure 2). Obviously, management did not perceive the union to be helping, while the union saw it the other way. Those who perceived that the union is not helping the company become globally competitive mentioned the following explanations: 1. Resistance to change 2. Lack of cooperation with management undertakings toward greater productivity and efficiency 3. Nonacceptance of what is going on globally 4. Tendency to be emotional in approaching issues due to their political orientation 5. CBA-related demands that result in increased overhead costs and lower profit 6. Lack of understanding of laws among unions 7. Demands not commensurate to equivalent productivity increases

124

The Filipino Worker in a Global Economy

Figure

Position

of Respondents

Advantage Competitive

to the

on Whether Company

a Union

is a Help/

to Become

Globally

Management V----'--1

i_*-u

Union

.///// 0%

20%

Prohibitive countries

40%

around three are believed

80%

labor costs in the Philippines are getting

Lack of awareness

The reasons

60%

100%

while those of other

cheaper

on global competitiveness

given by the management

and union seem to revolve

major issues. First; union demands to result in increased labor costs

regarding the CBA which becomes a

disadvantage to the Philippines. Labor costs in other countries, especially those without unions (e.g., Taiwan, China, Pakistan, and Vietnam) are cheaper.

Moreover,

labor's

expensive

and increasing

the unions

are perceived

demands

are often

seen as unreasonable,

every time a new CBA is negotiated.

Second,

to lack awareness

against,

of, or are strongly

the neoliberal form of globalization so that they do not accept the present nature of global framework perhaps due to their political orientation or resistance to change. Third, the presence of a union in a firm does not always translate to a corresponding increase in productivity in spite of their demands for better salaries and benefits. It seems to contradict findings

of other studies

to higher very

productivity.

cooperative

productivity

that increases There

with

and efficiency

in wages and benefits

are also instances

management to hlcrease

where

undertakings

will lead

the union toward

is not greater

profit and global competitiveness.

This could be based on the workers'

notion that the wages and benefits

they receive

to the amount

are not commensurate

of effort

they exert

Chapter 4: Observance of the the Core ILO Labor Standards

125

to make the firm profitable and competitive, and to the benefits and profits that the employer derives from his or her business. On the other hand, those who opined that a union helps a company become globally competitive said the following reasons: 1. 2.

It helps to broaden understanding of workers. It gives suggestions/innovative ideas that help companies become more competitive 3. It helps in gathering and documenting company data for ISO certification so that the company becomes globally competitive. 4. It helps management become aware of employees' needs to help them become globally competitive. 5. Helps upgrade quality of products. 6. Helps by focusing on employees' welfare and maintaining high performance/productivity of employees. 7. Helps in cost-cutting measures of company. 8. Believes that company's progress is also employees' progress. 9. Cooperates with management, and which gives the company the competitive edge. 10. Helps in providing continuous education and balanced information dissemination to workers on the present situation of the company.

The above explanations appear to be related to one major point-the full cooperation afforded to management by unions. This support is manifested in their efforts to give innovative suggestions/ideas, to inform management of employees' needs, to assist management in upgrading the quality of products, to help in the cost-cutting measures of the firm, and to conduct information dissemination among workers about the present condition of the company. This reality may be attributable to the growing maturity of labor and its shift from an adversarial to a more mutually beneficial stance with management. Labor and Management Stand on the Social Clause Social clauses provide for the implementation of international labor standards, which are to be "incorporated in international trade

126

The Filipino

agreements

to ensure

accompanied

that

the gradual

by improvements

elimination agreement

like the

standards

abuses

a .social clause

to enforce

agreement

Given this parameter, of management

favor of a social (32.04%

from

/ 100%

, 80%

(Figure

andunions

labor access and

3) that a

(50.00%) from

and 21.88% from union)

are in

both groups

who did not give

with the issue.

Regarding

the Social

Clause

['lNo Position/ Unfamiliar with theissue

_/_

specific

of management

some respondents

of Respondents

(ILO

in a trade

and market

///_ //7 /

position

(53.40%)

of all the benefits

such as trade

due to their unfamiliarity

3. Position

certain

The data showed

clause. However, management

their position

Figure

groups

provision

enjoyment

the present

labor on this issue was investigated. majority

and forms of exploitation"

for continued

and privileges in the trade to other countries.

of markets

of work, or at least by the

is a proposed

WTO-GATT

as a condition

liberalization

in conditions

of the most flagrant

1994). Specifically,

Worker in a Global Economy

[] Not In Favor

60%

[] In Favor /

40% 20% 0%

///7

/ /

â&#x20AC;˘.

Management

Union

Based on the company

characteristics,

the firms which are more

in favor of a social clause are those in the chemical owned

by Filipinos,

employment last

size, have medium

year, and

(Table 9).

registered

have been

as single

proprietorship,

capitalization,

operating

their

products

sub-sector, have

had an average

business

a large profit

for 2 to 10 years

Chapter 4: Observance of the the Core ILO Labor Standards

127

Table 9. Characteristics of Companies which Favor the Inclusion of a Social Clause Trade Agreement Chemical products manufacturing Operating for 2-10years Average profit Medium-sized based on capitalization Large employment size Single proprietorship Filipino-owned

Several explanations were forwarded by the respondents are in favor of a social clause. They said a social clause will:

who

1. Help implement labor standards; 2. Enhance the quality and productivity of labor in the Philippines; 3. Enable firms to better compete in the world market 4. Serve as guide/protection for both union and management; 5. Be beneficial for both employees and management, and 6. Enable companies to upgrade their standards as required in the global market These bits of information emphasize the conviction that the inclusion of a social clause in trade agreements like the WTO-GATT will be beneficial to both the employees and management of the firms. At the firm level, workers will be protected and receive the benefits due them, which will make them happy, productive, and inclined to improve their relationship with management. By the same token, at the firm level, this will redound to more profits and better ability to compete in the world market because better labor standards lead to higher productivity. This positive outlook on the social clause is also an indication of the corporate social responsibility for human rights. On the contrary, those who are not in favor of the social clause expressed their reservations based on the following reasons:

128

The Filipino Worker in a Global Economy 1. Small capitalists/companies will be affected or would sacrifice/cannot compete. 2. It will reduce the competitiveness of developing countries like ours since our competitiveness depends much on lower labor costs. 3. It would cause further unemployment. 4. We need to focus/stabilize our local industry/business first before going global. Therefore we are not yet ready to compete. 5. Government the laws. 6.

should first have the capability to implement

There is no need for it or that it is not acceptable.

The stand of those against a social clause is rooted in the reality that many firms in the Philippines are simply not yet ready for this. A case in point is the problem of child labor, particularly in labor-intensive industries like textile and wearing apparel. Many of the firms still consider low labor costs as a competitive advantage in the world market, which will have to be stopped if the social clause will be implemented. In particular, the textile and wearing apparel and furniture and wood products industries have indicated that they will not be able to compete in the international market because of the strong competition posed by countries with much lower labor costs like China, Indonesia and Vietnam. At the same time, it is the small firms which are more worried about this issue because they will be forced to comply to remain in business or to simply close because they cannot abide by the international labor standards. The social clause is also not acceptable because firms find it impossible to have international consensus on the treatment of unions, child labor and discrimination based on gender. From the nonunanimous trend of the responses of the firms surveyed on the social clause, protection of labor must be ensured. More fundamentally, the Philippines must find ways to both improve labor market flexibility and ensure that gains from structural changes are broadly shared. CONCLUSION The ascent of globalization over the last two decades is ordy a start. With the expansion of globalization and increased liberalization

Chapter 4: Observance of the the Core ILO Labor Standards

129

of the economy, it is expected that the Philippines will continue to experience industrial adjustments and restructuring. Therefore, there is a great need for a stronger and more concerned cooperative partnership between and among the employers, unions, and governments of all participating countries in the global market to preserve the benefits and to turn the impact of globalization towards supporting and protecting the people, particularly the workers. Much needs to be done in the Philippines to protect basic workers' rights, particularly the freedom of association, the right to collective bargaining, the prohibition of forced labor and exploitative child labor, and nondiscrimination in employment and occupation from the negative consequences of globalization. Moreover, the non-full compliance with the core labor standards cannot be solved effectively just by the adoption of a social clause which could be a basis for imposing trade sanctions. Rather, it must be complemented at the global and national levels with integrated and comprehensive programs aimed directly at poverty reduction, educational reforms, disclosure of information, and human resource development. RECOMMENDATIONS It is evident from an analysis of the data that there is lack of adherence to core ILO labor standards and, therefore, there is no full protection of basic labor rights. The ILO Conventions, which have been embodied in the different laws in the Philippines, are based on social justice, and it could very well be that the observance of at least the core international labor standards would foster and advance the well-being of the Filipino and give globalization a human face. The following policy recommendations, including those from the government, academe, employers and unions, are hereby enumerated to ensure the protection of basic labor rights and full adherence to the core labor standards. The same recommendations should help in realizing the goals to open markets, increase growth, create jobs and share the benefits of trade more fairly in a globalized economy. They address specific national needs and are presented based on priority areas of concern. 1.

Modernize the entire Philippine industrial relations system. a) Eliminate unnecessary rigidities in the exercise of workers' and employers' rights. "A system is said to be rigid when

130

The Filipino Worker in a Global Economy the power to make decisions over the allocation of resources â&#x20AC;˘ is vested in the State, through laws, predetermined rules or other institutionalized means rather than in the market. Consequently; the Labor Code institutionalized a regulatory rather than a facilitative role of the State when its comes to the exercise of workers' and employers' rights. One notes, for instance, that on rules governing fundamental rights like collective bargaining (ILO Convention No. 98), the Labor Code is actually more rigid than its predecessor, the Industrial Peace Act of 1953" (Soriano 1999). b) Change the role of the state from being regulatory to facilitative in orientation. "Flexibility in the industrial relations system should be possible, with appropriate safeguards against infringement of fundamental rights. The present systems should therefore be assessed on how it can best conform to emerging changes in the role of the State from a regulatory to a facilitative orientation in relation to the exercise of workers' and employers' rights" (Soriano 1999). c) Realign national laws with the ILO conventions and treaties. "The Philippines is under obligation to progressively align its national laws with the conventions and treaties it has ratified, more particularly ILO Convention Nos. 87 and 98, with guidance from the observations of experts with respect to the observance of â&#x20AC;˘these conventions. Last year, the ILO adopted the Fundamental Declaration of Principles and Rights at Work, applicable to all member states, emphasizing the central role of freedom of association, collective bargaining and nondiscrimination in improving the conditions of workers as well as employers. Within and outside the ILO, movements calling for greater corporate citizenship, social accountability and promotion of ethical standards have been graining ground. A new system should assimilate these developments to an extent compatible with the country's particular circumstances" (Soriano 1999). â&#x20AC;˘ d) Promote plant-level initiatives toward voluntary selfregulation. "Part of this system should be self-discipline and shared responsibility, through which the parties engaged in collective bargaining should absorb the costs of their

Chapter 4: Observance of the the Core ILO Labor Standards

131

actions rather than shift them to third parties (Word Development Report 1995). This is a time of fast business cycles and highly competitive product markets. The desired outcome of any industrial relations system is first, the parties should share responsibility in shaping their power relations which should lead to the speedy resolution of conflicts and, second, move toward efficient formulation of acceptable work rules by workers and employers at the plant-level through democratic methods such as cooperation, negotiations and collective bargaining" (Soriano 1999). Enhance participatory approach at the workplace. If workers are giving a stronger and meaningful voice in the decisionmaking process that shapes the life of the firm (Sardafia 1997), either as individuals or more so as an organized group, like the trade union, the workers' rights will be protected and violations of labor standards can be prevented or reported. In this case, various channels of consultation, such as the labor-management committees, family welfare councils, joint consultation bodies, or suggestion systems must be renewed or organized at the firm level.

Revise/update regulatory or legal conditions and support mechanisms of implementing labor standards, a) Improve the monitoring system on firms. The DOLE, through the Bureau of Working Conditions, can only strictly implement the laws if its monitoring system on firms' compliance with labor standards is improved or strengthened. This strategy may require further decentralization/devolution of the monitoring functions at the lowest level of the bureaucracy of the department; hiring of additional competent and honest labor inspectors who will more frequently and regularly look into the actual working conditions of the employees in the factories, plant sites and offices of the establishments; and coordinating closely with other government agencies with police power who can assist the DOLE to implement the labor standards

132

The Filipino Worker in a Global Economy laws.

b) Set up an industry-wide labor standards tripartite task force. Its main function should be to monitor compliance with labor standards by all firms within an industry and then to ensure that corresponding stiffer sanctions are given to violators. It could report directly to the DOLE Secretary. c) Make the violation of labor standards laws a strikeable issue. Unionized companies which are habitual and willful violators of labor standards will become more cautious if labor standards violation will become a strikeable issue. At the same time, unions will become more vigilant in monitoring their respective companies' dereliction of the duty to observe the labor standards. This will also lighten the work of the perennially limited number of DOLE inspectors and reduce the number of compulsory arbitration cases. d) Conduct intensive information dissemination about the labor standards. DOLE, with the assistance of the employer associations and labor unions, should launch an aggressive information campaign throughout the year to increase the awareness of both management and employees regarding the provisions of the core labor standards and the implications if such laws are violated. The various forms of media like radio, TV, newspaper, etc. should be utilized for this purpose. Setting up of information hotlines, in cooperation with workers organizations, can also be done for this purpose. 3.

Develop human resources a) Upgrade the skills of the workforce. In coordination with educational and vocational-technical institutions, through the assistance of CHED and TESDA, as well as the tripartite industry training boards, the efforts to retrain and continually enhance the industry and skills capability of our labor force to respond to the need for higher productivity and become more competitive in their respective sectors in both local and world markets should be intensified.

Chapter 4: Observance of the the Core ILO Labor Standards

133

b) Promote employment security rather than job security. "Under a globalized regime, flexible employment arrangements appear to be the norm worldwide. What is emerging is the concept of employment security, where the trust is to conduct continuous training, or if necessary, retraining of workers in skills that are needed by the market. This will ensure employment security, meaning continuous employment of workers is assured because their skills will be in demand in the market. Hence HRD institutions and programs 1999). 4.

must be geared toward employability"

(Soriano

â&#x20AC;˘Institute other support systems at the national and international levels a)

Formulate corporate codes of conduc( for companies. This should supplement and provide specifications to safeguard workers' rights. Non-compliance with these corporate codes of conduct should be given stringent sanctions. Codes of conduct should encourage all employers to actively police their ranks and provide unions specific bases to help monitor and call attention to deviations.

Monitor potential problem industries. There should be close monitoring of industries that are likely to be affected by globalization. Industry conferences and consultations should be held on how to minimize a potential adverse market impact of such developments. Winners should be encouraged to preserve their gains, and potential losers should be helped to avoid losses and minimize pains to their workers (Ofreneo 1995). Provide additional financing support to companies, particularly the small ones. The government should mandate or encourage banks and other financial institutions to offer special financing schemes to help businesses gain access to more capital needed for investment in advanced technology and to help them bridge working capital requirements. New funds, needed to ensure access to new technologies and new tools could perhaps be generated through public investments.

The Filipino Worker in a Global Economy d) Accelerate the efforts of the government to alleviate poverty. The various government agencies, with the active support of the private sector, particularly the employers, should strengthen and develop new programs that promote and facilitate employment generation, as well as the development of manpower to provide adequate remunerative employment among the adult population (Conferido and De Vries 1998). e) Forge stronger commitments to global ethics, justice, and respect for human rights. This commitment should be spelled out in terms that are binding for corporations, unions, and individuals, not just for governments. Therefore, a mechanism, through the initiative of the government, must be instituted to make this workable. If workers' rights are protected, this in turn will lead to an increase in the demand for labor particularly for more highly qualified workers, without sacrificing growth and international competitiveness.

Chapter 4: Observance of the the Core ILO Labor Standards

135

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The Filipino Worker in a Global Economy

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Philippine Labor Review. [on-line], XX(1 ). Manila. Available from the World Wide Web: (www.sequel.net/'ilsd01e/plri.html)

.1997.

Child Labor Situation in the Philippines. ILS Major Research [online]. Manila. Available from the World Wide Web: (www.sequel.net/rilsdole/res1997.html) • 1997. Measures Adopted by the Philippine Government to Eliminate Child Labor. ILS Major Research.[on line]. Manila. Available from the World Wide Web: (www.sequel.net/rilsdole/ res1997.html)

1997. Trade Liberalization and the Challenge Enforcing Against Child Labor. Manila: ILS. • 1999• What are international

Labor Standards?

of Effectively

International

Labor Standards and Human Rights. Available from the World Wide Web: (http://www.ilo.org/public/ english/50 norms/ whatare/index.htm, pp. 1_2) Laguesma, B. 1994. Philippine Government Policy on the Social Clause: The Local Perspective. In The General Agreement on Tariffs and Trade (GATT) and the Social Clause: Implications for Philippine Business and Labor. Quezon City: UP SOLAIR.

Chapter 4: Observance of the the Core ILO Labor Standards

137

Leary, V.A. 1996. Workers' Rights and International Trade: The Social Clause (GATT, ILO, NAFTA, U.S. laws). 2:177-230. Lee, E. 1997. Globalization and Labor Standards: A Review of Issues. International Labor Review 136(2). Lewin, K. 1935. A Dynamic Theory of Personality. New York: McGrawHill Book Company, Inc. â&#x20AC;˘ 1967. Resolving Social Conflicts. New York: Harper Publishers, Inc.

and Row

Malonzo, I. 1994. GATT and the Social Clause Implications to Philippine Labor and Industrial Relations. In The General Agreement on Tariffs and Trade (GATT) and the Social Clause: Implications for Philippine Business and Labor. Ouezon City: U.P. School of Labor and Industrial Relations (SOLAIR). Maskus, K. 1997. Should Core Labor Standards Be Imposed Through International Trade Policy? Washington, D.C. Available from the World Wide Web: (http://www.worldbank.org/htm/dec/ publications/workpapers/WPS18/wpslS17-abstract.htm) Muntarbhorn, V. 1999. A Question of Conditionality: Child Labour and the Social Clause. Available from the World Wide Web: (http:// www.cwa.tnet.co.th) Ofreneo,

R. E. 1994-95. Labor standards and Philippine economic development. Philippine Journal of Labor and Industrial Relations 16:1-2.

. 1995. Employment and Industrial Relations. Philippine Labor Review 19 (2): 108-131. Saunders, R. 1997.ILO Fights for"New Labour Standards. Available from the World Wide Web: (htpp://www.mg.co.za/mg/97junel/6junelabour.html)

138

The Filipino Worker in a Global Economy

Salvador, T. 1996.2 _dInput session on the social clause discussion with the academe. Quezon City: UP SOLAIR. Sentro ng Alternatibong Lingap Panlegal (SALIGAN) Democratic Labor Caucus (DLC). 1996. The first input session on the social clause. Quezon City: UP SOLAIR. Soriano, T. (1999). Comments on the Paper on "Observance of the Core ILO Labor Standards by Manufacturing Companies during the Technical Workshop on Labor, HRD and Globalization, October, Makati City, Philippines. Tan, A. 1994. Impact of the social clause on Philippine business. In The General Agreement on Tariffs and Trade (GATT) and the Social Clause: Implications for Philippine Business and Labor. Quezon City: UP SOLAIR.

ChapterFive

TripartismandtheRole oftheStatein aPeriod ofRestructuringunder Globalization Virgim'a A. Teodosio *

ABSTRACT his paper shows how the tripartite discourse and practice have evolved in the 1990s in the context of state governance and globalization. Against the background of intensified internationalization of production and distribution, unions face a profoundly different structure of labor and management relations. Tripartism has played a central part in mediating the structure and dynamics of Philippine industrial relations. Accordingly, a framework for understanding its changing form and character is examined. Lessons are drawn for a broad range of organizational capabilities requirements on the part of the state, labor and employers. Policies and mechanisms are proposed that would be useful in promoting and implementing a broad based sectoral representation that focuses on capabilities and their enhancement. INTRODUCTION Since the 1970s the continuity of tripartite processes has acquired a broader representation and participation. With a better appreciation of the role of the state in a period of restructuring under globalization, the institutional development of tripartism that has taken place may prove to be a more enduring achievement in terms of *Professor,U,P.SOLALR. TheauthorthanksCecileBasa,AdelaEllsonand MelisaSerrano forsurveyassistance;Dr.ReneOfreneoandProf.EdSisononmanagementside.Special thankstoAssistantSecretaryErnestoBitoniooftheDOLEfor hishelpfulcommentaries.

140

The Filipino Worker in a Global Economy

prospects for reforms. However partial the tripartite experience has been at various times, the nature of relationships between labor, employers and the state remains critical. The domain of tripartism essentially requires mobilization of organized interests around an agenda that can usher in a broad consensus-building impetus. The complex interplay Ofinterests with widespread restructuring is still being shaped by the demands coming from the firm, industry and national levels. Tripartism and Its Importance in a Period of Globalization In retrospect, the practice of tripartism has not really mobilized commitments for a shared future. Tripartism is conceived here as the interaction between the state, employers and labor as social partners in the development of industrial relations policies that seek solutions to issues of common concern. While collective agreements are continually forged, however, the tripartite agenda failed to deliver, among others, employment, job security and an effective enforcement of labor law. Any attempt to engage in an evaluative discussion of tripartism becomes caught up in the larger question of its inability to close the gap between policy statements and practice in a society where real divisions exist. If anything, contentious problems were intensified rather than resolved. But in the face of profound social and economic transformations brought about by globalization, tripartite arrangements could assume significance in an environment of rapid change in the area of industrial relations. These changes include the automation of labor processes and transactions, greater use of flexible production patterns, and multiskiUing. The effects of work restructuring and flexibility have resulted in new work rules broadly defined to include job classifications, subcontracting rules, production standards linked with productivity, which might as well serve as the contending issues between labor and employers in the years to come. More importantly, the formal mechanisms of tripartism have increasingly highlighted a much more multidimensional view of an open, contested terrain in which interest groups are made aware of opportunities, develop confidence and believe that they can have an impact on an issue. The capacity of the state to protect society's interests is constantly challenged, because in the process of structural adjustments, these same interests are transformed as needs and aspirations are met.

Chapter 5: Tripartism and the State under Globalization

141

With transnational capital serving as the primary agent to an integrated circuit of production, marketing, and finances, nation states are now linked to a global economy and society in an unprecedented scale. In short, globalization is part of a broad process of restructuring the state and civil society. The redemocratization of the Philippines has encouraged the establishment of a political arena where demands of various groups can be put forward as a collective response and strategies for social change mediated and negotiated. The wide range of conflicting interests will have to be managed by a functioning state that has a capacity for genuine dialogue and sufficient control over the economy to be able to allocate resources. Conceptually, tripartism's new institutional features should help develop operational mechanisms that could distribute gains and losses, process demands and implement policies. The nature and extent of mutual support organizations and self-help initiatives have brought society closer to itself, because poverty cannot be defined solely in terms of income. With the emergence of new kinds of community networks outside the traditional structure that have tried to correct and compensate for the pernicious effects of the market, the process of conflict resolution could prove constructive. Negotiation, rather than imposition, has become the norm. Thus the state should find a new lease on life in the social and economic accords of the new tripartism. This paper aims to provide a background and contextual analysis of the concepts and issues surrounding tripartism and the role of the state. It focuses on the responses, rationales and outcomes forwarded on behalf of labor and employers within a rapidly changing economic environment. The integration of markets around the globe has intensified in the past decade in terms of the ascendancy of economic and industrial restructuring aimed at raising efficiency levels and enhancing market competitiveness in the international arena. But such concerns do not arise in a vacuum, because the interests of capital and labor are important. In many developing countries, economic restructuring has provoked social tensions largely because of the displacement of labor. In the Philippines, this has exerted tremendous stress on the state's capacity to manage its industrial relations system, and along with this, its ability to support the worker's welfare.

142

The Filipino Worker in a Global Economy

GLOBALIZATION

AND THE STATE: CONCEPTUAL

To appreciate recognize

the broader

economic

forces

UNDERPINNINGS

the role of the state

in industrial

rules of institutional

formation

and their

respective

interests.

relations

is to

and influence

Firstly,

the emergent

globalized economy seems to indicate a bias toward capital at the expense of labor. Globalization has located capital owners in a strategic position

in all levels

owners,

within the context

significantly regions, labor

of industrial

empowered

relations

of a globalized to dictate

Secondly,

economy,

1996). Capital

seem to have been

the price of labor within geographic

or seek areas with abundant costs.

(Hechscher

labor

flexibility

supply and therefore

in the

production

lower

process

has

centralized decisionmaking with respect to issues of employment and wage levels inthe hands of capital owners to the exclusion of labor. Meanwhile, order

the power of labor within

may have been

workplace

seems

For one thing, significantly

The introduction

to undermine

the potency

diminished

the use of sophisticated developed decreasing

vitiated.

this emergent

labor's

of strikes

of technology

traditional

machines

countries, trade union as a result of the adoption

sources

as a bargaining

with the mechanization manufacturing

economic in the

of power.

tool has been

of the workplace

and

(Rifkin 1995). In many

membership, too, is gradually of advanced production machines

and of an increasing share of services (mainly self-employment) in the total labor force (Ozaki 1992). In the Philippines, the resort to flexible labor

arrangements

being swamped

by many

by competition

companies-lately

has promoted high work turnover 1995; Barranco-Fernando 1996). All in all, the general picture capital

mobility

capital

owners

industrial picture,

strategically

however--and

be occupied

that emerges

unionism

changes

to manipulate

(Verma

absent

important--is

by the state in the new map of industrial

is one of

the conduct

1 What is noticeably

one that is obviously

economy--

in the advent of greater

technological

positioned

and of workers.

domestic

and discouraged

and labor-displacing

relations

by local enterprises

in the liberalized

in this

the locus to

relations.

This is despite a 1977policy declaration of principles that multinational enterprises in the context of negotiations with worker representatives, on conditions of employment, or while workers m-e exercising the right to organize, should not threaten to utilize capacity to transfer whole or part of an operating unit from the country concerned,

Chapter 5: Tripartism and the State under Globalization

143

Liberalization has opened up the economy of many nation states and increased competition among market players. This competitive environment seems to have produced labor-saving and flexibilization strategies to raise efficiency levels, which translate to employment and income insecurity. Also, deregulationto some extent signals the retreat of the government in industrial relations, thereby disturbing the precarious balance of power in the tripartite consensus. By the mid1990s, significant legislation congenial to labor had been withdrawn across countries (Erickson and Kuruvilla 1998), and most govermnents--under the aegis of international organizations and financial intermediaries, most notably the International Monetary Fund and the World Bank-had assumed a less interventionist role in the labor market (World Bank 1995). This is especially true in most developing countries whose debt burden had placed them under the influence of such institutions and permitted the latter to significantly influence the directions of those countries' policies. Globalization interweaves problems of state power in both the domestic and international arenas. The transference of political costs as manifested through the state has sometimes shifted the burden to domestic sectors, though at times domestic interests have been given priority. The capacity of the state to develop successful strategies and policy alternatives is enhanced by its ability to displace the effects of economic problems from vulnerable groups while at the same time appeasing those that are able to mobilize claims most effectively. A political order is the outcome of a complex web of interdependencies between political, economic, and social institutions and activities, which divide power centers and wield multiple pressures on the state. Hence, the so-called crisis of the state is a product of its shouldering the political costs of globalization. Precisely how the balance between globalization and fragmentation will be adjusted depends on the new role that states are able to forge for themselves, and how successfully they manage to mediate between increasingly potent international pressures and domestic concerns. The nation state is central to the maintenance of a national economy, and in the face of tendencies toward its disarticulation, the state has had both to support private capital and intervene in its reconstruction (Scott 1997). The displacement into the state of economic dislocations produced by concentration and internationalization might be expected to make state policies

144 contradictory avoided.

and shifting.

Not all versions

The Filipino

Worker in a Global Economy

Yet an enhanced

role for the state cannot

of globalization

concentrate

exclusively

developments in the international economy. Some theorists emphasize evidence from political change and the development of a global society. Political

globalization

perceived

to a growing

as global in scope,

the development which

refers

attempt

to address

the development

and grassroots

organizations

process notion

of globalization prevents

requiring

us from

that it has been shaped

to be and to

and global institutions

More tentatively,

the concept

of a global society in which local groups from

all parts of the world interact.

as both a domestic succumbing

of the globalization

for issues

global solutions,

organizations

such issues.

also suggests notion

hence

of international

tendency

trend,

and international

to a technical

and depoHticized

and allows us to recognize

and carried

forward

This

political the reality

by the most powerful

states

for their own ends. it also brings to the fore the importance of the state and its ability to forge critical political bargains to mediate between domestic

and

external

the social sectors They are therefore

precarious

the state to minimize viable

strategy

developing basically

pressures.

and require

discontent

of conflict

countries corporatist

[Corporatism

bargains

determine

categories,

strategy

at the

intermediation

disposal

definition

is] a system

ordered recognized

that

of corporatism

of interest

intermediation

units are organized compulsory,

into a limited

non-competitive,

and functionally or licensed

is the classic one

differentiated

(if not created)

by the

monopoly

within their respective categories in exchange for observing controls

articulation

of many

framework

state and granted a deliberate representational certain

from

affected.

in nature.

of singular,

hierarchically

a sophisticated

imposes.

those to be adversely

minimization

the constituent

number

from

is an interest

Philippe Schmitter's Teodosio 1990):

which

These political

that will carry the heavy costs globalization

on their

of demands

selection

and supports.

of leaders

and

Chapter 5: Tripartism and the State under Globalization

145

In this context, corporatism is noteworthy for its system of interest groups and restrained political power that offers consensus as a means to adjust to changing economic requirements. In exchange for political stability, such interest groups are reassured of direct representation with the government on policy formulation. Essentially, two main interpretations inform the corporatist paradigm. One is corporatism (imposed from above) as characteristic of fascist authoritarian regimes; the other is societal corporatism (shaped from below), which takes on the liberal democratic tradition of, for example and specifically, Western Europe. The emphasis of corporatism is on the system of interest intermediation rather than that of interest representation, as in pluralism. Under corporatism, industrial relations is fashioned by state efforts at effecting a social compact with peak associations of labor and capital. In the form of formalized tripartite bodies, a selective assemblage of interest groups is granted access to government decisionmaking. The political exchange would be for the interest groups to guarantee observance of legislative measures by its members. Historically, the pattern has been most obvious in economic policy formation, particularly that relating to income shares. Generally, the main purpose of an incomes policy is to control wages and prices. Presumably, through direct intervention by the state in wage and price determination, labor can be persuaded to practice wage restraint, capital to stabilize prices, and the state to restore economic growth, full employment, and social policies. At the same time, while the state is considered an autonomous agent on a general level, Schmitter's explanation quickly becomes a matter of differentiating societal from state corporatism. The changing conditions of interest groups and their relationships with the state and vice versa indicate a shifting power base, hardly a manifestation of stability which Schmitter has implied. The overwhelming evidence is that union movement in general is too fragmented to exert any real power to influence policies. The coercive tendencies of monopoly representation would ultimately precipitate more conflict. In other words, there is no clear-cut exposition as to the nature of control over interest groups and the results of the privileged power position of such groups.

146

The Filipino Worker in a Global Economy Panitch (1980) says: Corporatism could be seen as a political structure within advanced capitalism which integrates organized socioeconomic producer groups through a system of representation and cooperative mutual interaction at the leadership level and mobilization, and social control at the mass level.

Being narrowly founded on groups that are class-based, wage labor and capital are to be defined in terms of their structural and historical relationships. Thus, fractions of capital and labor are class organizations and hence separate and fragmented. The first point to be made is that corporatism is essentially a stateqnduced class collaboration. There is a vast difference between what is the legitimate representation in the ideal sense and the actual state involvement. In effect, the socioeconomic interest groups serve as agencies of mobilization in implementing state policies. The push toward functional representation has been overstated; others, which include the implied conditions of social harmony and equal power between groups and a neutral state, have been obscured, Corporatist analysis not only involves peak associations but also class domination, exclusion and conflict. More recently, the practice of tripartism has been the focus of debates as the locus through which to recast industrial relations in a more strategic perspective in crisis management. Alongside globalization are inadequate mechanisms to address the entrenched and substantial concerns on the maintenance of market principles and the productivity of the enterprise, which is perceived as consistently biased against labor. Tripartite state interventions have been motivated by widely diverging and often conflicting aims and pursued by a variety of different means. As a key actor in industrial relations, the state intervenes not only in cases of market failure such as persistent unemployment and underemployment, but also in such fundamental work processes as wage determination, legislative enforcement of the employment contract, and skills development. Necessarily, the capacity of the state to manage conflicting interests broadly depends on its relationships with organized groups. Interests, however organized, become _

Chapter 5: Tripartism and the State under Globalization

147

incorporated within the policy process, as recognized, indispensable negotiators are made coresponsible for the implementation of policy decisions. These tendencies suggest the dimension of, on the one hand, â&#x20AC;˘integration and inclusion, and, on the other, fragmentation and exclusion. In the local arena, these processes occur at several levels affecting commitments to patterns of negotiations in the workplace and elsewhere. All the same, the state's obligation to manage globalization involves many nonstate actors that interact with each other (Keck and Sikkink 1998). in the global arena, the very cohesion of states themselves is at stake in these interactions and is increasingly visible in terms of transnational networks. Corporatist thesis brings the issues of production by central state agencies to be informed principally by values which emphasize the rights of private property and the importance of sustaining private sector profitability in interest intermediation (Williamson 1989). Conversely, consumption questions are often relegated to peripheral state institutions, where the rights of citizenship and the importance of meeting different social needs are stressed. This issue of citizenship directs attention to the range of levels at which the empirical concerns in the practice of tripartism are organized and mediated within'the broader issues of globalization. Apart from the conflicting ideologies of private property and social needs and the dualism through the exclusion of nonprivileged interests, there is the relation between the different levels of tripartite arrangements at the national or macrolevel, the mesoindustry, sectoral level, and the firm, microlevel. Mesocorporatism refers to the institutionalized entity of industries, regional authorities and the industry-wide trade associations and labor unions. Meso refers to those organizations which operate between the peak national associations and individual firms or members. Meso sectoral corporatism involves only a single, organized interest with privileged access to governments while macro-arrangements consist of a plurality of organizations. Finally, microcorporatism refers to individual corporate entities and establishments, local representatives of trade unions and chambers of commerce and their relations with the lower administrative bodies. interest representation is necessary if only to find a combination of effective leadership from the top and the emergence of new forces from below that are able to challenge long-standing patterns of privilege.

148

The Filipino Worker in a Global Economy

Yet, this very participation

appears

to obstruct

the attainment

of tripartite

arrangements that require stronger institutional foundations. However, while institution building is a very difficult and protracted process and canproceed

only to the extent that new and transformed

the changes

brought

about

'by globalization,

capital and the challenges workplace would continue

range

of flexibilization

of issues

in the

structure relations

area

unions

and

between

employers,

multidimensional

of industrial

modes the

nature

corporations.

essentially With the

decline

arrangements

in union

that

systems

globalization

environment

and

relations.

has

spawned

job benefits

workplace.

Increasingly, concertation between formulation 1996). Such agreements

and

the locus

_ndustrial relations the social, economic

and implementation concertation,

by the group

at the top, which

of decision

efficiency, themselves adjustments of workers'

could

making

has paved and political

of macro-economic

however,

tended aggravate

are

collaborative

between

rights and the role of trade unions and other representative industrial relations-based legislative reforms in promoting and productivity

and

and security

and influence,

relationship

and equity can only be addressed

larger

the

and competitiveness.

(Ratnam and Kuruvilla 1996). Among others, the major that have to be made have to do with the legitimization

flexibility

broader

of industrial

efficiency

membership of a stable

are

the role of the state,

socioeconomic

with economic

in search

democracy

relations

any assessment of the future taking into consideration the

On the other hand,

incompatible

has given rise to a

of production,

of emerging

Over the last decade, flexible

have had an important (Lansbury 1996). The

in the labor market

compared to those in the past. As such, means accommodating various interests, interrelationships

the transformation

to democracy and governance in the to bring new insights. Undeniably, such

changes in the economic and social effect on the nature of industrial development

forces emerge,

bodies, labor at the

the way for actors in the

policies

(Zapata

to be identified the divide between

with the

2The International Labor Organization's 1998Declaration of Human Rights reconfirmed the need to promote strong social policies, justice and democratic institutions. A new emphasis in the use of ILO resources (constitutional, operation, budgetary and external) was made in terms of the principles and rights that were reaffirmed in the Declaration. A global report each year will try to identify progress, problems and needs to realize the principles of the Declaration and will form part ofthe Director General's presentation to the annual tripartite International Labor Conference.

Chapter 5: Tripartism and the State under Globalization

149

governing elite and society as they relate mainly with the traditional, formal, and organized work sector, thus increasing the isolation of the informal, socially excluded sector. Hence, a new challenge in industrial relations is micro-corporatism. This means cooperating with employers on a range of flexibility issues at the workplace. Centralization facilitates the pooling of resources and promotes solidarity, while decentralization allows greater flexibility in bargaining. These various levels of corporatist arrangements determine the extent of institutionalized and effective participation of employers and labor unions in policy formulation and implementation across all sectors and those policy areas that are vital to the management of the economy. STRUCTURAL CHANGE, TRADE UNIONISM AND COLLECTIVE BARGAINING The roots and the present structure of tripartism date back 1970s. The Labor Code of 1974 institutionalized tripartism as an industrial relations policy during the Marcos regime. Under martial law, the concertation between the state, employers and labor at the national and local levels had its limits. It was a quintessential partnership whose select membership was constituted by the state itself. Over the last two decades, the state has intensified its campaign to restructure the economy in conjunction with the adoption of an export-oriented industrialization strategy. Throughout this period, trade and investment liberalization, financial sector reforms, and deregulation and privatization programs were resolntely pursued to attain macroeconomic stability and enhance the country's economic competitiveness. These sweeping changes in economic policy herald the continued commitment of the government to its structural adjustment program with the end in view of enhancing its trade position and economic competitiveness within an integrating world. But, like anywhere else, the unfolding economic transition exacted costs. These costs come in the form of high unemployment and underemployment, greater inequality and wealth redistribution problems and a more fragile and unstable industrial relations. The lowering of trade barriers under trade liberalization and the subsequent tightly competitive environment created various costcutting and rationalization measures across industries. Right-sizing programs have resulted in worker retrenchment, voluntary or forced

150

The Filipino Worker in a Global Economy

early retirement

programs,

subcontracting

and casual,

Privatization for leaner operations.

or new employment temporary,

has als0 contributed organizational

arrangements

or contractual

to job loss, as privatized

size following

the

such as

employment. firms opted

streamlining

of their

Shifts in the Labor Market Between percentage

accounted 39.2 percent

1998, the services

in employment

for 16.4 percent

generation

unemployment underemployment,

rate during 20 percent

the period (Table 2).

by Industry:

Industry AllIndustries

posted

the highest

(Table 1). In 1998 industry agriculture

While employment

sector and that of industry

1. Employment

sector

of total employment,

and service, 44.4 percent.

in the agricuhural

Table

1993 and

has contracted

has flattened, stood

1993-1998

registered the average

at 9 percent

and

(In percent)

1993

1998

24,382

27,911

Agriculture, Fishery, and Forestry

45.7

39.2

Industry

15.6

16.4

Services

38.7

44.4

Source: Bureau of Labor and Employment Statistics, DOLE, 1998

TaMe 2.

Year

Unemployment (In percent)

and

Underemployment:

Unemployment Rate

1990-1997

Underemployment

1990

8.3

22.4

1991

10.5

22.5

i992

9.8

20.0

1993 1994

9.3 9.5

21.7 21.4

1995

9.5

20.0

1996

8.5

21.0

1997

8.7

22.1

Source: Bureau of Labor and Employment Statistics, DOLE, 1998

Rate

Chapter 5: Tripartism and the State under Globalization

151

Unemployment and underemployment, already persistent problems in the Philippine labor market, have been aggravated by new employment arrangements that adopt flexibility at an organizational level to increase competitiveness through technology and improved market share. Forms of flexibility include different working practices such as shiftworks, seasonal work, temporary contracts of employment, part-time work, flexible hours and subcontracting. On a broad scale, the practice of flexibility has been at the expense of labor (Macaraya 1999). The most common of flexibility practices are subcontracting, agency hiring and the use of homeworkers, in the garments sector, subcontracted work include textile printing, embroidery, cutting, laundry and ironing while in the electronics sector, the manufacture of spare parts previously made, maintenance services and spare parts machining are but some of the production stages commonly subcontracted (Aganon 1996). Subcontracting is also becoming prevalent in the agricultural sector where contract raising of livestock and contract farming of vegetables are now quite popular. There is also the important role of homeworkers in the manufacturing and service sectors. The extent of flexibilization of labor in the country may be measured using certain indicators (Serrano 1999). Among these are (a) the ratio of full-time to part-time workers and the average hours worked, (b) the number of company closures and retrenchments and (c) the number of contractors and subcontractors. As shown in Table 3, part-time employment increased by some 540,000 between 1997 and 1998. Full-time employment decreased by 460,000 during the same period. In 1997 nonregular employment stood at 808,000, representing 28.2 percent of the total 2.8 million employed in establishments with ten or more workers (Table 4). By category, nearly half, 43.5 percent of women in nonregular employment were engaged in contractual work. In general, the share of female nonregular workers when compared to men is relatively higher. Apart from reduced work time and nonregular jobs, labor flexibility can also be discerned in the number of establishments resorting to closures, lay-offs and job rotation. Table 5 indicates that between 1997 and 1999, 4,955 companies resorted to closure and retrenchment, resulting in the displacement of 209,072 workers. The nature of displacement is characterized by total closure, 21 percent and retrenchment, 79 percent.

152 Table

The Filipino Worker in a Global Economy 3.

increase of Workers 1998 (In thousands) Hours

by Hours

of Work:

1993-

1993

1994

1995

1996

1997

Part - time (less t.han 40 hours)

8,226

8,368

8,728

9,855

9,17I

9,711

Full-

15,824

16,373

16,647

1.7,022

18,169

17,709

Source:

of Work

Employed

time (40 hours Bureau

and more)

of Labor

and Employment

Table 4. Number

and

Nonregular

Percent

Philippines:

DOLE

Distribution

Employment

Ten or More

Worker Category Wmokers in Non-Regular

Statistics,

of Workers

in Establishments

Workers

by Specific

1997 (In thousands

Percent ] Number Both Sexes

1998

Employing

categories

trends

Professional

used workers;

from

the

workers

are

in the labor and

for

survey--

administrative,

Chapter 6: Evaluation As shown

of the Readiness

in Table

1, the employment

workers

in the nonagricultural

although

slowly, over time. From

start of the liberalization 11.87 percent 1980s, the

by 1988. Despite

employment percent

An analysis agricultural

of Table 2 will show

of the share

by the end of the to non-agricultural

remaining

at around

that production

occupation

accounting

and professional

in the non-

employment.

The small proportion

of professional

employment

shows signs of the inadequacies

labor

participants

force

that

are

They are

to 25 percent

Closely at third are service

accounting

of total nonagricultural

for almost

employment.

for almost 20 percent

employment.

workers

and related

of workers

in total non-agricultural

by sales workers

fell to

of the 1990s.

to be the dominant

share of total non-agricultural workers

in 1982 at the

it steadily

increase

dramatically,

declining,

sector, both in the 1980s and 1990s. They account

40 percent followed

a high of 14.74 percent

the beginning

189

of professional

steadily

for the Philippines, of professionals

has not changed

continue

has been

the sudden

to 13 percentat

works

sector

period

employment

of Filipino Professionals

for 12 percent workers

to 16 percent

in nonagricultural

of the economy

highly

skilled

and

to absorb

have

higher

educational qualifications. This gap between the supply of graduates from educational institutions, on one hand, and the demand of the labor market, search

on the other

hand,

for employment

Filipino

professional

workers

are sometimes

forces

overseas. workers

many

However,

of our educated

are employed,

questioned.

of these

of education

or unrealistically,

where

the qualifications

The quality

in the Philippines may not, realistically those of foreign countries.

workers

in many occupations

received

be at par with

General Agreement on Trade in Services (GATS) The importance more heightened The expansion establishment governing

of improving

because

our human

of the country's

of global

trade

is one

resources

international of the main

objectives

of the WTO in 1996. To this end, two major

international

trade were constituted.

is all the

commitments. of the

agreements

The General

Tariffs and Trade (GATT) guides the global trade of goods, General Agreement on Trade in Services (GATS) establishes for the international flow of services.

Agreement while the the rules

190

The Filipino Worker in a Global Economy

Table

1. Employment

Nonagricultural

Professional

Employment

Year

Employment

1977-1980

of raw data:

Table

14.74

1983

13,97

1984

13.47

1985

13,05

1986

12,88

1987

12,40

1988

11,87

1989

13,88

1990

12,97

1.991

1,2.76

1.992

12,37

/993

12,79

1994

12.46

1995

12.52

1996

12,75

1997

13.08

1998

13,00

Labor

Force

Employment

Survey

Nonagricultural

various

years;

average

of Professional Classified

for the year

Workers

by Occupation

(In percent) Ave.

1985

1990

1995

1996

1997

1998

14.09

13.05

12,97

12.52

12.75

13.08

13.00

8.73

8.14

7.80

7.55

7,49

21.28

25.14

24.61

24.54

24,67

23.82

23,87

15,81

16.38

16.22

15.95

15.70

16.59

16.92

Prol:essionalworkers Clerical workers Sales workers

(LFS)

Employment

Years

1978-1980

Service

14,53

1982

Selected

1977-1998

14,09

1981

Source

Workers

(In percent)

workers

%67

7,17

Agricultural, Husbandry workers, Production workers, equipment Source

Animal and Forestry

0.71

0.32

0.77

0.59

38.81

36.85

37.19

38.54

0.52

0,45

38.29

38.33

etc. and related Transport

38.61

and laborers

of raw data:

Labor

Force

Survey

(LFS) various

years; average

for the year

Chapter 6: Evaluation of the Readiness of Filipino Professionals

191

The GATShas laid down the general legal framework that would govern the promotion of global trade in services. It consists of a set of rules limiting the intervention of governments and other institutions in the global trade in services by removing hindrances to market entry and providing equal treatment of foreign service providers. A key mode of supply of services is the movement of workers and professionals from one territory to another to supply various forms of services. In turn, this avenue for enhancing global trade in services may be facilitated or obstructed by the degree and levels of obstacles among countries in accepting the competence of these foreigners to perform the service. An important component of the agreement is the section on specific commitments of member countries on market access and national treatment. Market access refers to the lifting of various forms of limitations on the number of service providers, value of service transactions, number of persons employed by service providers, value of foreign capital and the restriction or requirement on a specific type of legal entity in establishing a supply provider. Member countries with market access commitments are prohibited by Article XVI Section 2 to maintain the above-mentioned limitations and restrictions. National treatment, on the other hand, refers to nondiscrimination in the treatment of nonlocal service and service providers (Tullao 1999a). Acceding countries to the GATS are committed to observing several obligations, including nondiscrimination and transparency. Nondiscrimination or most-favored-nation treatment, requires that "countries shall not discriminate in the extension of concessions to all signatories of the agreement," while transparency calls for the publication and dissemination of all relevant laws and regulations regarding the conduct of trade in services in member countries. â&#x20AC;˘ Upon accession, member countries are required to make commitments along the four modes of supply, and identify their limitations on market access, limitations on national treatment, and additional commitments. The four modes of supply, namely, cross border, consumption abroad, commercial presence and presence of natural persons, describe the alternative manner trade in services can take its form as defined in Article I of the agreement. Cross border refers to the supply of service from one territory into another territory. Consumption abroad is the purchase by foreigners of services in the

194

The Filipino Worker in a Global Economy

to the instruction of WTO for the Philippines to review its labor market test rule in accepting foreign workers in the country. One major result of the implementation of the GATS is the tremendous expansion of global trade. The Philippines is bound to benefit from this expansion because the country has sufficient supply of productive and skilled workers in the services sector. To maintain this competitive edge, the country needs to upgrade human resources through various forms of investment in human capital. The succeeding sections of this study contain an evaluation of the process of human capital formation in the country from formal education to continuing professional education. THEORETICAL UNDERPINNINGS: EDUCATION,DEVELOPMENTAND LIBERALIZATION The initial empirical research on the relationship between human resource development and economic development was centered on the contributions of education to economic growth. The seminal works of Schultz (1961) and Denison (1962, 1967) tried to account for the unexplained "residual" growth left when all other changes have been accounted for (i.e., hours worked per year and physical capital). The contribution of increased education of the labor force to economic growth was found to be the unexplained residual growth factor. Developed country estimates have placed the contribution of education to output, from a low of 2 percent to a high of 25 percent. Similar estimates by the World Bank for developing countries also suggest a wide variation of educational contribution ranging from 1 to 16percent. Based on Schultz's study, estimates of education contribution are within the 12 percent to 23 percent range (Psacharopoulos and Woodhall 1985). These studies suggest that, for all their limitations, countries have indeed achieved high economic growth with large investments in education. In addition, Easterlin (1981) examined data for 25 of the world's largest countries and concluded that the spread of technology depended on the learning potentials and motivation that were linked to the development of formal schooling, in other words, the most likely causal link is from education to economic growth, not the other way around (Psacharopoulos, 1988).

Chapter 6: Evaluation of the Readiness of Filipino Professionals

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Manpower Forecasting Attributed largely to the pioneering work of Frederick Harbison and Charles Myers (1964), the idea of forecasting manpower requirements came from their striking observations regarding the correlation between a country's level of economic development and its level of educational attainment and drawing inferences from this relation. Thus, by forecasting manpower "requirements" educational planners can plan the expansion of the educational system to meet the future needs of the economy for different types of middle and highlevel manpower (Snodgrass 1996). In short, the forecasting model is based on a set of fixed relations between the anticipated growth in output and the educational or skill requirements to produce such output. Forecasts of the derived demands for educated labor have not always proven reliable, particularly at the level of specific occupations and technical specializations, which educational administrators find most useful. Even projecting the overall distribution of enrolment demands among primary, secondary, vocational and higher education has proven difficult (Psacharopoulos and Woodhall 1985). This is not surprising: technological changes and their implications for the demand for skills have been too elusive to predict (Psacharopoulos 1988). Although models of manpower requirements have lost favor among economists, manpower forecasting retains considerable followers among policy makers and other practitioners. Manpower forecasts are still used in many parts of the world for setting long-term quantitative targets for the educational system. Models of manpower requirements are useful in providing an objective description of the economic scarcity of specific skills that the educational system contributes to produce. It also provides information where priorities can be set with the goal of maximizing returns from resources and distributing these returns to individuals equitably (Schultz 1988). Human Capital Theory The second perspective on the link between education and economic development emerged as a reaction to the limitations of manpower forecasting. A strong competing paradigm appeared in the form of human capital theory, as developed by Gary Becker (1975) and Theodore Schuhz (1961). Human capital theory centers on the

196

The Filipino Worker in a Global Economy

expenditures on education, health, nutrition and health that are considered as investments in human capital, analogous to investments in physical capital. In particular, studies have shown that earnings of individuals increase with additional years of schooling. Moreover, according to the human capital theory, education makes the individual more productive not only in the market place but also in the household. According to Schultz (1975), education has a beneficial allocative effect or helps the individual to deal with disequilibrium situations. Extensive empirical work on this view suggests the existence of high rates of return to investments in most levels and forms of education. The research on rates of return appeared to indicate that the highest returns were generally earned on expenditures on primary education. This finding is contrary to the claim of the manpower forecasting approach that there are significant and high returns of investments in secondary and higher education. The same finding emphasized the value of acquiring even modest amounts of education and that there are economies in scale (i.e., cost per pupil tends to decrease) in primary education rather than in secondary or higher education. Several studies have calculated rates of return both on private investments in education and on the social rates of return. Private rates of return to educational expenditure were found to be exceptionally high, largely due to the huge premium attached to education's impact on earnings, in addition, private expenditures to reap this premium are very low, given the high levels of public subsidization on education. However, widely accepted conclusions on the rates of return to investment in human capital have been challenged. Paul Bennell (1996) has shown that the rate of return estimates published by the World Bank are derived from highly suspect data. In addition, David Lindauer (1995) has questioned how social rates of return in Africa can truly be high when substantial investment in education over a long period has not led to significant economic growth (Snodgrass 1996). One indication of the low social returns of public education is the apparent excess supply of and overexpansion of higher education, problems that can be traced to the methods of financing higher education. Tuition fees are often minimal and the resulting public subsidies per student enrolled in higher education have become sufficiently large that there is little room for the private sector to provide its own complementary higher educational services, in addition, some

Chapter 6: Evaluation of the Readiness of Filipino Professionals

197

countries may be training more skilled workers than their labor market is likely to absorb. The obvious economic solution is to reduce the public subsidy and allow student fees to cover a larger share of the costs of higher education. Scholarships and educational loans awarded on the basis of family means can still achieve redistributive objectives. The study of Tullao (1982) traced the impact of international migration on the demand for nursing education in the Philippines. Because of perceived high income differentials between the Philippines and the United States, the possibility of migration exhibits a substantially high expected internal rate of return and has enhanced the demand for nursing education in the 1970s and 1980s. Hence, education per se does not indicate a high level of social benefits, but investments in labor mobility. The Effects of Trade Liberalization on Labor Employment Studies have documented well the benefits of improved resource allocation and long-run efficiency brought about by trade policy reforms. However, the political economy of trade reforms has proven that policy makers are very much reluctant in implementing changes due to fear of excessive adjustment costs. Politicians, in particular, fear the reprisal of owners of displaced resources, especially if benefits could only be realized when they are no longer in power. As defined by Matusz and Tart (1999), adjustment costs are potentially disadvantageous short-term outcomes that might result from trade liberalization. These outcomes may include displacement in employment, reduction in industrial output, and even loss of firm-specific human capital. The Evidence from Developed Countries Several studies have investigated the output and employment impact of shifts in the volume and composition of trade in developed countries. In general, empirical studies have suggested that, for the economy as a whole, the net effect of increasing exports and imports on employment has not been important in industrial countries (Baldwin 1994). A detailed study by the OECD (1992), using input-output analysis to decompose changes in output and employment by industry in nine OECD countries, has found that trade in the 1970s and 1980s had a positive effect on employment Kingdom.

for all countries, except for the United

198

The Filipino Worker in a Global Economy

Wood (1991, 1994) suggests a more relevant approach than static analysis using input-output methods--to compute the amounts of factors required in the North (developed countries) to produce noncompeting imports from the South (developing countries) using the factor input coefficients of the South. Through this method, trade liberalization is observed to have a major impact on labor markets in developed economies. Wood estimates that increased trade between developed and developing countries has reduced the demand for labor in the manufacturing sector of the developed countries by an amount equivalent to 12 percent of employment in the sector. However, as Brenton and Sinclair (1997) have noted, there are a number of reasons why Wood's conclusions are questionable. First is the assumption that all manufactured products imported from the South have no substitutes in the North. Another issue relates to technology. If products from the South do not compete with those in the North, why should producers in the North adopt new labor-saving technologies? Thus, the argument that trade is responsible for the loss of jobs of unskilled workers in the manufacturing sector of developed countries is far from convincing. Economists view the loss of unskilled jobs in manufacturing as primarily the result of technological change. The Evidence from Developing Countries Unskilled labor is relatively abundant in developing countries. From a general equilibrium framework based on Ricardo and Heckscher-Ohlin models, trade reforms in the goods market can lead to an increase in the overall demand for unskilled labor in the long run. However, trade liberalization could lead to short-run adjustment costs. The shift and reallocation toward higher production of goods using unskilled labor will lead to a reduction in the relative returns to the owners of capital, as well as a reduction in returns to the owners of another type of skilled labor in developing countries. Similar to studies for developed countries, evidence on trade and employment linkages is also weak for developing countries (Harrison and Hanson 1999; Harrison and Revenga 1995). Anne Krueger (1983) and her coUeagues hypothesized (without empirically testing) that moving toward a more liberal trade regime can lead to greater labor intensity in production (Harrison and Hanson 1999). However, the study was weak in that it did not directly estimate the short-run adjustment costs from a policy shift toward a more liberal trade regime.

Chapter 6: Evaluation of the Readiness of Filipino Professionals

199

A World Bank study has concluded that trade liberalization did not generally result in decreased employment even in the short term. In addition, studies using partial equilibrium approaches have shown that trade reforms had a significant impact on the level of employment across manufacturing subsectors, but with almost no impact on real wages. Using plant-level employment data in Chile, a study showed that trade reforms in Chile had a significant yet modest impact on manufacturing employment. On the other hand, several studies found a moderate reduction in firm-level employment in Mexico following reductions in tariff levels and quota coverage. While changes in tariffs had no effect on employment, reductions in quotas had a relatively small impact. A similar study by Currie and Harrison (1997) for Morocco found trade reforms had an even smaller impact. Employment in most manufacturing firms was unaffected by tariff reductions and reductions in quota coverage. Complementarity Betweenthe Economics of Trade Liberalization and Education Theory Lucas (1988) included human capital accumulation in models analyzing the pattern of production in closed and autarkic economy. Individuals acquire human capital by investing time in education when they are young, while the level of human capital they achieve depends on the time they spent on education. Across time, increased human capital among individuals brings about a corresponding increase in society's stock of knowledge. Thus, the representative individuals of each generation have higher levels of human capital than previous generations. On the production side, there is an imperfect substitution between workers of different levels of human capital (Falvey 1996). Stokey (1991) extended the theory from an autarky to a small open economy. According to his model, in international trade, a country's comparative advantage is then determined by its stock of labor. Since trade alters relative prices and wages in the small economy as what standard trade theory predicts, it also alters the returns on investments in human capital. This may strengthen or weaken the incentives for human capital accumulation. If the small country is sufficiently backward relative to the rest of the world, as seems the most likely scenario for a developing country, then free trade lowers

200

The Filipino Worker in a Global Economy

the relative prices of goods produced by highly skilled labor, thereby reducing the returns to investment in that skill. Hence the small country falls even further behind in terms of skill levels. However, the small developing country can still benefit from the higher human capital level of the rest of the world. Since the higher human capital in other countries can be treated as a foreign externality, it will be important to consider transferring the said foreign externality to the domestic market. According to Falvey (1996), since an externality that is associated with formal schooling is being considered, it would seem inadvisable to restrict the entry of inputs to that activity. Access to foreign educational materials and foreign educators, or even opening up trade in higher and professional education and services broadly interpreted, should not be restricted. However, in the framework of Pissarides (1997), skilled labor does not lose out from trade liberalization due to a deterioration of the returns to their human capital skills, as Stokey (1991) and Falvey (1996) theorized, instead, according to Pissarides skilled labor gains fromtrade liberalization using similar linkages--trade liberalization enhances and increases returns to human capital. According to this framework, developing economies may gain by learning from the technology of industrial economies. Learningis faster when trade links the developed and developing economies. Thus, trade liberalization in a developing country leads to more technology transfers from the developed to developing economies. The key assumption in this framework is that the transfer of technology requires skilled labor. When a developing country liberalizes trade, it experiences more technology transfers than before. As Pissarides described it, "trade liberalization moves the economy of the developing country on to a permanently higher level of technology." Learning about the new technology and putting it to use in developing economies may increase the demand for skilled labor, which raises the returns to human capital and, at the same time, the wages of skilled labor also rise. Increased demand for skilled labor due to trade liberalization may also cause a temporary widening in wage differentials. The overall increase in labor demand associated with trade liberalization will have a larger short-run impact on the wages of skilled labor than on the wages of unskilled labor. The supply as well as employment of skilled labor also increases to meet the higher demand.

Chapter 6: Evaluation of the Readiness of Filipino Professionals

201

Empirical Evidence The complementarity between the economics of trade and education is a new research area that relates the economics of trade reform with human resource development. Following are initial research findings in this rapidly growing arena between trade and education. Two recent literature support the idea that more trade brings about more technology transfers. Coe, Helpman, and Hoffmaister (1995) found that research and development (R&D) spfllovers from industrial countries to developing countries are substantial. While the study of Tan and Batra (1995) did not explicitly look at the implications of trade liberalization, they calculated the wage premium paid by firms engaged in R&D and worker training in Colombia, Mexico, and Taiwan. Using firm4evel data, they found that firms involved in technology-advancing activities paid all their workers a premium over and above the wages paid by other firms. Yet that the premium paid to skilled workers far exceeded what was paid to unskilled workers. Most importantly, Tan and Batra (1995) claimed that trade liberalization increased the R&D activities of firms and the demand for skilled labor. Studies in Chile and Colombia in 1957 to 1992 concluded that skilled labor did not suffer a relative drop in earnings after trade liberalization. In 1994, plant-level data for 1984-1990 in Mexico found that wage inequality increased after trade liberalization. These studies concluded that the most likely cause of the rise in wage inequality was the importation of skill-biased technology from abroad. The documented earnings dispersion during the late 1980s in Mexico also found a rise in earnhlgs dispersion in Mexico, which can be traced to a higher demand for educated workers, which in turn resulted from the complementarity between skilled labor and investment in capital. Examining household data for Argentina, Costa Rica, the Philippines and Taiwan (China), Robbins (1995a) found similar results. Trade liberalization increased the relative demand for skilled labor in virtually all cases. The Emergence of International Trade in Professional And Educational Services Over the past several years, increasing attention has been paid to the emergence of international trade in professional and educational services. Attention specifically revolved around some general issues

202

The Filipino Worker in a Global Economy

including

regulatory

services firms (OECD 1997).

and

Mallea trade (1)

measures

affecting

the cross-border

(1997) identified

in professional

supply

four

and educational

Professional

of professional

specific

issues

According

preparation

of professional services

on international

services:

preparation.

professional

establishment

concerns

to Mallea

matters

(1997),

of accreditation,

certification and licensure. Accreditation is a form of quality assurance for programs and institutions; or certification formally attests that an individual has met a certain standard of achievement; and licensure is the process professionals are granted permission to practice. processes

vary,

country there

(2)

sometimes

and from

considerably,

profession

is a growing

support

for greater

and procedures 1997).

Professional

This second

competency.

from

to profession

international standards 1997); Lenn and Campos

whereby All three country

(Mallea

1997). Yet

convergence

toward

in all three

(Mallea

issue is also being greatly

addressed internationally, particularly on the setting up of competency-based approach or standards used as basis in the design

of undergraduate

and postgraduate

discipline, the development standards and the articulation every discipline. (3)

Continuing

professional

also addressing should meantime, expand

economy

of professions

continuing (Mallea

training

education

1997).

such as law, accountancy,

In the

architecture

programs

and skills of experienced

are

designed

professionals.

has identified in a previous study the impact of of trade in professionals services on the domestic based

organizations. continuing

on the perceptions His

study

professional

liberalization.

Pobre

recommendation impact

A variety

of whether

are introducing

the knowledge

The author liberalization

education. or mandatory

professions

and engineering

for any

of industry-based competency of standards for professionals in

the question

be voluntary

courses

of the entry

education (Accountants

in a paper

of various

highlighted

that

the

as a positive Journal

response

1997) echoed

enumerated

of huge multinational

professional

importance

the

accounting

to this

negative firms on

Chapter 6: Evaluation

(4)

of the Readiness of Filipino Professionals

203

the domestic players. He concluded that since the country has to proceed with the process of liberalization, it is imperative that Filipino professionals should upgrade themselves through continuing professional education. Quality assurance. Concerns over quality assurance form an integral part of international trade in professional services. Quality assurance is increasingly being defined in terms of reciprocity and international norms and standards by professional bodies, accreditation agencies, higher education institutions, and multilateral and non-government organizations.

The four issues identified above are replete with implications for higher education and how professionally oriented undergraduate and graduate programs in colleges and universities are conducted. Some Initial Implications for Higher Education According to Mallea (1997), the impact of international trade on education and training services for higher education institutions is being felt primarily in the areas of student recruitment, policy development, evaluation and skills development. The issue of what skills and competencies higher education graduates will need to function successfully in international contexts is also assuming a higher profile. Economists are stressing the need for highly trained managers and management teams drawn from diverse cultures, The private sector is calling for increased personal and professional adaptability among graduates. A study by Nadurata (1998) has shown that general knowledge is the most significant predictor of performance in auditing firms. She recommended the development of world-class outlook by updating of the curriculum and using an interdisciplinary approach to teaching. The same study has shown that accounting and accounting-related knowledge were good predictors of CPA board exam results. According to the International Federation of Accountants (IFAC) education committee, "A program of accounting education and experience must go beyond the traditional approach to accounting education, which has emphasized transfer of knowledge," with learning defined and measured strictly in terms of knowledge of principles, standards, concepts, facts and procedures. Emphasis must be placed

204

The Filipino Worker in a Global Economy

on a set of knowledge, skills and professional values broad enough to facilitate change. Professional accountants should be characterized by a constant striving to learn and apply what is new. Although general education requirements vary greatly from program to program and from country to country, certain aspects of the education must focus on the development of general knowledge, and intellectual, interpersonal and communication skills through a broad range of subjects that provide students with a grounding in arts, science and the humanities. A broadbased general education is critical to life long learning and provides the foundation on which to build professional and accounting studies. In response, higher education institutions are creating new courses and programs, modifying their curricula, fostering alternative methods of delivery, all with the intention of improving international skills and competencies among their students. HIGHER EDUCATION IN THE PHILIPPINES Structure of Higher Education Prior to 1994, all levels of education were under the supervision and regulation of the Department of Education Culture and Sports (DECS). In 1994 DECS was reorganized into three separate units. This change in the biggest government bureaucracy was an answer to the recommendation of the Congressional Commission on Education (EDCOM), and meant to make the delivery of educational services more efficient. The specific functions of the autonomous units were meant to address relevant issues pertinent to their respective spheres of responsibility. Basic education became the sole responsibility of the original DECS. Higher education was assigned to the Commission on Higher Education (CHED), which was created under Republic Act (R.A.) 7722 or the "Higher Education Act of 1994." The role of CI-IED was further articulated under R.A. 8292 or the "Higher Education Modernization Act of 1997," which defined the relationship of CI-IED with state universities and colleges (SUes), which are created by legislation. The third educational agency which emerged from the reform is the Technical Education and Skills Development Authority (TESDA), which was created by R.A.7796, otherwise known as the "Technical Education and Skills Development Act of 1994." This law sought to provide "relevant, accessible, high-quality and efficient technical

Chapter 6: Evaluation of the Readiness of Filipino Professionals

205

education and skills development in support of high-quality Filipino middle-level manpower responsive to and in accordance with Philippine development goals and priorities." The formal educational system in the Philippines is composed of a three-tier structure. Preuniversity schooling is only ten years, or two years lower than those of other countries in the region. The number of higher education institutions (HEIs) in the Philippines has been increasing in recent years. In 1991, for example, there were only 809 HEIs. In 1998 some 1,379 were registered with CHED. These institutions are classified into public and private schools. in 1998 private schools account for 81 percent of the total number of higher education institutions in the country. Schools in the public sector are established by law and administered, supervised and financially supported by the government. Public higher educational institutions include SUCs, CHED-supervised institutions, local universities and colleges and other government schools. The SUCs have their own charters and are independent of CHED. CHED-supervised colleges, on the other hand, are nonchartered colleges directly under the supervision and budgetary control of CHED. Local universities and colleges are operated, supported, and maintained by local government units (EDCOM Report 1993). Over the years the number of SUCs has been increasing rapidly. That is, from 23 such institutions in 1972 to 107in 1998, or an increase of almost five-fold in the last 26 years. Because SUCs enjoy budgetary autonomy, as specified in their charters, a number of CHED-supervised colleges and some overgrown high schools are lobbying for conversion into state colleges. It is estimated that SUCs account for 77 percent of the budget allocation to higher education in 1998. This sizable share of public funds, the wide variability of cost per student among SUCs, as well as the resulting inefficiencies, are major concerns among educators and policymakers. These issues are further aggravated by the Higher Modernization Act of 1997, which authorizes SUCs to establish autonomous campuses. This legislation also allows further increases in SUCs' budget requirements, and poses threats to the feasibility of existing private HEIs in the locality (TuUao 1998b). Private higher education institutions, on the other hand, are established in accordance with law, and duly authorized to operate educational courses by CHED. They are owned by private persons or

206

The Filipino Worker in a Global Economy

corporations, and source their funds for operations principally from tuition and other student fees (EDCOM Report 1993). Because these schools are privately funded, they enjoy financial autonomy as well as flexibility in the implementation of curricular programs and in the selection, of teachers and students ('lhUao 1993). Private schools are further classified into sectarian and nonsectarian schools. Sectarian schools, which are administered by religious sects, gradually increased in the 1990s, registering a modest growth from 225 in 1990 to 288 in 1998. On the other hand, nonsectarian schools have doubled in number since 1990, which has reached 825 in 1998. Private schools are also categorized into nonstock/foundation and stock institutions. The former consists of nonprofit institutions where share of ownership is not sold and surplus is reinvested back to the institutions. Stock institutions, on the other hand, are proprietary businesses that distribute dividends to stockholders (World Bank 1988, as cited in the EDCOM Report 1993). In terms of geographical distribution, many public higher education institutions are concentrated in Region VI (43), Region IV (32) and Region V (26). On the other hand, most private higher educational institutions are operating in the National Capital Region (209), Region IV (142) and Region III (117). Student Enrolment Seventy-five percent of all students in higher education are enrolled in private educational institutions. Programs in business administration and related courses have consistently attracted the bulk of students in higher education. Almost 35 percent of the 2.2 million students in 1996-1997 were enrolled in commercial and related studies. Engineering, teacher education and medical and related programs are the other leading offerings. The enrollment trend and oversubscription in business administration, engineering, teacher training, medical sciences and liberal arts continue to persist over the years. This trend is reinforced by the fact that SUCs have amended their charters to establish programs similar to those offered by private schools. Graduate education, however, remains small and concentrated in some disciplines in liberal arts, teacher education, and business management. Geographically, almost 31 percent of the students in higher education in 1996 were enrolled in NCR schools.

Chapter 6: Evaluation of the Readiness of Filipino Professionals

207

Faculty Several studies on higher education in the Philippines have revealed the relative academic inadequacy of teachers, whose number in higher education institutions all over the country was estimated at 80,585 between 1996 and 1997. A little over 7 percent holds doctoral degrees while 25 percent holds master's degrees. Thus, almost two out of three of all tertiary level teachers in the country do not have advanced degrees. Many of them are overworked, can'ying a normal teaching load of more than 30 units per semester. Worse, some of them are teaching in several colleges and universities on a part-time basis. By international standards, a 12-unit teaching load per semester is considered the maximum that a professor can can-y if he has to fulfill other academic functions. There are very few universities in this country that give this normal teaching load to their faculty members. Research Activities In the field of research, the situation in many educational institutions is very discouraging. Many teachers do not have the necessary qualifications to conduct independent studies, and as a consequence there is hardly any research activity going on in local colleges and universities. Even if the faculty members are qualified to conduct research, they are not given sufficient time to do it. Their heavy teaching loads also prevent them from doing anything beyond academic instruction. In addition, given the high cost of research, schools allot a miniscule amount for research activities (Tullao 1999b). Whatever research activities are going on in schools are concentrated in thesis writing and related requirements in graduate programs. Very few teachers publish their research outputs in journals, whether local or international. A survey of higher education researches from 1975 to 1996 conducted by Bernardo (1998) revealed the following trends: 1) higher education research is conducted mostly by graduate students as a degree requirement; 2) many researches address three broad topics, which could be considered highly 'researchable' but not always significant; 3) most other topic areas receive only a moderate amount of research attention;

208

The Filipino Worker in a Global Economy 4) some very important problem areas are virtually ignored by higher education researchers; 5) most researches generate descriptive data on matters of limited scope; 6) very few researches attempt to develop, validate, or apply theories relating to higher education concerns; 7) most researches address very narrow concerns and use very confined designs and restricted samples; and 8) recently, large research institutions and organizations have been conducting large-scale, integrative research studies on many important issues facing higher education.

Another important reason for the lack of research activities in several colleges and universities is the relative underdeveloped graduate programs in various disciplines. The faculty of many graduate schools has neither world-class academic credentials nor impressive track records in the conduct of research (Arcelo 1998). The research culture in a university is nurtured to a great extent by the presence of welldeveloped graduate programs. Usually, professors conduct research by organizing teams and assigning researchable topics to their graduate assistants and students. As a consequence, many of the published works of university professors in advanced countries are collaborative efforts of mentors and their apprentices (Tullao 1999b). However, several constraints inhibit the growth of research in graduate schools in the Philippines. First, both the faculty and students are in the graduate school on a part-time basis. As a result, the professors are not doing any research while students are doing research mainly to fulfill degree requirements. Second, the graduate programs in this country are concentrated in two fields: education and MBA programs. There are very few graduate programs in other disciplines. In the field of business, because the MBA program is geared toward the honing the practitioners' ability and skills in management, research orientation is not emphasized. Toaddress this issue, CHED has formulated policies and guidelines for the strengthening of graduate programs. Under this approach, graduate programs are geared toward combining instructional tools and research capabilities to provide new lines of inquiry. In addition, the implementation of various proiects for the development and

Chapter 6: Evaluation of the Readiness of Filipino Professionals

209

strengthening of graduate programs is also intended to increase access to graduate education. Third, funding for research is minimal that has to be addressed. Since many higher educational institutions are privately funded, it is very difficult to finance research activities, particularly in the sciences. The private character of higher education coupled with the demand for higher education that places a heavy premium in teaching, has discouraged many higher education institutions to put their resources in research activities. Even in the public sector, the majority of SUCs spend only up to 5 percent of their total budget for research. Research is not a priority in many private educational institutions because there are no immediate and tangible returns compared to instruction. The risks are huge and research costs are tremendous. In an environment where education is privately financed, it is very difficult to rationalize a huge expense with no immediate results to those who pay the tuition (Tullao 1999b). Because of the prohibitive cost of maintaining research activities, the research infrastructure of many colleges and universities is rather weak. At the national level, funding for research in the Philippines is highly limited, because only a small percentage of gross domestic product (GDP) is spent for research and development. Funds, however, are available from a few government agencies (e.g., Department of Science and Technology for science-related projects, CHED for education-related projects, etc.), international agencies such as UNICEF and the World Bank and the development agencies of foreign countries. Alot of funds earmarked for research are not utilized, however, because academicians are either not aware of their availability or they do not know how to prepare research proposals, or they are not capable of managing research projects (Arcelo 1998). In line with the development of research culture in higher education institutions, CHED has conducted a massive dissemination campaign on the National Higher Education Research Agenda (NHERA) to engage higher educational institutions to undertake research. The establishment of NHERA was intended to ensure that the quality of tertiary education will improve significantly, since this will involve a series of consultations, discussions, meetings and conferences among leading educators, research experts, educational planners and policymakers, business and industry managers, both from the public and private sectors.

210

The Filipino Worker in a Global Economy

Indicators of Quality The trend in the number of graduates of higher education follows the direction of enrollment in higher education. The number of graduates has steadily increased in recent years, with close to 80 percent coming from private higher educational institutions. Business programs have produced the most number of graduates, followed by medical and allied disciplines, engineering programs and teacher training. In terms of geographical distribution, the NCR has maintained its top position for producing the highest number of graduates among all the regions. In terms of the performance of graduates in national licensure examinations, the average passing percentage from 1992-1997 was recorded at 41.76percent. The programs with the top five average passing rates for the period 1992-97 are landscape architecture (87,14%), medicine (79.16%), pharmacy (64.96%), nursing (64.96%) and metallurgical engineering (57.20%). The programs obtaining the bottom five average passing rates are custom broker (11.27%), accountancy (15.51%), master plumbers (17.78%), aeronautical engineering (23.49%), and dentistry (23.70%). The low average passing percentage has raised concern from some sectors, especially those receiving public funding. If less than half of the graduates of higher education institutions can pass the licensure examinations, schools are not doing a good job in preparing them. Worse, they may be wasting public money educating thousands of students who are likely to fail in professional licensure exams. There are, of course, other factors, including the interests of professional organizations that may affect the failure of so many graduates. HEIs with Accredited Programs Higher education institutions that intend to improve the quality of their program offerings may decide to go through voluntary accreditation where they undergo self- and peer evaluation. Institutions whose programs are accredited are given incentives and priority funding assistance and greater independence in curriculum development and setting of tuition fees. Institutions which have already attained Level III accredited status for arts, sciences, and for three other professional courses are allowed to operate new courses in any field without prior approval from CHED, provided they meet its minimum requirements (Biglete 1998).

Chapter 6: Evaluation of the Readiness of Filipino Professionals

211

According to the Federation of Accrediting Agencies of the Philippines (FAAP), only 37 programs have attained Level III accreditation, 102 undergraduate programs were granted Level II accreditation, and 42 undergraduate programs attained Level I accreditation in 1996. In the graduate programs, 13have attained Level II and another 13 have received Level I accreditation. Combining all these undergraduate programs at various levels of accreditation will yield only 181accredited programs. Does it mean that only 14percent of higher education institutions have some form of accreditation? This figure is even overestimated since several of these accredited programs are given to the same higher educational institutions. Centers of Development/Excellence The Higher Education Act of 1994provides for the identification, support, and development of potential centers of excellence among higher education institutions (HEIs). Centers Of excellence serve as the foundations for the development of higher education in the country. They provide necessary training and adequate research for continuing the programs being implemented while identifying the needs for further development. CHED has constituted technical panels for different disciplines and program areas, as provided for by Section 12 of RA 7722. These technical panels in nine clusters of disciplines have assisted CHED in setting up academic standards and in the monitoring and evaluation of programs and higher educational institutions. They were given autonomy to revise the curricular offerings and structure of tertiary education. The selection of centers of development/excellence is one of the tasks that the technical panels have accomplished. The identification of the centers of excellence and development was based on the schools' previous performance and present goals. The criteria for selection are specifically based on (1) Level II or III accreditation; (2) highly educated, professionally qualified and experienced faculty to philosophy, mission, vision and goals of the institution and education; (3) well-selected students; (4) adequate library, research and facilities; (5) competent administrative and support staff; (6) well=planned and relevant instructional programs; (7) adequate student development programs; (8) relevant extension service and

212 outreach teachers.

The Filipino Worker in a Global Economy programs; The identified

and (9) percentage centers

of graduates

must meet international

who become academic

standards by focusing on research undertakings that will enhance the system, in addition, these institutions are asked to extend their services to other HEIs through technology transfer, industry linkages, sharing of expertise, technical assistance, training, and scholarships. In the field of teacher education, business education, science and mathematics education, engineering and architecture, medical education, and nursing education, only 59 higher educational institutions have been identified as centers of excellence and centers of development. This is only one-third of the number of accredited programs identified by the Federation of Accrediting Associations of the Philippines. It also constitutes a little more than 4.5% of the total number of HEIs in the country today. Of these 59 HEIs, only seven institutions have nine or more programs granted Center of Excellence and Center of Development status. These are UP-Diliman, University of Santo Tomas, Mindanao State University-Iligan Institute of Technology, De La SaUe UniversityManila, University of San Carlos, Xavier University, and St. Louis University. This implies that these schools have a variety of program offerings and exhibit potentials for academic development. The schools with the most number of programs cited as centers of excellence are UP-Diliman (9); De La SaUe University-Manila (7); University of Santo Tomas (5), Ateneo de Manila University (4), UP-Los Banos (3) and MSU-Iligan Institute of Technology (3). These schools have consistently shown the research capability of their academic programs. These universities, however, constitute only 3 percent of FAAP accredited program and 0.46 percent of the total number of HEIs in the country today. CURRICULAR PROGRAMS AND LICENSING REQUIREMENTS OF SELECTED PROFESSIONS Accountancy The accountancy program offered in Philippine schools is comparable with those of other ASEAN countries. The minimum number of units required by CHED for accounting students to complete the course is 144 credit units (although the Board of Accountancy

Chapter 6: Evaluation of the Readiness of Filipino Professionals

213

requires 165 units, as prescribed in the accounting law). General education courses make up some 40 percent of the subjects while 60 percent constitute the professional courses. To obtain a license in the Philippines, a graduate of an accountancy program must pass the CPA licensure examination given by the Board of Accountancy. The examination covers the following areas: Theory of Accounts, Business Law and Taxation, Management Services, Auditing Theory, Auditing Problems, and Practical Accounting Problems i and 2. The Professional Regulation Commission (PRC) supervises and regulates the practice of various professions in the Philippines including the accountancy profession. The Board of Accountancy, under the supervision of the PRC, controls the licensing processes of CPAs. Sample schools in Thailand and Indonesia require students to take between 142and 144units to finish an accountancy program. One of the leading schools in the Philippines offering an accountancy program requires the completion of at least 209.5 units, of which 60 units are devoted to major accounting subjects and another 69 units for business professional subjects. A sample school in Indonesia aUocates 65 units out of the 144 units for accounting subjects while a school in Thailand devotes 54 units to major accounting required, elective and free elective courses. One strong component of the accountancy program of Singapore is the incorporation of professional exposure to industry and a submission of an applied research project in the final year of study. Similarly, a sample school in the Philippines requires students to complete 120 hours of practicum work with the top auditing firms in the country. In addition, students are required to come up with a research project or a feasibility study. Indonesian schools require visits to business organizations. Renewal of a professional license in the Philippines is set every three years and requires the completion of 60 continuing professional education (CPE) units given by accredited bodies. The required completion of CPE units is patterned after the American practice. The Illinois Public Accounting Act, for example, requires the completion of 120 hours of CPE within a three-year licensing cycle prior to the renewal of a CPA license. Courses must be taken from bodies registered with the Department of Professional Regulation.

214

The Filipino Worker in a Global Economy

In Singapore, the Institute of Certified Public Accountants is the official accounting body responsible for all matters pertaining to the practice of the accounting profession. It administers the licensure examination and maintains a register of qualified accountants. The Public Accountants Board, on the other hand, is in charge of the regulation of the profession. In Brunei, it is interesting to note that there is no rule or policy that has been issued by either a professional body or a government agency on the regulation of the accountancy profession. In Indonesia, the profession is regulated and monitored by the Ministry of Finance. The Indonesian Institute of Accountants is the organization recognized by the government for establishing and reviewing accounting and auditing standards as well as the accountant's code of ethics. In Malaysia, the Malaysian Institute of Accountants (MIA) and the Malaysian Association of Certified Public Accountants are recognized and empowered by the government to regulate the profession. They have the power to investigate and take disciplinary action on complaints filed against any of its members (see Appendix Table 1 for a comparison of various programs in the ASEAN). Civil Engineering To prepare graduates for professional practice in the field of civil engineering in the Philippines, CHED requires a minimum of 54 units for technical courses, 58 units for professional/allied courses, 12 units of electives and 36 units of nontechnical subjects. Completion of the degree requires a total of 160 credit units. Passing a licensure examination in civil engineering given by the Board of Civil Engineering to graduates is a requirement for professional practice. The examination covers the following areas: mathematics and surveying, design and construction, and hydraulics. In Malaysia, to be eligible for a bachelor's degree in civil engineering, a student is required to earn a minimum of 127 credit hours. In Thailand, the academic program includes 41 credit units of general basic courses and basic courses in science and mathematics, 103 units of engineering courses, and six units of free elective courses. In Indonesia, the number of credit units required to earn a degree in civil engineering is 148, consisting of 63 units of common basic components and 70 units of skills components. In Singapore, the academic training courses include structural mechanics, theory of structures, steel and reinforced concrete design and detailing,

Chapter 6: Evaluation of the Readiness of Filipino Professionals

215

mathematics, applied science, soil and fluid mechanics, foundation engineering, environment engineering, transportation engineering, construction technology, computer programming, computer-aided drafting, contract administration, project management and communication skills. Teacher Education The minimum course requirements set by CHED for the bachelor degrees in elementary education and secondary education are 149 and 152 academic units, respectively. The curriculum in elementary education is broken down into 68 units of general education, 51 units of professional education and 24 units in the area of concentration. A sample school in the Philippines requires students to complete 211.5to 248.5 credit units to graduate from a bachelor's degree in secondary education. In 1994, the Philippine Teachers' Professionalization Act was passed to strengthen the regulation and supervision of the practice of teaching. A Board of Professional Teachers was constituted to conduct regular licensure examinations. The examination for elementary teachers covers professional education and general education, while the coverage for secondary teacher includes professional education, general education and field of specialization. In Malaysia, to obtain a bachelor's degree in education, one must complete 150 academic units. In Thailand, the four-year teacher program requires no less than 140credits. Practice teaching is a common component of teacher training programs in Malaysia, Singapore and the Philippines. Mechanical Engineering To provide quality mechanical engineering education for global competitiveness, the CHED in the Philippines requires a student to complete a minimum of 72 units of basic courses, 33 units of basic engineering sciences, 38 units of allied courses, 38 units of professional courses, and 14units of miscellaneous courses. The school has the option to have either plant inspection programs or on-the-job training programs, whichever are applicable. Professional practice requires the passing of a licensure examination given by the Board of Mechanical Engineers. The examination covers the following fields: power and

216

The Filipino Worker in a Global Economy

industrial

plant engineering,

mathematics,

engineering

economics,

basic

engineering sciences, machine design and shop practice. In Indonesia, the curriculum consists of 152 credits units divided into 12 credits courses, courses,

science

completion

of 148 credits

in mechanical

subdivided

engineering.

into 41 credits

in science six credits

2 credits

is required

This number

for general

for selective

is total credit

The minimum

of mandated physical

course

in Electrical

21 units of languages

for engineering

courses,

26 units

41 units

and

Professional

practice

given by the Board

requires

10 units

engineering

and 14 units Engineering.

of mathematics,

courses_

courses

for technical

for all majors

elective

courses

examination

majors and 12 credits of compulsory technical either telecommunication or power system.

covers a

sciences

account

for general

and allied of 150 credit

for 94 credits,

electrical courses

courses.

The examination

engineering

3 units

62 units

of a licensure

of natural/

of miscellaneous

field, and electrical engineering professional subjects. in Thailand, the total credit requirement consists Compulsory

consist

15 units of social sciences,

the passing

of Electrical

subdivision

of Bachelor

by CHED,

of mathematics,

of basic

and allied courses

for the degree

as required

and humanities,

courses,

sciences,

requirements

Engineering,

professional

credits

units is

and basic courses

Engineering

of Science

units.

science

for an undergraduate

basic courses

and mathematics, 101 credits for free elective courses.

Electrical

detailed

courses,

22 credits for basic skill courses, 36 credits for special basic 55 credits for skill courses, and 25 credits for additional courses.

In Thailand, course

for general

engineering for majors

Industrial Engineering A sample

school

210 units to earn a degree of 18 units education,

in the Philippines in industrial

requires

engineering.

the completion

This number

consists

of languages, 23 units of mathematics, 8 units of physical t2 units of religious studies, 18 units of social sciences, 32

units of basic engineering of professional

courses,

sciences,

16 units of natural

and 12 units

examination is not required in the Philippines.

of technical

for individuals

sciences,

electives.

to practice

71 units

Licensure

this profession

Chapter 6: Evaluation of the Readiness of Filipino Professionals

217

In Thailand, completion of 150 credits is required to finish the program. General basic courses account for 44 credit units, while 100 credits are allocated for engineering courses and 3 credits for free elective. In Indonesia the number of credits to be earned to complete the program is 152 credits. The emphasis of the curriculum is focused on industrial systems such as manufacturing industry. Nursing The minimum number of units prescribed by CHED for the completion of the nursing program is 153 to 159units. The total number of units is subdivided into 73 units of general education, 72 units of nursing, and eight units of physical education. Passing a licensure examination given by the Board of Nursing is required of nursing graduates before they can practice the profession. The examination covers the following areas: promotive care, preventive care, curative care, and rehabilitative care. In Thailand, a sample school of nursing prescribes 142 credits for the completion of the course. These consist of 36 credits for general education, 28 credits for pre-professional education, 72 credits for professional education, and six credits for elective courses. Architecture A sample school in the Philippines offering a B.S. Architecture program that covers carries a three-year building construction program plus two or more years of higher studies in architectural theory and design. A two-year practicum is built in into the program. In the fifth year, a range of electives is offered together with the completion of an undergraduate thesis. A license is required for the practice of architecture in the Philippines. The Board of Architecture supervises the licensure examination, which covers the following areas: architecture design and planning, structural design and utilities system, architectural practice, and history of architecture. In Thailand, the academic program requires the completion of 171units, consisting of 45 units of core courses, 90 units of major required courses, three units of major elective course, and three units of free elective course. Indonesia requires 144units, which are to be completed in eight semesters. Architectural design is the most important course, supported by other courses such as environment science, construction

218

The Filipino Worker in a Global Economy

structure, history and theory of architecture, city planning, community planning, construction economics, and professional practice. Law CHED requires the completion of a minimum of 134 units for to earn a Bachelor of Laws degree, which is a post-baccalaureate degree. In addition, no school shall require more than 152units for someone to earn a bachelor's degree in law. Passing a licensure examination given by the Supreme Court is required for admission to the bar and professional practice. The practice of law is not under the supervision of the PRC. In Thailand, legal education requires the completion of 148units. Basic courses account for 33 units, 91 units for core courses, 18 units for major required courses and 6 units for major elective courses. In Indonesia, the academic program consists of 1 credit for general courses, 47 credits for basic legal courses, 36 credits for advanced courses, 17 credits for additional skill courses, 6 credits for elective courses and 18 credits for improvement of legal skill courses. Pharmacy A sample school in the Philippines offers a four-year program leading to a Bachelor of Science in Pharmacy, where instruction is focused on the three fields of the disciplines: community, manufacturing and hospital pharmacy. Passing a licensure examination given by the Board of Pharmacy is required for professional practice. The examination in pharmacy covers the following areas: pharmaceutical chemistry, pharmcognosy, practice of pharmacy, pharmacology, phannaceutics, quality assurance and public health, In Thailand, a student must complete two years of basic science study and three years of professional study, including 500 hours of pharmacy clerkship. General Medicine In the Philippines, the regular medical academic program, which is a post-baccalaureate degree, is at least four years--three years of didactic teaching-learning activities and one year of practicum. At least 1.5 years are devoted to basic biomedical sciences during the first and second years and 1.5 years to clinical sciences during the second and third years of the academic program. The fourth year is devoted to full

220

The Filipino Worker in a Global Economy

The PRC requires all licensed professionals to complete 60 units of CPE credits within three years for baccalaureate degree holders and 30 CPE credits for nonbaccalanreate degree holders. Noncompliance means nonrenewal of license and the possibility of de-listing from the roster of professionals authorized to practice in the Philippines. Based on the figures supplied by the PRC at the end of 1998, some 141,362 professionals were given compliance certificates. The commission has estimated that only 23 percent of the total number of professionals have complied with the CPE requirement (Table 3). If the 521,400 teachers who have not taken any CPE units wee excluded from the list of professionals licensed from 1960 onwards the estimated compliance rate would be higher at 34 percent. Although this is a significant improvement over the estimated compliance rate of the PRC, it is nevertheless still low. There are several reasons for the low compliance rate for CPE. One, some licensed professionals have transferred to various occupations that do not require a license to practice the profession. For example, many certified public accountants (CPAs) are no longer in public accounting, having shifted to related fields like management accounting and finance. It is also possible that many of these licensed professionals are currently occupying top managerial positions where renewal of license is no longer necessary. These may possibly explain whylicensed chemical engineers, CPAs, chemists and assistant electrical engineers have low CPE compliance rates. The third reason is that the total stock of professionals has not been updated to account for mortality, disability, and migration of professionals. Under the CPE program, PRC allows professionals to earn credit units from a variety of programs and activities undertaken as part of their continuing professional education. These acceptable CPE activities include attendance and participation in seminars/conventions, completion of academic graduate courses, production of self-directed learning packages, authorship, invention, postgraduate/in service training, study/observational tour, delivery of professorial lectures, and other approved activities (Table 4). Although there is a variety of activities that professionals may choose from to comply with he CPE requirements, there is a bias toward participating in seminars and convention, as shown by the inequitable allocation of credit units to various activities. For example, by

Chapter 6: Evaluation Table

of the Readiness

of Filipino Professionals

3. Continuing Professional Education and Renewal of Professional License

221

(CPE) Compliance (January-December

1998) CPE Compliance Protession 1, Accountancy 2. Aeconautical Exlgineer 3- AglficLdturM Engineer 4. Architecture Intccior Design Landscape Azchitecture 5. ChemicM Engineering 6. Chemistry Chernicad _zc h, 7, Ci.vil Engineering 8, CriminoloKy 9, Customs Broker 10. Dentistry Dental Hygie)xist 11. Prof_ssionM Electrical Engl" Reg. ElectNcal Engineer Reg. Master EleO:rician M_ter Electrician Associate Electrical Engr Assistant Electrical Engr 12. Elec. & Comm Engineer 13. Environmental Ph'umer .1,4. Forestry 15. Geodetic Eng'[neering .It',Geodetic Engineer Geodetic Engineer's Aide 16- Geologist Geologic Aide 17. Library Science 18. Chief Mate Second Mate Third Mate Major Patron Minor Patron M_tec Mariner liBRa. 19, Chief Mmil_e EngineeJ' Second Marine Engineer Third Mmfine Engineer FouVrh Marine Engi.neer Motor Engineer 20. Ma,_ter ,Plumbing 21, ProL Mechmxical Engineer Mechm_ical Engineer Certified Plm_t Mechartlc Mechanic,'d Plant Engineer ACRE 22. Medical Technology Medical Lab, 'linch 23, Metallurgic_d Engineer Mat. Plant Nweman 24. Midwifery 25. Mining Engineer Certified Mine Foreman Certified Mill Foreman Cetxified Query Foreman 26, Naval Achi. & Marine Engr

Units Earned

Exemp tton

1226 36 76 743 28 7 326 127 5 3474 122 169 1220 4 235 550 6 258 16 311 570 60 436 328 140 7 66 0 216 339 432 1114 126 50 388 4 187 253 370 885 7 68 80 1033 21 0 0 10_ 244 10 1 6728 44 1 0 0 15

371 5 6 309 9 4 104 9 0 1428 7 12 489 0 161 16 8 810 72 736 255 13 16 90 68 1 12 0 8 841 )117 2221 143 13 969 4 882 1167 1447 2932 10 30 52 943 53 4 2 584 32 6 0 1478 14 0 0 0 10

Under taking 5163 37 162 555 59 10 722 123 1 733 480 332 3640 0 283 409 0 575 116 954 984 84 306 192 316 10 26 0 69 100 139 315 211 78 178 26 ]61 196 N9 803 10 111 111 2543 126 0 2 1974 53 13 0 5041 89 3 1 1 29

Tot al issued 6760 78 24 1607 96 21 1152 259 6 12235 609 513 8349 4 679 975 14 1643 204 2001 1809 157 758 610 524 18 104 0 293 280 1688 3650 480 141 1535 34 1230 1616 2066 4620 27 209 243 4519 200 4 4 3604 329 29 1 13247 147 4 1 ) 54

Total No. of Prof. (as of Dec 1.998)

33% of

98121 480 4476 14623 672 110 21893 8057 589 83300 6072 3078 39669 6 3101

32707 160 1492 4874 224 37 7298 2686 196 27767 2024 1026 13223 2 1034

19637 2968 15034 3651 31690 18478 412 6756 4934 5746 100 1382 66 2128 12315 1.9702 39629 2976 1760 7479 1315 6310 12687 22326 48225 1210 2405 3454 54403 9312 2070 65 37369 3143 427 57 125516 2608 649 191 66 400

Total Prof.

6546 989 5011 21"I 10563 6159 137 2252 1645 1915 33 461 22 709 4105 6567 13210 992 587 2493 438 2103 4229 7442 16075 403 802 1151 18134 3104 690 22 12456 1048 142 19 41839 869 2:16 64 22 133

% Corn pliance 21 49 16 33 43 57 16 D 3 44 30 50 40 200 66 15 1 33 17 19 29 114 34 37 27 54 23 0 41 31 26 28 48 24 62 8 58 38 28 29 7 26 2l 25 6 1 18 29 31 20 5 32 17 2 2 5 41

222

The Filipino Worker in a Global Economy

Table 3. Continued... CPE Compliance Units Earned

Pro fessiox_ 27. 28, 29. 30. 31, 32. 33.

34. 35, 36. 37. 38. 39, 40.

Nursing Num-itiorJ ,9_Dietet cs Die0 r,ia ri Op1:octxcWy Phacmacy Chinese Dla,lgg_s_ Pl'ays,icim_ PhyslcN Therapy PhysJ c_ Therapy rl_" "d_, Occupational Therapy Occupati,oflal Therapy ProfessionN Teachers Supecintendent Radiologlc Technology X-cay Technology Sanitary Engineer SocJ_d _n-k Sugm- Tech.nolog.ist Veteljnary Medicine TOTAL

Source:

Professional

Exem ption

Total Issued

Total No. of Prof. (as of Dee 1998)

33% of Total Prof.

% Coin plianee

14313 343 2 366 2664 2 6045 125 0 20 4

9467 53 1 I01 596 0 1039 140 0 26 7

17376 234 3 300 J916 1 2995 199 5 7 4

41156 630 6 767 5J76 3 10049 464 5 53 15

323736 10165 1430 8971 40979 485 90566 6988 78 636 119

107912 3388 470 2990 13660 162 301.89 2329 26 212 40

38 19 I 26 38 2 33 20 19 25 38

0 0 147 439 68 385 1 246

0 0 77 208 33 29 0 12

0 0 190 598 15t 569 21 179

0 0 414 1245 252 983 22 437

521400 269 2959 7581 2056 11058 183 5077

173800 90 986 2527 685 3686 61 1692

0 0 42 49 37 27 36 26

49,387

Regulation

Under taking

31,762

60,222

141,362

1,850,014

616,671

Commission

participating in a whole day eight-hour seminar, a professional can earn CPE credits equivalent to eight technical papers or eight articles published in professional journals, or five graduate subjects in the masters program, or four doctoral subjects or one year fellowship. In addition, a two-day seminar can give the professional higher CPE credits compared to his research or creative project. In terms of research, an article is preferred to a technical paper or a publication in a professional journal (Tullao 1998c). These inequities in the valuation of CPE activities lead to a neglect of the more important components of continuing professional education. This problem is similar to that of higher education, where research and graduate education are de-emphasized. If continuing professional education will become relevant in updating professionals, CPE programs must be geared toward research, graduate education, inventions, and publications. Professional organizations should have their own journals reviewed by national or international experts. They should also sponsor professorial lectures where distinguished members or outside experts discuss topics within their area of expertise. Similar to the quest of higher educational institutions to make the research outputs of their professors published in international journals, professional

Chapter 6: Evaluation

of the Readiness

Table 4. Matrix

for CPE Programs,

PROGRAMS

CREDITS

1, SEMINARS/ CONVENTIONS 1.1 Pm'ticipant

1.2 Resource

of Filipino Professionals Activities, UNITS

Speaker

3 CU Per Hour

1,4 Facilitator/Moderator

2 CO Per Hour

2. ACADEMIC PREPARATION (Residential & Distance Mode) 2.1 Master's Degree

2.3 Residency/Externship

1 CU Per Academic Unit 30 Additional Upon Completion Degree 2 CU Per Academic Unit 450 Additional Upon Completion Degree 10 CU Per Year

2.4 Fellowship

15 CU Per Year

2.2 Doctoral

Degree

3. SELF-DIRECTED LEARNING PACK AGE 3.1 Module 3.2 Technical Paper/ Professional Journal

l0 CU Per Complete Module Article

4. AUTHORSHIP 4,1 Research/Innovative Programs/Creative Projects 4.2 Book/Monograph Single Author 2 Authors 3 or More 4.3 Editor 4.4 Article Si,r_gle Auflaor 2 Authors 3 or More 4.5 Professional ]'oumal Editor 4.6 Peer Reviewer

CO of

University Certification Diplorna & Transcript of Records

CU of

University Certification Diploma & Transcript of Records

Copy of Duly Accomplished Article and Evaluation

10 Credit

Duly Cer rifled/Published Article and Evaluation Published Book with Proof of Copyright

Urtits

[25-50Pp,] [51-100Pp.] [101 or more Pp.] 20 CU 30 CU 40 CU 10 CO 20 CU 30 CU 5 CU 113CU 20 CU V2 OF THE CO OF AUTHORSHIP CATEGORY [ 1-3 Pp,] [ 4-6Pp,] [7 or more ,Pp.] 4 CU 6 CU 8 CU 3 CU 4 CU 6 CU 2CO 3CU 4CO 5 CU Per Issue

Published Book with Proof of Authorship :Proof of Publication of Article

Copy of Published

2 CO/Article

6, Postgraduate/IrA-Service "II'aining 7. Study/Observation Tour

0,25 CU Per Hour (Maximum 40 C U/Training) 2 CU/Day (Maximum of 30 CU/T3ur) 10 CU pER/CttAIR

9. Such other activities preapproved by the Council, which arein compliance with the objectives as embodied E,O, 266.

Copy of Duly-Accomplished Module and Evaluation

1 CO/Professional/Technical Article

10-30 Credit Invention

Chub"

Hospital Certificaticm Certificate of Completion Certification from the Grm'ttiag /nst:itution, Certificate of Fellowship

Set of

5. Inventions

8. Professional

DOCUMENTS

Certificate of Attendance with number of ho___s, seminar program & certified list of participants Photocopy of Plaque or Certification & Copy of Paper, Program Invitation Certification lirom Sponsoring Org, & Copy of Program CertiEcatiou from Sponsoring Org, & Copy of Program

5 CU Per Hour

1.3 Panelist/ReactOr

or Sources SUPPORTING

1 CUPerHour

223

.Iournal

Duly Certified Copy of Published ,Article/Book CertiBed Copy of Patent Certificate

Units per of

Certified of Training & Training Description Certified from Sponsuring institution Certified of Grant or Appointment Paper

224

The Filipino Worker in a Global Economy

organizations should encourage their members to publish in international journals. Refocusing the CPE programs toward research and graduate education, in addition, may assist the development of higher educational institutions through the improvement of their graduate programs as well as their research capabilities. Linking the development of research and graduate education in higher educational institutions, on one hand, and the improvement of CPE programs, on the other hand, should be explored seriously. The centers of excellence in various disciplines that have been identified by CHED can play a key role in improving current CPE programs, Since CPE is a requirement for the renewal of licenses, the existing stock of professionals is a potential market for the graduate programs in various disciplines. If heavier credit units will be given to graduate programs offered by centers of excellence identified by CHED, the CPE program of the PRC can boost the academic capabilities of these centers, and in turn contribute to the improvement of higher education in the country. Because of heavier credit units given for attendance in seminars and conventions in the CPE programs and activities, a number of organizations and institutions have applied with the PRC as accredited CPE providers. As of 1998, there are 1,611CPE providers, which include schools, professional association, and private companies, all of which are accredited by the PRC to conduct seminars and training programs in various professions (Table 5). Sometimes competition among CPE providers is stiff that some sectors question the rationale of the CPE while others clamor for its removal as a requirement for the renewal of a professional license. Based on formal and informal consultations with key informants and leaders of various professional organizations, several options may be taken to strengthen the CPE programs instead of removing them. A system of accreditation and promotion in the professional ranks may be instituted by professional organizations. Elevation to ranks will require more competencies as evidenced by acceptable outputs. Some professions are doing this practice, including electrical engineering and various specialized fields in the medical profession. Another way to improve the CPE programs is to learn from the experience of the private sector in providing continuing professional education programs to their employees. Moreover, the program of the

Chapter 6: Evaluation Table 5. Number

of the Readiness

of Accredited Regulated

CPE Providers

profession

Accountancy Aeronautical engineering Agricultural engineering Architecture Chemical engineering Chemistry Civil engineering Custom broker Criminology Dentistry Electronics and communication Electrical

of Filipino Professionals by Profession,

No. of accredited

engineering

TOTAL

providers

1611 Aggregated Education

Department technical

1999

67 1 12 21. 16 30 17 17 10 121 9 (and 50 other multidisciplinary providers) 22 (and 4 other multidisciplinary providers) 5 5 8 4 5 Not available 30 53 53 3 28 230 7 63 19 6 360 26 8 34 52 116 77 25 2 33 15

Environmental planning Foresters Geodetic engineering Geology Interior design Landscape architectttre Libra_5;m Marine deck officer Mal_ne engine officer Master plumbilag Mechanical engineering Medicine Metallurgical enginemJrlg Midwifery Milling engineei5tag Naval architecture and marine engineering Nursing Nutrition and dietetics Optometry Pharmacy Physical therapy / Occupational therapy Professional teachers Medical technology Radiologic and x-ray technology Sanitary engineering Social work Veterinary medicine

Source:

225

based Office,

of Science papers

be integrated organizations

on the raw data provided by the Continuing Professional Regulation Commission (as of

and

and research

with the current of giving awards

Technology

of giving

and to outstanding practice

awards

young

of PRC and various

to their outstanding

Professional 1999)

April

for best

scientists

can

professional

professionals.

226

The Filipino Worker in a Global Economy

ABSORPTION OF PROFESSIONALS Domestic Absorption Professional, technical, and related workers account for almost 13 percent of the total non-agricultural members of the labor force. In 1998, some 2.168 million workers were estimated to be included in this group. The bulk of these professionals is found in community, social, and professional services industry group, which absorbs 75 percent of the total number of professionals (Tables 6 and 7). Based on PRC data, there are some 1.850 million registered licensed professionals in the country as of 1998(Table 3). If only the number of professionals licensed since 1960 were counted, the adjusted stock of professionals would be estimated at 1.75 million. Although many of these licensed professionals could be working as professionals and holding administrative positions, it is not certain whether they are still in their respective professions where they were originally licensed, Assuming we have a 34 percent compliance rate in the continuing professional education, an estimated 419,000 professionals may be actively practicing their professions. If the more than half a million teachers were included, close to a million professionals would have been accounted for. Thus, another 1.2 million professional workers are either licensed professionals who have shifted to other occupations or other professionals who do not need a license to get a job like economists, IT specialists, nonaccounting commerce graduates, graduates of arts, humanities, social and natural sciences. After analyzing the supply side of professionals, we will evaluate the demand for professional ser vices using the compliance rate for CPE as an instrument to indirectly measure demand. Another indicator of demand is the external market. Using data from POEA and PRC, we will determine the extent of external absorption of our professionals. While the compliance rate for CPE is low in certain professions, as pointed out earlier, professional electrical engineers, physicians, nurses and pharmacists have relatively high CPE compliance rates. For professions with well-defined professional career paths, compliance rate of those on the higher ranks of the professional ladder would be higher compared to the lower ranks. Those in the lower ranks would have more flexible professional options while those in the higher ranks would have limited options for inter-occupational changes. In addition, once

Chapter 6: Evaluation of the Readiness of Filipino Professionals Table 6.

Employment and in Nonagricultural

227

Share of Major Occupation Employment (In thousands),

January

Group 1998

Share in Nonagricultural Employment (%) January

Professional, technical and related worko's

2168

13.006

Clerical workers

1195

7.169

Sales workers

3979

23.871

2820

16.918

Service workers ADicultural,

Anhlml Husban&-y and ForesU-y

Workers, fishennen and htmters

0.450

6389

38.329

Production and Related Workers, Transport Equipment

Operators and Laborers

a professional attains the apex of his career, it is assumed that he has been seriously pursuing the profession's career path by taking various examinations and CPE programs to maintain his professional rank. As a consequence, professional electrical engineers have a 71 percent compliance rate compared to a 19 percent compliance rate among assistant electrical engineers. Physicians also follow a clear and formal career path defined by their professional organizations. This may explain their relative high compliance rate of 40 percent compared to 22 percent for accountants and 17percent for chemical engineers. Compliance rates for other health professionals are also high such as those in pharmacy (57%) and nursing (40%) (Table 8). The low CPE compliance rate and subsequent nonrenewal of license in several professions may imply that many licensed professionals are using their licenses as an additional credential for entry to an employment position within or outside their professions. It is possible that many graduates assume that employers attach a premium to a licensed professional in hiring personnel. Thus, aside from professional practice, a legitimate reason that graduates consider when they take a licensure exam is to increase their employability in general. But once employed in a related occupation, they do not continue

t_ bo Oo

Table 7. Professionals

Employed in Major Industry Groups (In thousands), llk/Iining &Quar-

Manufacturing

tying

ElectriÂ˘_ity, gas, â&#x20AC;˘,water, &

Construcfion

sanitary services

Wholo

Transport,

sale & Retail Trade

storage & commt_ nicalion

January

1998

Financing, insurance, business services

Community social & personal services

Industry not Adequately defined

Professional, technical & rela[ed workers

1,359

Adminis _ative, executive & managerial workers

280

116

109

148

1639

.. To tal

_" 2168

Total employment in the nonagricultural sector Share

of major

16,669

industry

group to employment in the nonagricultural

0,042

0.696

0.144

0.366

0.378

0.654

0.888

9.833

0.006

13,006

sector C) Source:

Labor

Force

Survey,

1998

t_ 0 0

Chapter 6: Evaluation of the Readiness of Filipino Professionals Table 8. Continuing Professional Education (CPE) Based on Adjusted Stock of Professionals Selected Professions

Profession

CPE compliance issued

229

Compliance

Adjusted stock of professionals as of Dec. 1998

33% of total professionals

% compliance

Accounting

6,760

92,378

30,485

Architecture

1,607

13,394

4,420

Chemical Engineering

1,152

20,904

6,898

259

6;9]6

2,282

12235

77,529

25,585

5,349

31,476

10,387

679

2,852

941

2,001

30,978

10,223

Prof. Mechanic,'d Engr.

243

2,864

945

Mecharfical Plant Engr.

696

230

41,156

30,9432

10,2113

767

8,077

2,665

5,176

27,349

9,025

10,049

75,082

24,777

Sanitary Engineeling

252

1,950

644

Vemlinar y Medicine

437

4,687

1,547

Chemistry Civil Engineeling Dentistry Professional Electrical Engr. Asst. Electrical Engr.

Nm-sing Optometry Pharmacy Physi,cima

their professional practice, as shown by the low compliance rate in fulfilling CPE units in professions like accountancy, chemical engineering and others. Professionals who need continuing professional education, on the other hand, are those who are still in the professions where a license is required. Once a licensed professional has decided to pursue the career path in his profession, he will need to improve professionally as a requirement for the renewal of his license. As mentioned earlier, this trend is happening to professional electrical engineers, pharmacists, nurses and physicians. The relatively low compliance rate of 34 percent and the subsequent nonrenewal of license among professionals may be viewed as a waste of resources in their initial education and training. This is not necessarily true, because while many licensed professionals are no

230

The Filipino Worker in a Global Economy

longer practicing their professions, they remain as an educated stock of human resources. They can even displace those members of the educated workforce without a professional license, which is vital 'to one's employability. For example, for every 100 graduates of accountancy, only 15 will pass the CPAbased on the national average passing rate, and only three will remain in the profession based on a compliance rate of 22 percent. What happens to the remaining 97 graduates? Even if 85 of them did not pass the licensure examination, they cannot be considered as a waste of human capital investment, since they can go into other occupations. The 12 who passed the CPA but are no longer practicing public accounting are probably in better positions in management, finance, and other fields. The remaining three who are willing to pursue a career in accountancy are the candidates for graduate programs in accountancy, can do research, and whose improvement will strengthen the global competitiveness of Filipino accountants. These are the ones that the country wants to improve further through a refocusing of the CPE programs, as mentioned earlier. External Absorption From 1992 to 1998, a total of 318,392professional, technical and related workers were reported deployed for overseas employment (Table 9). More than half of these deployed overseas workers were composers and performing artists. In fact almost half (49%) of the total professional technical workers deployed for overseas employment were choreographers and dancers. Since choreographers and dancers are not professionally licensed under PRC, they can be excluded from the total number of professionals deployed overseas. The remaining number of professionals absorbed by the external market constitutes about 9 percent of the total stock of professionals in the register of PRC. Other leading professionals working overseas include the 56,539 medical, dental and other health professionals. The leading health professionals are the 37,767 professional nurses that account for close to 12 percent of the total deployed professionals. A good number of surveyors and geodetic engineers working overseas comprise another 12 percent of all tile deployed professionals. Architects and engineers make up only 5.75 percent of the total overseas professionals. Surprisingly, less than i percent come from the accountancy profession,

Chapter

Table

6: Evaluation

Selected

of the Readiness

of Filipino

Professionals

Deployed

Overseas

Category,

1992

231

Skill

to 1998 Share

Professional Technical and Related Workers Accountants Aircraft mad Ship Officers

318392

100.00

2986

0.94

397

Pa'chitects and Engineers

18322

Engineers Civil

3954

Engineers Electrical and Electronics

4134

Engineers Mechanical

3357

Authors Journalists and Related Workers

Composers and Perfolming Artists Choreographers and Dancers

187246

58.81

157409

49.44

Economists

Jttrists

Life,Scientists and Related Techrdcians

3998

Medical Dental kl_terinm'y and Related Fields Doctors Medical Nurses lh-ofessional Pharmacists

56539 387

17.76

37767

11.86

299

Physiotherapists

3209

Technicians (Medical X ray)

1.00

2147

Physical Scientists Statisticim_s/Mathematicians

295 4969

Surveyors Geodetic Engineers

38299

Teachers

860

Professional Technical and Related Libi_rian

988

Religion Worker

12.02

Sculptors Painters and Photographers

2922

Sportsmen Athletes and Related Source: Philippine

5.75

Overseas Employment

471 Administration

which has one of the biggest stocks of professionals, next to nursing and midwifery. Based on data from the PRC, an estimated 31,762 exemptions from CPE compliance were given in 1998to various professionals. Many

232

The Filipino Worker in a Global Economy

of these professionals were exempted because they were working overseas. The professions with relatively high number of exemptions are nursing (9,467), marine engineers (6,428), and physicians (1,039) (Table 3). Preparing local professionals to compete internationally through investments in human capital entails some social costs. On one hand, relevant curricular offerings, reforms in higher education, and improvements in continuing professional education may further enhance the competitiveness of professionals in a liberalized setting. On the other hand, the increased human capital value of professionals may push many of them to work overseas, and thus create brain drain. In addition, the improvement of higher education through the selection of centers of excellence may contain some equity issues since many of these private educational institutions cater to students from high-income families. The granting of subsidies to these institutions as centers of excellence may further reinforce the existing inequities. A worse situation may occur if graduates from these institutions end up working abroad. The country may thus end up subsidizing the provision of services in a developed country which experts call "the reverse transfer of technology." Liberalization of professional services may not be able to resolve this major concern in many developing countries in the light of inequities in education as well wide wage differentials across countries in the same profession. In theory, however, equalization of factor prices may eliminate these disparities. RESPONSES OF KEY INFORMANTS ON READINESS OF FILIPINO PROFESSIONALS The last indicator of demand is the perception of key informants on the ability of Filipino professionals to compete domestically and internationally. The first level of competition is external. Are Filipino professionals able to compete abroad? The second level of competition is domestic. Can Filipino professionals compete with foreign professionals, given the liberalization of trade in services, particularly professional ones? Although comprising a very limited sample size, the respondents were drawn from key informants in various industries. They were asked about their perceptions of the readiness of newly hired professionals, the readiness to compete, types of training provided and the top source of professional manpower.

Chapter 6: Evaluation

of the Readiness

of Filipino Professionals

When asked about the performance key informants An almost while

rated it 3.61, indicating

similar

rating

offerings.

academic

training

but those

who think

received

the leading

technical

know-how

mentioned respondents

items

cited under

well as compete

that

they

with foreign

that as individuals, of professional

professionals

professionals.

and

Although

system, licensure of selecting

As for training majority for newly

hired

programs.

New trends

Fifteen

can compete

training

17 as

(Table

11).

they are not apprehensive

about

the

an indicator

of the quality

on the

are inadequacies education

continuing

capability in the

program

of these

educational

serve as means

professional

and continuing

provided the most

with

out abroad

in the country

and developments

education,

professional

the

training education

in the field is the most cited

by firms. With respect to continuing cited

in-house

item is attendance

seminars

together

programs.

More than half of the key informants

allow their professionals

professionals,

(94.1%) reveal that their firms provide

professionals

type of specialized professional

are

the graduates.

and

of respondents

competitive.

confidence

and a continuing

the best among

are

professionals

there

number.

(Table 10).

of newly hired

services,

their

high

in the fields, they are not often

professionals

This indicates

that

is adequate,

a very

to the areas for improvement

liberalization local

for the adequacy (61%) indicate

"need for improvements"

trends

believe that Filipino

competence

professionals

still comprise

of the competitiveness

believed

respondents

was recorded

by newly hired

and current

performance.

to technical

of the respondents

otherwise

in relation

In terms

above satisfactory

rating,

The majority

Although

of newly hired professionals,

of 3.56 was given

only 3.33, or satisfactory

of course

233

seminars

and

in outside

internal

training

claim their companies

to work with their affiliate

companies

abroad.

The 18 key informants enumerated 26 schools where they source their professionals in various fields. The schools are UP (11), UST (9), DLSU (7), UE (5) and Mapua

Institute

of Technology

(4).

CONCLUSION To reap the benefits with the full implementation resources

by investing

to protect

Filipino

of an expanded

of GATS, we need

in them. This upgrading

professionals

global

from foreign

trade

in services

to upgrade

process

human

is not intended

competition

but to build

Table 10. Readiness of Filipino Professionals: Responses and Training of Newly Hired Professionals Company

Performance Rating

Technical Competence

of Key Informants

Adequacy Training

on Performance,

Adequacy of Course Offering

1. Serrano Dental Services 2, Data Sphere Philippines 3. J. Reyes Medical Center 4. Phil. Aluminum Wheels 5. Nestle Phils. 6. Health Infra Services

4 3 3 3 5 4

3 3 3 3 5 4

0 1 1 1 0 1

4 2 1 4 4 4

7. St. Luke's Hospital 8. Practitioners 9. Asia Konstruct 10. Adamson

4 4 4 3

1 1 1 0

3 4 4 4

4 5 4 3 3 3 3 3 3.61

4 5 4 3 3 3 3 3 3.56

1 I 1 0 0 0 0 1

4 3 3 3 3 3 4 4 3.33

I1. Punong Bayan 12. Punong Bayan 13. KPMG Laya Mananghaya 14. AMMDA 15. AMMDA 16. MEOA 17. MandatSn Credit 18. POEA Average

Competence

Areas of Improvement 1,3,4

_,_

,_.' _,.

4 4 1,2,3,4 1 1,2,3,4

_,. g_

_3 LEGEND: 1Needs Improvement 2Fair 3Satisfactory 4Very Good 5Excellent

Adequate Not Adequate

Y = 1 N = 0

LEGEND: Technical Know-how Computer Literacy Communication Skills Current Trends in the field

1 2 3 -- 4

_r"

TabIe 11. Readiness

of Filipino Professionals:

Responses

of Key Informants

on Competitiveness

of Newly

Hired Professionals Company

Professionals can compete abroad

Can compete professionals

with foreign domestically

CPE should be made mandatorylicense_ for renewal

1. Serrano Dental Services 2. Data Sphere Philippines 3. J. Reyes Medical Center 4. Phil. Aluminum Wheels 5. Nestle Phils. 6. Health InfraServices 7. St. Luke's Hospital 8. Practitioners 9. Asia Konstruct 10. Adamson 11. Punong Bayan

1 1 1 1 1 1 1 1 I 1 1

I 1 1 1 I i I 1 1 1 1

0 1 I 1 0 1 1 1 1 1 1

I2. Ptmong Bayan 13. KPMG Laya Mananghaya 14. AMMDA

1 1 0

1 1 t

15. AMMDA 16. MEQA 17. Mandarin

0 1 0

1 1 1

Credit

18. POEA

Legend:

__"

_'_." _.

_. _3 Y-1 N-O t,o L.h

236

The Filipino Worker in a Global Economy

a strong human resource infrastructure in the light of a globalized trading environment. Specifically, the readiness to compete internationally should be viewed as the ability of local professionals to meet the standards and human resource requirements of foreign as well as domestic companies. As we review the process of human capital formation in the country, we concur with the conclusions documented in various research and reports on the inadequacies of higher education in the Philippines. Several factors hinder the development of higher education in the country. The overexpanded higher education in the country is accompanied by inadequate faculty qualifications, lack of research orientation, underdeveloped graduate programs, misallocation of resources in public institutions and overconcentration of enrollment in few programs. As a result, very few accredited institutions of higher learning offer quality education. Of the more than 1,300 higher educational institutions, only 4.5 percent colleges and universities were cited by CHED as centers of excellence or centers of development. Only six institutions have at least three centers of excellence while only four universities were included in the top universities in the Asian region. The allocation of limited government funds to higher educational institutions is not helping solve the problem of overexpansion and poor quality of education. More than three-fourths of public spending in higher education is allocated to the maintenance of 107 state colleges and universities. With the implementation of the Higher Education Modernization Act of 1997, many of these state colleges and universities were given leeway to expand through the establishment of autonomous campuses and offer academic programs in direct competition with the private sector when what was needed was more integration and cooperation. With the establishment of CHED, various programs were initiated to address key problems confronting higher education in the country. The formation of technical panels for various disciplines to review and evaluate curriculum is working very well, The members of each panel are drawn from the leaders of industry as well as respected individuals in the academe. Aside from the curricular review and changes proposed by the technical panels, they have also named various colleges and universities as centers of excellence and centers of developments. The citation is not only intended to recognize schools

Chapter 6: Evaluation of the Readiness of Filipino Professionals

237

with excellent programs but also to serve as a mechanism for channeling government funds for the development of the discipline in the school. If these institutions can provide the academic leadership and research support among other colleges and universities, then there is a chance the educational system can prepare the needed human capital for global competition. In addition, CHED has prepared a national research agenda for higher education to emphasize research activities in academic institutions and provide the necessary funding for this educational priority. In spite of the inadequacies of the educational system, the curricular offerings of the various professions are comparable with international standards at least in the ASEAN region. The country may be producing a lot of graduates but the licensing examinations as well as the continuing education program serve as a means of selecting the best among these graduates. Moreover, the fact that close to 9 percent of the stock of professionals work overseas, including a good number of nurses, physician, and engineers, speaks highly of the academic training they have received in the country. However, with the liberalization of trade in services, can our own professionals compete with foreign ones, given that more half of them fail the licensure examinations for various professions? The overexpanded higher educational sector in the Philippines has been blamed for the mismatch of graduates and manpower needs of the economy as well as for the excess supply of graduates. Addressing this issue requires increasing the demand for educated labor through better economy, greater employment generation, and higher savings and investment rates. The expansion of trade in services through liberalization is an avenue that creates demand for educated manpower particularly professionals. The question is the readiness of the country to absorb these trade inflows in services if more than half of its graduates fail the licensure examinations. â&#x20AC;˘Thus, there is a need to develop higher education and improve continuing professional education as a strategy for meeting the expanded demand. The bias toward attendance in seminars over the conduct of research and pursuit of graduate education should be rectified. Many of the professionals are now reaping the benefits of their initial investment in human capital and they have the ability to pay the cost of graduate education. The development of graduate education and research can be supported from two ends. On one hand, the government

238

The Filipino Worker in a Global Economy

can put more resources to these programs via the centers of excellence. On the other hand, the needed warm bodies will be available from the stock of professionals. Even if only 34 percent of the 1.75 million professionals will pursue CPE, we will have close to 600,000 potential students in graduate education. In addition, upgrading teachers through graduate education will make a dent in improving the low quality of instruction in basic education. Because of the huge amount required in the formation of human capital, the role of the government in the provision of education should take into account the returns and equity considerations for various types of schooling. A sizable portion of returns to higher education, including the training of professionals, is reaped privately compared to the social returns to basic education. Although government support for the advancement of knowledge through research and graduate education can be rationalized on social grounds; such legitimate state support can be channeled to higher education institutions through the centers of excellence in various disciplines. Although graduate education is a valuable route for improving the quality of continuing professional education in the country, it may not be as practicable as conceptualized in view of the huge opportunity cost for professionals. The busy schedule of professionals at work may prevent them from pursuing professional upgrading though formal schooling. Given the advances in information technology and improvements in distance learning, centers of excellence can devise programs through which the opportunity cost for professionals may be reduced as they pursue graduate studies. The development of human capital through various forms of schooling and training aimed at addressing the competitiveness of local professionals in a liberalized environment entails social costs. The loss of educated manpower through brain drain and the various social ills resulting from the overseas employment may not be fully compensated by the foreign exchange remittances brought into the economy. The problems of brain drain and the exodus of manpower to overseas employment, however, are brought about by the inability of government to create domestic demand for educated manpower. If the supply of educated manpower will remain in this country and reap the benefits of investment in human capital, employment opportunities in the country must be generated, and population growth minimized. If these

Chapter 6: Evaluation of the Readiness of Filipino Professionals

239

two conditions are present, then the output of education in number and quality will be further enhanced. Given these conclusions from the study, we propose the following recommendations: 1. Regularly update curricular programs of various professions to keep up with the changes in the market as well as in technology and to benchmark against some of the best academic programs in the region. 2. Refocus the continuing professional education program towards research, publications, inventions and graduate education and de-emphasize seminars program. 3. To boost the effectiveness of professional continuing education, give professional organizations more flexibility in developing their members through the institution of a professional ranking system. Passing the licensure examination given by the PRC will be used to determine the entry-level position in any profession. Subsequent promotion to various professional ranks will have to be given by professional organizations. Since promotion to various ranks entails the fulfillment of professional accomplishments, such promotion may be counted as fulfilling the CPE requirements and the subsequent renewal of license, In addition, various CPE programs, including graduate and research, will be given heavier points for faster professional advances in ranks. The organization may institute an academy of fellows whose membership may initially come from former recipients of outstanding professionals given by the professional organizations. The academy may institute rules and policies on how to promote and induct members to higher ranks similar to the practice done by physicians, electrical engineers, marine engineers and other professional groups. 4. Link the development of higher education with the improvement of continuing professional education. Encourage professionals to conduct research and do graduate work in centers of excellence. In addition, assigning heavier CPE credits to graduate units earned in programs

240

The Filipino Worker in a Global Economy offered by centers of excellence will reinforce the subsidy CHED grants to these educational institutions. For quality control, the center of excellence can be given scholarship slots, heavier points, and discounted tuition fees. This combination of private funding and limited government support can make a dent in improving the quality of higher education in the country. Accredited graduate school programs will also be allowed in the CPE accreditation scheme but graduates from these programs will receive lower points compared with those of the graduates from programs operated by centers of excellence. 5. Encourage professional organizations to have their own professional journals, preferably refereed. Give monetary incentives to members who publish in international journals. Adopt a system of professorial lectures for foreign and local experts. 6. Recognizing the opportunity cost of graduate education for professionals, a system of distance education may be devised, where professionals earn a degree without too much sacrifice on their professional practice and income. 7. To minimize the social cost of migration, let the students in state colleges and universities internalize the cost of education through an imposition of a user's fee. For the needy ones, 'scholarship grants or a voucher system can be utilized as an efficient means of addressing the issue of equity. For migrating professionals who have received full support from the state for their education, a form of exit tax may be imposed. 8. Rationalize the allocation of government funds to higher education. There should be a moratorium on the establishment or conversion of state colleges and universities. There should also be a moratorium on the establishment of autonomous campuses of existing SUCs. If this is going to be allowed, however, funding must come from LGUs and other sources. 9. Encourage the integration of existing state colleges and universities instead of the establishment of autonomous campuses.

Appendix

Table

1. Comparative

s'rA_TE.S

Curricular

MALAYSIA

Programs IND_

In Various

Professions

SINGAPORE

Pi-_IPPn_F_

_cy • The minimum ednenUon_t] requirement for accountants a bachelors de_ee In accanatL_. Programs are of_red in oeReges a_d untve_lie_ thronghmtt the eetmtr y. • Some positions requtre master's degree tn either accounting er bqxtness

• Association of Chartered Certified Accountants. Eduentiensl quallflva flon must mt_et UK University Entrance Level or its equivalent. For Me,lays.Inn and StnRapore students: a. Cambridge overseas

School Ccrtiflea1_3 Cambridge Overseas HJ_er Cello

admtu.lslration with a coneenL,-a don in accounting. • Individuals who hold C_=_. and C.P).. destgnaOons must nsuall_ rake ean_nuiag educa*2on coturses Io eenew their licenses.

Tree advenced/Pr_elped Three ordlnary/salbsklla_ levels (five _sOnet a_ad separate subjects) Sn/Lieets mast/nchtdlng Eagli_h Language and Ma_ematics (or other approved numerate subjezts, e.g,, statistics counting or commercial math) Passes at Grade Cievei or ]dghe_ if ebla_ned [975

in or after

• The cucrlecdum tsdJvfded Into accomaling lessons (45.16 percent from the total credit.s), management lessons (L1.09 pere_rtt from the ts_d credlts_ eL-enemies (12.5 percent from the teud _-e_llts), general ]essc_s (31.3 percelat from the

• The three-year accotmtancy course trains sttt4ents 1_ a wide remge of professional enpebflR_es with emphasis on accetoavtr, g st_lls and kno_ge. The conr_ emphavizes a praetlceo_ented approach to education end

• The acco_tgprogram prepare s s tttdents for careers In accoc_Ong _d related flelds_ and makes them ready to deal ef_ctlvely with the problems they will face as professional accotmtants and responsible c|tizens. The prog_m$ al1_s to

total eredRs). The accotmti_g program in Fetes chvistlan UnJverslty has three majors:

Integrates accoun0ng and relamd disciplines to equip students with :he r_ecessar y

develop the qv.alRles _at erdaanee the stadent's proEessl_nal ecmpetence_

Information System, AtJdJ_ng, ax.d Taxes. It has been done the curriculum efl_leney for the accoun_ng program, that is, I44 _red_ts for atIeast seven _mesters and reducing some lessens to give new lessens

ans/ytiea|, coneepttml, comm unientJen, a:ad in_m'personal skills, Incorporated In the course compt;isory eight-week professional at_ehmem_ _udns'try and an applied

awareness of _espo_xibt_ttes to seeie ty and appreela_an of an accountant's blgh ster_dardof th_eg_lty and ob]eeOvity.

which antieiFate _e developmant of the accounting a_d monetaey world.

_seareh prelect of stttdy.

is a

fo the ileal

Req_rements Languages year

• AceounZaney s_udents can broader, their traJnir.g hy ten,hag amtnoriaa selected area of bus_ness sRtdies or do a research mirror to further equip themselves for post -gradllate re seareh. An hor_ors degree is awarded for consistently good periormaaee throughout the three-'¢ear, course of s_dy,

Me. of units 21

Mathematics Natural Science Physical Education Religious Stu_es Social Sciences Core B,_l_ess ProfessJonsi courses Major Accounting Subjects _tal Academic Unlla lgortae.ademtes "J_ted r4mnberofUnRs

12 6 8 12 13 69 6_ 200 9.5 209.5

Basiceourses Basic cove eo_se s Ma_or required e ourse Major elective course Free elective course 1oral credits

31 57 30 12 12 142 0_

_" _q

_+ _,._" _. .

_. _' _. %e'_

bo 4_ r,o

Appendix

Table 1. Continued...

UIqFFED STATES A(XX)u]wrAlqCy

MALAYSIA b. SiJll TInggl] per_ekolaka Malaysia (STPM) - T_o Imsses of at least Grade E in the STPM, plus three passes o_at least Grade 6 in SPM - Subjec_ must include English langmtge and Math â&#x20AC;˘ Malaysian As_oefation of CP.As (MACP,A} a. MhlImum requirements - obtained principal-level passes in at least two subjects in the HSC/STPM exams - oblalned MCE/SPM with credits Ja English langrdage and Math, and ordhhary pass inBaham Malaysia b. Degrees, Diplomas, and Professional Qualification

INDONESIA

SINGAPORE

PHIIJFPINE

, The Bachelor of Aecountaucy degree is widely recognized by professorial accounting as wail ashy reputable universities overseas for po_ 6raduate studies. Upon being required to obtain reMva_Lpmetieal expesience, Bachelor of Accountancy graduates are also recognized by the InstJttlte of Certified Ptthlic Accountants of Sthgapore as having fulfBled al[ the necessary academic requirements for membership (Nanyang Technological Unirersity) Note: Certificasiun of accountants. The Institute

Certified Public Accountants of Singapore is the only official accounting body in Singapore administered by a full-time seeretaMat. The Institute is

- a range of degree% diplomas and professiolm] qualification from both

responsible eoneernir4 profession,

local and overseas thstltutions

establishment of guklelines for professional procedures, practices and ethics. The body administers the examination for accountants and maintains

Note: To qualify usa CPA, a person must fb'st register as a

for all matters the accounting including the

THAILAND

CHED REOUIREMENTS: * The maximttm curricular requirement for the Bachelor of Science in Accountancy (BS AccountingS, as specified in Annex I]I_ is 144 units (exoludln 6 Physical Education, etc.) * The required total number of units for the CPA exam inations Is 165, aS spelled out in Me Accountancy Law. General Education courses make up some 40 percent of the subjects while 60 percent oonstiP.tte the professional eourms. The latter ]n turn consist of 30 percent business administration and 30 percent accounting courses,

_'_

_'1

_" _3

_'_ O

student of MACP& a_d complete the MACPA examinations within the

_._

pre_rihikt

['_

period, and

Appendix

Table 1. Continued... SrAT/_

AOL'OU/qTA/q_

MALAYSIA

D/D_'qEs_t

SINGAPORE

PI-I]LIPP_S

omaha not less than three years practical training trader the sxtper vision era member of MACPA In p ubfic practice orin the employment of an organization approved by the A:xsoctatlon to provide CPA

a register of qualified a_ounmnt.s. Member thlp wtthoul examinarion is open to members o[ the institute_ of Chartered Accountants o_ England and Wal as, Australia, Scotland, Ireland and of a

training,

number

THAILAND

** Pr_ _"

_'. (_

of other accotmtthg

bodies. • Three undergraduate courses are offered bythe

* It has Five major flekis: s'u_aelure, hydraulic,

* In this course, students equipped with technical,

faculty, namely: In Civil

trartspor_tion, geo_chnique and construction management, The number e£ credits robe

analytical and super v-lsory skills to support engineers and project managers th the design,

ever -increasing demand for Mgh-quality civil engineering graduates who can furnish the

Engineering - Beng (cl.¢ilJ Sarlann Muda

completed Is i4 g (SKS) within e_ht semesters, consis_ng of

eonsb'uetion, and malntenanoe of public Infrastructure and

ex'pertlse tn the provision of shelter to Filipinos and who

Ke_ruteraanin Civil Bachelor Aware {SAA']

common SKS) and basic skill components components

buildings. who are snccessfui In addition, in the those

can develop the Serving infrastructure. counwy's both the

Bnginee_ng

SKS)

training

private

Engineering) (Environmental - Berg (civilenv.eng) Sarjarm Muda Kejuruteraan Aware (KeMruterama Alum Sekiter) (SAE) Bachelor in Civil

(Tersedia dalam Indonesia)

Bacbe]or

Engineering (Construction Managem ant) S_2]ana Muda Kejuruleraan Aware {Penguru sa_ Pembinaan) (sac)

Baha_

(70 (63

are

* The Civil Engineering program aims to respond

as Building

Supervisors Constzmclion (BCSS) Site Sa[ety will be a_arded the BCSS Certffl_',e jointly Issued by the Ministry Labour and _e Singapore Polytechnic.

to the

and the public seclors

engage o_ the society, in various civilservices engtheers _'hicb include consuhatlon_ planning, deslg_, preparation oE plans, specifications and estimates, contracling, works engtneerNng and construction project

[-_ _, 3' r_ _,_ _X_ _:,._. _. ;_ _:_

management.

bo 4_

he 4_

Appendix Table 1. Continued... UNITED STATES _'2[Vn.EN_ERI]qG Ma_y employers older on-theJob t_-ai_in_as well as semtnars, classes and workshops. Civil engJneer_ often continue their eduea_on to keep ttp with t_ends _a teeh_oiogy,

MALAYKIA * Theduratlonof*he program is a mlnimum _ eighl semesters to a maximum of 12 semes_ers_ As part o[ the acquirements of the course, students are required to attend a survey fie_course for two weeks at the end o_ the fourth se_esmr and Io _bmi'_ n relbort al t2_eend of the course, • Studems are also required to _l_tdergoindugrlal u-a_te.g _or eight weeks npon eompletien of their third year and Io submR a report u;_oncompletion of the trel_l_g, l.naddIl'_on,a finalyear project on a topic approved by tbe [acuity Is also eompuisory e_d has to be s'dbmltted within the tHocaled lime frame (norma_y two semesters), • To be eligible forao award of a bachelor's degree, minlmten oredR hours of 127 are required. Students lto]dl_g a dlploma may be taken dit¢ctly into the third year degreecourse with a maas_er credit of 63.

_IA

SINGAPORE • The training covers _d-dePJralmechanics, theory of sh--uctures,steel, and re£ofoseed concrete designn_d demt]Lng, mathematics, applied science, sol]and [luid meekanlcs, foundnUon engineering, environment engineering, U'anw,ortation engineering, conswaetion technology, compu_r programming, computer-aided tire[ring, contract ndmin_s'_'atlon,project management, and eommanieation sims. * Graduates with the Diploma in Clv'i]and Structural Engineering are certified by the BuLldingControl Division o[ the Public Works Department (Singapore) to work as structural elorls aft-works in a_ord_ce with lhe Building Control Act.

PHILIPP_

THAILAND

• Civil engineering has grown Into a diverse branch o[ engineering, which invoices various t_tald5 o_spee]aLIzaUoo _eh as structural engineering, construc*Jon highway engineering, hydraulic1 englneertng, foandatinn engineering, a_d water reloqJrces engineering, among others. • In response to this developmenL the Department of Civil Engineering introduced l_novations in the undergraduate curriculum bylncoz-poratfng speelaflzazionsla the field o[ Structural Engineering (STE}, and Coasmactien Tecta, elegy and Management (CTM) starting in SY 1992-1993. The a_'as of specialize tion have increased with the addition of Hydraulics a_d Water Resoua-_esEl_glaeering (HWR) in SY 1996-1997 and Transportation.Engineering (TRE), in SY Z997tOg8. Instarting the $_3cL'_ed|_g yeazs, the specialization in Geotech_cal E_gl_eerlng (GTE) will be lmplemez_*.ed.

_'_.

_'_._e_.

O_ "_ _"

Chapter 6: Evaluation

r N

[]

.__

of the Readiness

_=_

of Filipino Professionals

245

Appendix

Table 1. Continued... ST&TE_

MALAY_

INDONESIA

CIVIL EN_G

SINGAPORE

PHIIJI]PPINES

THAILAND

CNED REQUIREMEMTS Bachelor of Science irLCivil E_gi_eeri_g I. Techuic_Courses • Mathema ties 20 • XasuraltPhysical Sciences 10 • Bas|_ Eng. Seleuces • Professiorml arm AIBed Co_Lr_s 5_ * T_ohut_t] Eleoti_re, 12 Courses TotaiTee]mica]

i.?.] f_ _1

II. Nonteohniea]Courses 1. Language, Humanities & SocialSciences 36

_-_.,.

2. Mlsce]iany CMT PE -Tech_Ac_ TotalNor, Courses Gmm:l Total

(6) (8) 3fi 160 e_.

• Edttcatlonalrequirement* ]_ar]awyarsinehulea b_c_elor's degree plus three _ars _4Ylaw SChool. lz_dtm]s should graduate from an American Bar Msoelaflon_tpproved college or ttn2wersR_and win receivea .[otis Doctor, ot .RD "r degree.

The foliew_ are the requiremejsts for practicing law: a. holder of law degrees awarded by Unirersides in England, Wa2es,and _Iort_LernIreland, or CfNSA (UK)

The cu_e_lum COOL, iSISof Gener_ courses(t credit), Basic Legal course_ (47 eredlt_),Advar_,edcourses (36 crec_Ls),Addl_o_aalskill courses (17 uredlt_), ehcttve conrses (6 ece_t_), gdvaneed Legal sill] oour_es (lg credits)and Sports (non_redtts)

CHED REQUIREMENT Subject to the approval of the Bureau of Higher Educalion_ the law sekool may design iLs own hw curriculum, lr_r o's,Stied that It oomp_e_vd_ the requ_emems of L_eRules of Court.

I. Law B_s}4_ courses Corecourses Majorrequired course Major elective course Totalcredits

urdts 33 91 t8 6 _4g

(Assxtfiaptio_t[_liversi_yof Thailand]

g:_

_3 O

Appendix

Table 1. Continued...

UN Yt"_D STATES LAW A few statesmay perm]t individualstociterfor lawyers

instead

MALAYSIA h, holder o[ common degrees in law or other subjects awarded by the above Universities

of one or

more years e[|aw school Clerking means L_al the individualWillbe stttdylng io gel on-thewlthlawyers job t.ya.lnlng. California allowsincEvidtxals to rake correspondence coursesin law instead of classroom training. â&#x20AC;˘ To getintolaw school, individuals m_tst usually take an examination calledthe LSAT CLaw School Admission Test).

c. homer o_law degreesin Australia and Y{ew Zealand ff abe'_ is insufficient d. Fassed core subjectsin Law elConteacts,Law ofTar Is, Constltu_ona]_and A6mlrdslrative Law. Land Law and Law el Tsusts e. haw degree obtainedwithin six years except i[ degree was earned Erom Universily e_London, which can be earned within fouryears,

INDONESIA

SINGAPORE

PHILIPPINES

â&#x20AC;˘ The teaching and ]earning proee_ is based on 12m combination o[ tradi_cna]and innovati_,e teaching methods,

The Law Cnr_eulum shah use the interdisciplinary - approach.. imerreJatl_gwith the behavioralselences. ItshaP.

These stills provide

retlect

a dynamic

professionalprogram for $tttdente to dewelop practical knowledge,understandingand communicative skills

the objectives

e..... :_

of leg_d

education..%_"LCoursesln Law sh_l he gene_liy chtssi[led Intothe followingareas:

(Diponegora University) Perspective cvurses, consisting of such ._bjecl.* as ]ntrodttetion to Law_ Roman Law', Legal History,Legal Philosopby_ Legal ProFession and Legal Bibliography,wb'ch may be takenahead of basic

_._ _'_ 0_

_a e_.

law subjects. BasicLaw Subjectsin the general areasof Ci'dl Law, po]iiica] Law, Commercial Law, Cx_minal Law, Remedial Law, Labor

e_ '_*

Law_

and Legal Ethics, 'XSpecialized Law Su.bJects in rations areas such as Election Lmw, Agrarian Law, Banking

Law and Ta_tion,

G _e.' x,J

Practicum subjectssuch as skill coursesinlegal writing and research, counselin_ and _vocacy, appellae practice,and the llke.

4_ "-4

248

[] m

The Filipino Worker in a Global Economy

Appendix UNITED

Table

1. Continued...

STATES

MAI_YSIA

"_ _/D_

SINGAPORE

_P]_c,S

• The law schoo]ls encouraged to specialize tn a paracuhr [ieH, av,d the f:v._epl of cro_ enrolmem for elective subjects Ym schuois m_y be a_o',_:l, subjeel 1o the f_vor recommendalJen of

LAW --

_,_--

the Dean with the approval of

the CHED. • A student

"*_ must

have

su_essfu.Hy completed a minimum of 134 untts to earn a Bachelor of L.mws deg_e, otherwise authorized by the Department. NO school shah require more than 152 units to earn a Beehe)oFs

TEACHER EDUCATION • The mlnlm tim educaticsna| requirement for teacher_ is a 13aohelor'e degree in educetlon, Many _choo] dls_lcts require their teachers *_ohave or oh_ in a maseer'_

degree,

. For the Bachelor of Education degree, dee total number of t.mjts required is 1_0 (64 uml_ _rom Education, bO uzt]ts from the Academic component and 26 units _rom the Unl_er_Vy courses),

degree In Law.

v_¢_

• The school m.ay o_fera l_Veyear eumct_'_ttm s'preadl_g c_! •-he regular [our years to a perloct

-_ _._ _ •

of five academic years, _bJec_ the approval of CHED.

,__.

• Arts with Diploma In The Teacher Educallolt Educat_u.The fouz:-year Depart._ent prepares slcuden_ to Bache]or c(Arts with Di?ioma in teach In any of the [ollowlng Education co_crse combines ,f_e_s o_ spec_al_z_,tton at the Vigorous academic nudy _ith Secondary Level: Mathemario_, challenging U'al_ng i]_ pedagogy. Science, Computer App]lceflon_

Pla_ A: A_0ur-ye_r program requiting no ]e_ than MO credit,',_

Some of the modules being offered _nelude areas such as envtrunmentsl studies and geographic In[umiak/on _stems.

credits.

_umaufties, Economlcs, E_tory, Llte_ture, Psychology, Religious and Values Educa_on, gngi_eh, Behavioral Sciences and Ffllp_o

P_an B: A two-year p_ogram requiring no less than 80

To euh_r this program, appttcan_ mus_ PL_ISh f_eshman _d sophomore at Teacher's College.

,¢__' _._ _.

ycers

t,o 4_ _4D

t,o L_

Table 3. Continued... LffqlTED STATES TEACI-IER

MALAYSIA

INDONESIA

* Students mustcomplete t_eir studies within a minimum oEeightsemesters anda maximum o_14semesters_ For eachsemester theyareallowed toregister foraminimum of12 and maximum of22 units of courses. The number ofunits accum_tle_d a_.theel_dofthe sixth _mestermust natbe more than115unlts. This number does not include the Teaching Practice units, Rec[uirements ]:or theAwardo[ DegreeBachelor of Education:

SINGAPORE

FHlflLI[PPINES

Chinese langnage, cultural hlstory and the history o[ _lenee, ethnomuslco]ogy and the musictechnology, applied linglflsBce literature and literary expressions, English.. theater-in-education and art edueaBonhistory, critical and contextual studies, design ant[ technology. A _ecial_etuure of thecurriculum Isitsprovision for multilateral development, whicha]]owsa student to cotnblne di_iplines across di,.dsions oracross schools to forminnovetive programs.

CombinedBachelor of SecondaryEduea_onand Bachelor ofScience.

• Outstandlng students will be selected to do honors in Chinese language, Chinese L_tereture, English li_ratuYe, English language history, geography, Ar L or Musicafter their second year,

SUMM AEY OF BEED CLrRRICULUM

THAiI.AND

MajorAreas:" Sc|ences-Mathema_cs Sciences-Chem]str y Scien_es.B_ol_gy Reqt_reanents No,ofUnfls Sciences-Physics General Education 92 Physical and Biological Non Acad.Subjects 7.5 Sciences Orient (1.5) Home Economics ROTC (6} E]emen_ry Education MajorCourses 65.102 Educational Technology Research 6 Guilience Professional Education 41 Totlt IN_ber of Educatlona] Measurement Units 21L5-248.5 Adult Education Social Studies CHED REQ I_ItREM ENTS:

_ 0_

P_'ogram: B, Ed. (Hens.) Period of Candidature (No. of Semesters) Min: Max. Total Minimum Units Req_red

8 15

150

No. of Units Allowed ToReglster PerSemester Mth. 12 Max 22 No. of Units Allowed to Accumulateat theEzLdof _ Semester

• Undergraduates may also choose to be trained as physical educators through_e BA _ith Dip. Ed (PE) course. • Science withDiplomain Education The science course incorporates a professional diploma in educaBon or physical education.

Genere] Educ.etion -bg unlrs (46 percent) Professional Education - 57 units (38 10eceent_ AreaofConcentration - _ units (lb percent1. Tota] = I49 units (1O0percent)

_-_" _.

.._. ,,_ _-_. _;

A minimum academic units of M9 for BEED and t52 for BSED isrequired for graduation, _t_ _] xJ

Appendix Table 1. Continued... STATES "fEACH_R

EDUCATION

MALAYSIA

IND0_S_IA

Total number of units accumulated at the end of 5 '_ semester together with those registered for the 6t_ semester choedd not exceed 115 tt_ts, Hcweves, the Dean has the righ'_ tc wade the ruins gever_ng the m_nimum/ maxlmtxm number of units that. a candidate can register per semester. Bnt this provision cannot be used to enable a candidate to chain a degree less then eight _mesters. Last ttpdated

: 10 April 1996

SINGAPORE It Is designed to provide undergcaduatesw_th rlgorous academic and pedagogical know]edge and skIRs net only to psepa_e them far _.elr pro_essiona] re'les as pl"imary, secondary sclence teachers _,d sehvo} leaders, but also to widen their future career prospects.

PI-llLl_r_

Consist of the htnaenRle L natur_ and behavioral sciences and computer lRerar y. ma thentatlcs, "ingle and ethics, _mnd at de_eloplng a broad educated, creative euhnaed aRd m or_]]y upright and preduct_'ve person. Includes

philosophy

aRd alms

A special feature cf t.h.eccur_e Is that students base the flexibility either to read only Selenee

of education, curriculum de_lopmem teaching and ]earning processes, teaching

subjects, e.g, biology and ma_hematics er to select a cross disciplinary mode by comblnthg a science subject with one in erts.enumanlties, e_., Fhysics end Music Cm'siculum end educallon studies, Teaching Practice end Sckoo]. Attachments and

and learning prlnaiples and theo_es, direct _d subslant_al participation In teachingto provide cllRlcal expesience o_Ter a perind of time.

research prelect emphasized,

and specified field.

works are also

Equips the teacher w|th _ndepth knowledge of the context skills In the mnjoT

g3 _.

_._ f_

:_ _. :_

_] b.__.

Outstanding students w_ be selected to, read honors in Biology, Chemistry, Mathema*Jcs_ P1_ysica end Zaology,

Higher degreeby researchIn MSc and PhD are el[ered for

graduatesand professional seeking to upgrade themselves. (Nanyang Teehn _logical University )

b,j

t,O

Appendix Lr_II _u

Table 1. Continued... STATES

II_IDONESIA

SINGAPORE

ME 111Engineering Drawing (3 credits) The principles of engineering design axtd drawing; the

• A Bachelor in Mechanical Engineering is considered as a general pmetisioneL since lfls edtmatiOrlal scope is broad and

• All engineering students follow a eomm on course during their first yeas of _tudy after which the students wltl elect to

M echanical Engineering (ME) is a course pre_essinn that concerns iIse]f with m eehanica]

deg_e in engineering with an emphasis In mechanical engineering. A master's or Ph.D. degree may be required for some adminiserative_ supervisory, or teaching positions. Cousses in the first two )'ears of the Bachelor's program consist of Math and basic sciences such as physics

principles of projection, and perspective drawing and its conclusion; assembly dsa,,_ng; dJme_'icniag; and design by computer, M Ell 2 Workshop Practice (I credtt) Machine opera,ions such ns lathing, shaping, sur/aee

his field Includes a variety of interdisciplinary approach such as engineering, social, environment and economical issues. Thus, the curriculum is designed in such fashion that tha students are n at onl y capable _n their own field but also in comprehending other probiems. The number o_

pursue courses for their saeend, thb'd and final years ;n one cf the following branches: - Civil and structural engineering - Elecu'$eal and EleetxonJc anglneer - Mechanical and Production Engineering - The first-year curriculum

d etigrL energy convesaion, fuel and combustion technologies, heat transfer, engineering malerials, muntlfacmring processes, automatic control, pruduel safety alld re]iabJIdty, alternative sources of energy, and _ehnologJcal Impacts on society. Beeenl

and chemistry, sooi_ sciences, humanities, and lntraduelory

finishing, hobblng_ fitting, gas, and electric welding; high-

credits eredlte

engineering. During are the fir.a] two year_, studenls

pressure work.

comprised Genera] course (12 of credits) and science selective

relevant branches engineeringto nilsuch as

Science courses (2 credits); Basic skill course (2 2 credlts)j Special basle eoursas (36 credits); Skill course (55 ere dltsJ; additional course s (25 credits). Mechanical engineerirtg of Petra has three majors: Psoduc_cna] Engineering, Deign, aud Energy con_rsion,

engineer_g physics, mathemattcL graphics, computing, economics well as ]abosatory experiments and _-orkshops.

EIqGEqF..]ERING Mechanical engineers should have at least a Bachelor's

expected to take sll engine ering courses with a major emphasis in mechanical engineering. It is recommended that mechanical • ngine ers continue lheir edueatlon to keep up with lrends In technology, tvian)' employers also offer on-the, job tralning us well as seminasa, clas_es and workshops,

MALAYSIA

w'e]dlng_ sheet metal

ME 12I Er_g_neering Ma ter_ls (3 credits) The _lructuyes and propersies of crystals and amorphous substances; the movement of electrons 9n sold an_ conductlvit_ metals; charts of materials; heat treaLment; she study of corrosion: ceramic property; polymer; concrete and reinforcement,

to be taken is 152 within eight semeslcsa

PHELIPPII_!ES

is designed to expose _tudents to basic s_zb.lect

technological developments of

have

necessitated in the curriculum changes to lnc]ude computer app]JcationL electronic controls_ and mechatr chics.

The second and third )'car curricula consist o["core subjects in the particular branches ofengineering. An in-

* The DLSU ivfechaniea] Engineering program has been revitalized to reelect these changes. The entire course provides the students with a solid scje_tif'_ and techno]ogJca] k_owledge, a

house practical training program is also included ra pyepare _(ldenlx tO p]sy an

grotmdlng In the Code ul Bthics a_d oppurt_Jsies [cr sVudents to exereiaeengineering

effective role in industry graduation.

judgement_ circa sivity, Ingenuity, and the a'bllity to

upon

THAILAND

,_. _"

_ fl_ "¢ _' _:_

lead others. _3 _3

Appendix MEC_kNICAL EMG_E:ERING

Table

1. Continued... ME 122 Engineering (2 credits)

Graphics

An lnLrc_w;tion to d_wing sign symbols by computer, electronic circuits and meohanicat devices; and on.nearing applic_Oons

CAD-CAM. ME 211 Engineering Moo]tunics (3 credits) l_rereo, uishes: PH 101, MA 10b The study of topics sudl as oquJiibflum force analysis; applying e_,ui]Ibrlum equations 1o ._ruotnres and machines; the center of g_vlty; Poppus's theory; beams; fluid mechanics; ErJoflon; a_yses by _4rt_al work principles; the equilibrium stability; a_d moments

o_ inertia

o_ area.

ME 221 Engineering l[ _3 esedils) l_,ereqnisB.e:

in the f1_l year o_ _ud)', students are encouraged to spec_]i_ by mklng opflor, aI subjects groups. In olvU eng/_eering_ for example,

Requdrements No. o_Units Langumge 18 MoLhemaUos 20 Physical Eduo. S Religious Studies 12

students can specialize in Smaeture, Geotechnlcs_ Water , and Transportation. T_

Social Sciences Basic Englneo_g Science

electrical enslneedng, students can specialize in power, conU'o], electronics, computer avloniesj and communication engineering, while in mechanical onginee2Lug_

N atul'al Science.* Professional Courms ')_ehnlcal EleeOves Tots] Acid. Units Non Acid. Su'_joots Orientation

students can speelMlze In thermal engineering, applied mechanics, production engineering, and aeronautical engineering,

Tote] Mo. of Um6ts _10 (7.5)

(Nanysmg Technological UnlverMry)

_-_

22 16 94 2 2iO (fl) [1 _) _.

C_ "_

Mechanics

ME 211

Topics: Mass momenL_ of lr_rLia; the mechanlcs o_ panicle and object; velocity and accelern'don; the Impulse and momentum prlnc_]es;energy

and work prineJples; centre] force modon; gravity force; i_pact force; m ovemonts lnclth_ planes, IX) L_

Appendix Table 1. Continued... t_m_DsrazEs MALAYSIA MECHANICAL ENGINEERING

_On_StA

S_CAI_OI_

l*nUm_S

mAdriD

ME 311Ftuid Mechardcs (3 cred/ts) emrequis_.._ _ 107, ME 22t The study of defirdtior_, dimer_slaas andmlits; fluid prt_p_xuesand fluid statics; the pressure andm_mt of forces _a submerged surfaces; the s_ahiltty of fl._t_ bodies _md the equflilmLmaof ideal and re._ fluid; lm-alnar m_d turlxtl_ce flows; c_mpressible mid _acorapres.s_le fluids; oantln,.xRy m-,dEul_ds equation; B,_-nouUi's equation; _quadon energyandtheir appRc.ati_,s_ flow _'m-,mlea_ts_ mc_em,.wn equals; p_,_r_ losses of fluid m pipes; analysis of pipe netw_'-ks; dimenskmal analysis and mode_g,

0_ _'_ _, _. :_ __

ME 321 Thm-mo_Â˘_ Prerequisites: MA 107,ME 221 "rim,tu_ of d_fmititms; the propm-des of pm'z substm_ce__ and ideal gases; x_a'k and ]mat_ *1_ fa'st _xd _d laws of theamod_ and Camot's cycleandthestandard airpower cycle; the_eratlo_

c.yde.

_r"

Appendix UNITED

Table STATES

1. Continued...

MALAYSIA

IIqDOIqESIA

sIIqGAPORE

PHH.IPPD_E

C*F_qERAL M_D|CI_ The length of study Is 12 sem_--w.re, plus three montks of Ktdleh KerJa Syeto (on-the-job u'_ning cutsMe the campus, or mostlyln rut'a]

The course consists of ]ectures and practlc_ work, whtch will extend over three terms of the third. )_e.ar.

CHED REQUIREMENTS

arses).

Syllabus: SyszemaUc ]e ct,.u'esIn izzterrLz] medicine and pedin n'lcs and the C]hMcal exaraJn_siono[ pasieR'ts,

]aL,-'n]ng aodv',Ues and one year of pmeficum. At]east l_ shalI be devoted to basic biomedical science In the t'lrat and second. year ar.d 1_ year to clinical seie._es [n _e second and ttdrd year. The _urth. year shaB be â&#x20AC;˘ _uB elinic_! elerkshtp

Based on the _ree of the Minlslxy O_ EduenOon and CtLlmre _ _o.,nember 1994, all medical schools inlnd onesia lmve to can'y oct the nallonal core eu_Jcalum. The _aealty ]ms designed its curr_ulttm nr.d 20% of local cenlenLs, ..Within the localcontuntsare the communlty -orion tsd medical ed,uca fl on (COM E} ancL studentreseaxchassignment to ftd_]]I the Development of Karys "ik_sDmish (KTI= Skrlpsl) tqstal scJen_ficpaper. Eachd`epartment Is permitted, ormotivated,to add more instrttcflanal obJecfl_swl_ink are still rele_t, or to broaden the exlstlng core objeetlv_s in tlte_Irst six semesters, (pr o_ Pendldfkan Daser} (PPD).Most of theinstruetiorm} designs snbject-b_sedexcept those of t_ield assignmentsin COMB.

ExamineJ_on: The e)mmln_tlon wfl| comprise one thJ_e.hoar paper, a n]tnleal examJ.nasion and an oral exanflnasion(HaUorm] Univer sity of Sl_,gap ore ).

The eurricuitmt si_B be stleast four years consisting ef three years of de_ca_ed _eacldng

Today, tMrd to sixth year me_c_! sttutents of Sr_naklmxlnwirot University s_Jll astray the w_e range of experie_tces avagable from the st.off a_ resom'ees o_ these af_au_ hospim]s Lu this coopers'dye -stt_ty program.

The ot_rrlcu]um shall _nclude

T]u'ougll.out the years, the Faculty o_Med]cl_e at Srim.kharlnwirct University ha_ kept to the original objective of |ts esmblSsiamextt_ that Is, to prod.t_e physk'Jans

thefoBowlng: . Anatomy . Ane sthesio|ogy â&#x20AC;˘ BiochemJstry_ Molecular Biology and Xulrition

tlmtcan meet thedemand for dec tore throughout the oounwy, especially outside of Bangkok or in tAemore rural areas.

C]tnlc_d Pathology or Laboratory Diagnosis ILsettrrlcuinm includes field . Legal Med_ine, Medical work that opens studeets from Juflsprudence,Health the second year onwards tothe EeonomJcs and Mediez] Ethlcs Itealth problems and living . Medlcine_Microbiology, conditionsofpaap]e Invery Neurology, Obstetricsrare,] areas,$1xtk-y_r students Gynecology Optha]mology and ai-'_ requiredtodo _eld work in OterthtnoLaryngology viB_ge_ sub-district or Parasitology, Patlto_ogy_ Pediatrics, Pharm astology and TherapeuticsPhysicalMedlcine and. Rehabllitutio_

provincial hospitals. Approximately "30percem of reals]n each year ere a_ll_ble for stu6ents _rom oRts_de of Bangkok,

',_ _1

-_% _. _. e._.

"_ _. ex;_

t,J L_

rx_ L_ Ox

Appendix Table 1. Continued... UI_ IUJLISTATES GF.I_.RAL MEDICINE

MALAYSIA

IlqDONESIA ShOe 1987, in the Pr_grmn P_adidikan Sarjana (PPS), a problean2oased approach has hesmin_aduc_llhro_gh an integrated teaching l_own as kepanlte raan Ummn (Panum = Gen_-al clerkship). This pCmmais used to bridge the theoretical phase in I -I_ se=nesterto ]a'actical woc'k with patients in the wards in Â˘.b.elast phase of the study. Iu the Pcogrm_ P_ad_dikan Profess _PP =in thela_fimr semesters), all hSedepm"_,m_ LLg_ the COMEis carried out instudents the form of fidd ex_ "e_cefor fromthe3 trimester to the 12m semest_,

SIRqGAPORE

PHILIPPINES Physiology Family and Community Medicine Psychiatry Radiology Surgery

THAILA.gD The six-year medical program is divided into three phases: * The Pre-Medical Phase (1 year) students _re required to take general courses in Lang_tages,f-hehtmaaltilies mad sodal sciences as well as in sci_ace (i.e, biology_ chemistry, physics_ &math). These pr_:ecidestudents with a geaera] background that prepares them fcÂ˘ furth_ medical studie_. * The Pre_Clinica_ffaase (two years) students begin to t_ke b.mdam_atal courses in

(_ _.

The leading sector is the Dep_.meat of Public Health, along with other dep_mea Ls such as theDepar_ent Departm_mto_ N_l_fion, of Child

anatomy, ]3ioch_aistry, physiokgy, w_crobiology, pathotog_v,m_roducti_n to dmical work and begim,..ing clinical work. For the first one_&a-half years, s_ude_ts study at Srinak.harinwirotUniver_ty (Prasm'nmit)_ and the latter half-year at Va_ra Hospito[,

_,_,

Health, Depm_tmentof obstetrics and Gynecology and Depm'tmeaatof Ps_:hia'a'ics.

The clinical Phase (three years) Clinical study introduces students to epidemlology,

These grovide supervisors for students. Differ_t levds of c.ormatmity unders_mdin_ is giv_a the studmts, whida m-e gTtRktohamlet andKecmx_tan.

symptoms of diseases, diagnosis_ _'_eatmemtmethods, and prevention. This par_ of educalion lakes, three at Vajira Hosl_lal policeyears Gem_at

_ (3

(Dipcmegoro Uhi_sity)

Hospital, and othe_ a_]iated hospitals.

_:_

Appendix

Table 1. Continued... STATES

mvvs-rsa_ ENGINEERING

MALAYSIA * The number v_ speciaKst etreams aad exampies of o_¢e subpets _fered: . Production Planahag and Controi Statis-fical Q_ality mad Contrd Oper_m_ Rese.at_ - Facilities PLanning mad Layout - Pro._ Mmaagememt • The S-I-T l_ptoma in Engineering is recol_ized by_ many Auslralian and OK _aiversifies, wldda admit holders d/rectly into the second year engineering (Honors) degree progrm_s, Duration: two yeaa's _ull_me (three se_ esters p_ year)

1NDONE_.A The emphasis on curriculum in Lqdustrial¢algincering is in mau_h_ industrial _s s_ch as those ha the manufacinring industry. The number of crcdlts to be completed is152 credits m eight semes_. The curriculum is c3ass_ edinto four stages: Stage 1: The students have awar_aess and te_ical skills for be-_c _mical and economicknowledge Stage 2: The stodents ha'_ a _cept of planning vat indus_-LaL[ system Stage 3: The students can integrate all the kaao_edge they get _oanalyze an industr_ syste_n Stage 4: The students ca_ design a compl_ hadustzial svs_m_ " In stage_ 3 and4, students begin to specialize in the fields of skin that int_-est them. Industrial ea_neering and management have two major _dds: industrial engineering and management engineering,

SINGAPORE

PH]ff.31PPIIqE S The Depav_ent of _dus_'_al F_gi_eering envisicals its _aduates as p_f_als ',_ wcclang compe'_ace m Produclion Syst_ans, Operati_msRest, _ad Ergo_aomicsand Product Desig_a.The Induslrinl Engineering graduate is knowledgeable in the differ_at engineering processes which enables himfae_ to decdcp an m_l_g of the imp_atinns of te_no[ogica_ parameY.er%problems, opportunities, and op_a_ions to the whole set of manag_eant systems, and canversaly, the implication of managea_e_at d_sion.s _othe technical aspect of the enC_aprise.The graduat¢_ employ disciplined _ad systematic approaches to the maLnag_maeaat of people, equipment materials, capital e_elgy, andinformaLicm dra_iagupon knowlec_e _d sld_s from the mathematical, physical and social sciences,

THAILAND

The currioJhan is avhniadstered bytheInch_s_ta_Engmeering Program. Modern indus_al engineering isaccanbina_.o_aofbasic _agineering knowledge mad quanUtative analyds tedrinques to support manag_%al deds_nmal_g. It is concerned with the effacieacy in which work is perfm-med by machines, peep/e, and c,_mputers.Lu.chis'ca-isl englne_-s use the h-,forma_on _d techniques from physical, mathemalical_ biological, behavioral _md engineering sciences _o plan, control, dexign aod manage ¢xanpl_ ovganizad_as and systems. Specifically, they utilize knowledge andprindples in opera*Aonsresearch, ergonomics, managemen_ mad mant_gacturing systems Ln specif_g, predicting and e'ealuating the resuhs obtained ff_omindustrial a_adhusiness systems.

e_ -_ _ _._0b c-._.

_ _'_ E_. __ O _q _. _,

bO L_ "q

bo Oo

Appendix Table 1. Continued... STATES ]Ik_IDU_I'RIAL EIg_R]D_IG

MALRysI_&

IIqDOZ_ESIA

RIHGAPORE

PHILIPPINES Thus,theDepartment of Industrial Er_gineer_g is a resource ofthe_niversity In developing scientific disciplines, and consequently provides an en','tronment flint promotes national development in the ChrLq.iancontext and n commitment to the secJally responslhle pmoti_eofone's pro_essten. RequlremenL_ No. of Units Language 18 Mathema_os 23 Physical Education _ Religions Studies 12 Socia]Sciences 18 Basic Engineering Science 32 Natural Soienees 1/a Professional Colly _ 7I TechnicalElectives t2 â&#x20AC;˘Tota_Aead. Units 210 Non Aead. Subjeots (6) Orientation (t3) _.tal No. of Units 2Ifl(7.5)

TI-LMLM'_D ThestLtdy ofIndustela] eng_eer_ng places crop.sis upondeveloping thestudents' _hllities to analyze anddesign _stems that integrate technical, economic, and social behac]ora! factors In Indnstrtal, ser_ce_ socialand government organizations. This stud_yleads to a 'earietyof prnfessian_]oppo_unlUesin IndusL_yand manu_aetunng, health care services,reseat eh and developmen L flnaneiel centers, public enterprises, aml h_stness corporations. Its conceptsand prlnelpIesalso help preparestudentsl_or_a_lr graduate study in Indus_l en#neerlng, management engine erlng, bnslness admin]_on, a.nd other _ie]ds.

_ t_ _'J _. "__, _"

Toaceomp]lth these obJecfives_ the Deparlment of Industrial F2gineerlng offers a

*'_ _ â&#x20AC;˘

curriculum that is _eetflcaBy desflgned to distinguish i_el_ from the eurrlcula o_ered eL other Thai teohnieM institutions, but is a]so at the standard enmpamble to those 0ffe_d at renowned lnteraa_ona] u_cersll_es. _fhe curs_eulum presents Indus_'la] englnser_ng courses that e0_er

g:_ C_ ,g_

_1_ C3 (3

Appendix

Table

D_I ]{TED STATES

1. Continued... MALAYSIA

O_ IND_

S_qGAPORE

pHILIPP]R_,S

_Ub_RDkL

THAILAND four major areas, namely, operadons re scnro]b r quandtait_e analysis, manufacturing systems, ergonomics, aridma_gement. Althouf_h, the curriculumIs weli-bal_nced e.mong four ureas, theDep_trtmer, t placesits main emphasis on qtmndtadve

_ELEC'I_ICAL ENGII_ING

_..

an_b'slsend I_Igldtghts its applications especially to _'easmentioned enrller. The offeringofcoursesiscarefdly _ranged so that those providh_ basJo end hm<tamenml c onenp_ are ut_ght in the early years to build adequate technical baclCgrotmd, Then their applicatlc_ts are discussed in depth in coursesprostrated In the Inletyeaxs.

* Starring Erom 'the academic Itls directed to prepare sessioncf 1996/97,theunlversJty sturdlents to be ElecU'k'al has fun'educed a semester EngineeringBAchelora wad

The course s_nemre hasa con,,.tnulng theme cfelectrical s._de]ecU'onlc sngineerlr_g,

From the totsd credit requlrement of] 50 cradle,94 ercdlJ.s areallocatedfor

system.This system willt_ks effects_rtingon thissession's t_irst year sit, dentsand consecutivecard]meats, â&#x20AC;˘ All stttdercts of engineering must rakeatleast12 credithours in theordinary semesterand ful_]_the EJ-'_theering Faculty Course requiramenu lismd below:

backed up by englneerlnf science, matl_emadcs, computer applicationin engineeringand related engineeringstudies. Emphas_s isgiven tothe utillzarlon and conWol o_ electrical energy. Tlieore_tc_d aPA preotieal tsclmiealsubjectsare dealt wP.h.so as to relatethem to currentengineeringpractice,

compulsory coursesforall majors and 12 creditsof technical elecitve c_es for _e General RE major and 12 creditsof compulsory tech2_c_ courses_ermajors in elther TelscommunlcatioRs ofPower Systems.TRe ccmpulsor y coursesforallmajors ure designedto providethestudent with broad knowledge in

have addlitozmlvaluesby giving lecturemate_als thatare always ul)-to-date and follows tltedevelopment oftechnology a_d offeringstudentswith managerial ability. L_eo_cal engineeringhas threemajor courses: Power englneerin8, elect_onlcs engineering,and computer engJneerlng,

_'_

d r_ _e_,

_'_

t_ ta_

t',O C)

Appendix UNITED

Table 1. Continued...

ST_LTES

MALAYSIA

I_DONF_I_

SINGAPORE

PHILIPP_ES

THAILAND

Science Fttndameata| s._d Materi_] Fmgineering (3 credits) EngineerJn8 Drawing and Computer Aided DesJgn (4 v,r_il_) Engirieering Mathematic 1 (3 credit)

SECOND YEAR Core Subjects Communication Skills II Principles of Economies Network ARalysls A_alog_.e Elec_o?,_ns Eleclrorde Matetials &amp Devices

The oo_tenf, ot sub,acts _skept in line with the rapid])" advcncing technology, Various modern trainers are widely used Within the course. The course edtlcates potel_flsl lP_.ders, able to work Sn mtt]tl-dtsctp]lnsry teams h't the e_glneeviRg

electxiÂ˘_,I en.giPtoeHng, WhiC:hIs. necessary to _tiffy the general needs of the industrial sector In Thailand. The compuhory courses J_lude five laboratory c_rses 111electrical engineering tlmtare provided to lllttslrata practical aspeoLs o_

Er.glneartng Mathematic 2 (3 credits) E_meerb'_ b__gthemadc 3 {3 credits) Computer And Programming (3 credits) Engineer and Safety (3 c_dlts) Management Theory, Economics And Law (3 credit) Industrial Trainlng(3 credits)

Kngtneerllig Matltemadcs I Electromagnetic Theory DlgRal Electronics AC Circuits &amp; Devices Enginecri_ Mathematics lI Laboratory I LaboratorylI Engh_eering Desig_ A Pro joel A In-house Praedcal Training

profeesto_ _3,dcapable e[ adopdng to the complex teelutological and human problems which they will enecunterin s<_clety. The course sh"uc ture has a subject in improving communication s_l]s and leadership capabilRles,

electrical circuits ardl maoldnesj e]ectroRlcs, and feedback conh'oL The eurTicultlm Js deslgne_i by the end of the third year, s_adem wll| have completed compulsory courses, ogeepl project courses that wtl] he mien in the fourth year,

Note: DJrect-enLry students are reqtllred to take G133 il_ addition to the core subjects.

so dmt Lhe all for

_._ 0b

_ 0

Core "f IllRDSubjects yF_.AR: Conical Engine erlnll Commtmjcadon Prlnclple.s Integrated Clreutts al_t

Â˘..,

SemlcorLd_tctor Pr ecessing Technology Miccoprocessore Power Systems _amp; Machines Labc_tory IH EngiReerlnll Design B Project B Igdustvial Auachment

Appendix

Table

1. Continued... O_

STATES

M_ ELECTRK_AL F21GINEERING COURSE SYLLABUS FIRST STAGE: Circuit Theory and Field Theory (4 credits) Elecn'onics 1 (4 eretht*) Diglml _stem (3 credits_ EJeetrlealEiaeh_e (3 credit*) Mechanics Engineering (3 eredits_ Laboratory! (1 credit) Lsbomt0ry 2 (1 credit) I_TERMEBIATE STAGE: Commu_deaOen I (3 credits) Clreuir Theory II (3 credits) Opfios Communieatl on and Optoeieewonics (3 eredRs) Remote Sensl_t_(3 credit*) Mlcroproeessu#Signal Pr_ess_g (3 evedJt_) Mlvroelectrenics (3 credit*) Arti_ietfl Intelilgence_ Fuzzy Logic and Neural Network (3 credita} Power System (3 ered_t.*) Power System Operation (2 credits) Power Ouality (2 ereddt*)

INDONESIA

_I]_GPI, iPORE FINAL YEAR Core Subjec_ Er,gtneers and Seeiely Managing Human Resouroe and Entreprenaurshlp Prtnolp/es oELaw Final Year Project Software Englneevirtg Presc_bed Electives In a661tlon to the core _bjeeta, students are required to taXe twopveecrlbed _b_e_and three pre_erlbecLelective subject* to be selected from one option group aM one additior,al prescribed elective subject to be selected from any option group (_th]e 1) or tahe Open List (Table 2). Cene.ralE].ecti'_.s In addition to the cove *'obJect* aytdpre_rthed elecflveSr studeaL_are required to take a minimum of six acaltemto units of general eleot.ismsfrom Lhe following list of subjects offered by the school or subject* offered by other schools w_th the approval o_ the Dean. Direet-enn'y stu¢Lentsare required to tare GL_3as pai't of their general core requiremant in Ben of four academic unit* of genera]aleetive.

PI-IILIPp]I_,BSS • The eo,_rse is offered usa cooperative education program, Fuibslme students intermit their formal academ_ studies to enter indus,'In| attachments for a period of three months. The aoa_.emic eomponeuta cff t.ke emtr*e are present in two stages_ extending over eight _emesters. * At the end of the _tst ac_demtcsmgeso_thecourse, students ere sent to suitable Industrial faints for attachment. The aim of this g.tmehment is to _miUarLve student* with industrial work en_lr oument. CHF..DRequirememts Toprepare the graduate for a profes_ona] E_eetrlcal Er,g_eering career, Including profossfo_.alpractices, management and eut.veprenenr.dxip,tiLegyftdua_e mess have a so'aug foundation in the basle *cience and mathematics and should ee_der the economic sueLal and environmental sSga|f:icance e_ electrical projects,

_ , For the general BEmaJor, a high, number _ total eredlLs _or technical eleefl'_ecourses are a]lacamd In the eu_lmdum so that students, with the aid o_ _aect|tyadvisors, mn plan a seqLte_oeof technical elecUve cam'yes wlt_.hlgh flexibility to intensify their knowledge in study areas of _tevest. Three areas of study provided in the curriculum are: * Cotamor,tcatleus and Networking * Power Systems and Energy * Solid Siam and Electronics * In addition, teeh_teal elective courses are provi6ed for studen_ who would ]_e to gain experie;LecIn the area of _eareh a]ul deve)opmem Courses for topics In electrical englueering are flea ¢fffevedas tecl'oxlealelective courts to cope wl_ rapid ehangrs in technology _mdthe highly diver_eareas a#study In e]ectrlo_Jengineering,

_._ ___ v_. _.e_' _2_

C_ _. _2. _:_ _, ._

_' e*.

_'_ r_ _'_ Oe'_' :_

_O (3X bO

Appendix Table 1. Continued... vnrn_ stArEs mL_YSt_ I

_O_S_

smc_ro_

_--.,_PmES

*a_L_O

. ARCI_TECWU]gE

Tiae Bachdor of Science with H_am-s (H.B_.) has the fonowhag features: * This

is a minimum

of three-

year or six-semestea- program, • Sucr.cssf_l studeatswfllbe con fi_z're.d the Bachelor of Science (IqBP) with honors. • This program was e_iished m re.spor_se to the call of goVZaTaUemt to produce Uaine.d, skilled, mad knowledgeable graduates to o,_:come proMean.s fac_ag the developlaent of th_ built _avi_o=m_t, • They also will undertake respo_a_i/ity in relation to tim xmrious piarmlaxg alad consU-uction processes. Th_eaCore, specializa_ic0n in the _alti_ years of the program is reduced as compared to other similar_ograzas at other instiLu_ons. • The school emphasizes trainingto _prove inert og_ti_e.ly the technical, _a,_t, admi_istratlve and development fields that provide graduates with the

Platmh3g, Construction Ecoriomics_ Professional study, CADD, etc. To kapro_e the learn_ag pro_ess, a]_ of the oddmad eceax-s_naeet_r course* are offered

every

stmaestea-.

e.__, ._-,L,_.

_. g_

O O

L'*

Appendix Table 1. Continued... U14H]'ED STATES

_U.AY_[A opporr_lry wld_r r_nge

ARC_[[TE_E

IMD O14IESIA

_[14IG_

I_4H.]Pp_ES

THP_[._kIqD

to absorb a of knowledge,

h_ _

able to adaptandtotovarious conditions solve pr0b}ems erce tivaly and

HBP griduntes their resolves

_._

c_n oonU_ute in vaflous L_lds,

_:_

for examp]e as develapmem adm_'JstPatarsand project me_gers. Many othershave gone on to fttrther advanced studies, ]eading toa p1_ofesslonai statusIn

_._ _" O_

• Architecture • Planning • Quantity Sur_y_g

_t. _-_.

• CORSWd_Jon Ma_gement OR • Higher academic qu all flcaflon.

D]_/'rzs'rR¥ * Dentists

"_" must attend a dent_l

schoolapproved by t_e Commlstion on D_t_ Accreditation. graduate wlth oltheza DThey octurmay ofDents] Surgery or s Doctor o[ Dents] Medicine (DD.M.) degree.Dental studentsgo through dents] instructions, laboratory work, and pre-ellnlca] an_. practical experience. Th_s course of study usually takes four years to complete,

• Tb.e net,," cusrlco.lam Is compemncy-based, wlth emphads on ImpcrUng banjo skies essential to thepracticeof

The eusrl_ttlum thoukl provide adequsttet_aming fora dental graduate to practicesound ger0ez_tldentistry and to inzfll] a

deretlstry. The didactic program w_llteack relevant kn owledge and skims r.eeessary to tr_n a ccmpemnt generaldental practitioner. TMs willreduce c)¢essesin thecurriculum,

commitment hlsJher to leamlng throughout pro [esslor, sl B_e.

CHED REQUIREMENT

FIRST

FIRST YEAR SEMESTER

Gen. Anatomy I Gen. Microsnoplc Anatomy and Embryology Biochemistry Oral Anatomy Computer Program _

Hrs. LabUnits Lec total 3 6 5

._ _,

2 2 2 1

6 6 _ 2

5 5 4 3 21

;_ _:_

b,a Ox 4_

Appendix Table I. Continued... U'_JrI'E.DSTATES

MALAYSIA

INDO_IA

SINGAPORE

PI-I]SLIPPI_IES

TI-TAII_d_D

D_S'rJZ£ i TObe accepted at dental school, mndents must have at least three to four years of college education wlth COtLrses In sciences and htLmanl_es, They must also lake a national e_aminatlan. Preference ls oftnnglven to students who are resldent_q ofthestate inwhlc]_ thedental schoolIslocam-_, Admissions arebasedon s numberoffactors lncludlng scores on thenational exam, overell gradepointaverage and the gradepoint average for science classes and personal Interviews andrecommendations. Add]Oonaleducation must be obtaImedin order foedentiststo practice specialties,

• C]LpACai competency test_ will The dental graduate thou]d replace the current schedule, possess a thorough based cltntne] assessment, underste:adiog of the biological A student w]ll sl_, up for selences to esmbhi the competency lest s for different lntegra0on and out,elation of procedures after he or she has these b_slo sciences with adequate exposure to bns_c clhaical dental practice. clinical competency. This will Specff'ically_the graduates mus_ allow the more clinically possess the foflowing: competent students toprogress • Competenceind_a_qos]s of atafesmrrate. Atthesame oral anddental diseases time,sludents who may need i_]udW, g an Lmderstandlng of remedial he]pcan be Identlt']ed. therelatlonsblp between genere) andoral diseases. Therewill be moreIntegration* Skills roprovide the and ooordlnaOon between preventive and treatment - disc]pllnes anddepartments, services commonlyrequ]red in Thiswifl reduceduplication dents] precllce and increase multldiscipllnary • The ability to organize and te_chthg,Theintroduction of administera dental practice the Oral Blnlogym oduls efficiently Inlegea_es oral physiology and * Ahlllty tOappraise and apply ore! biochemlstry, wblohwere researchr_ndings andnew pses'lnuslyteugJhtin _[_erent technology departments. Other integrated , A commitment to conltnn]ng

SECOND SEMESTER Hrs. Units Leo Lab Total Gen. Anatomy I1 3 6 (H and N) Oral Mlcroseop_c 2 6 4 Anatomy & Embryology Gen. Physiology with Family Pt_.nnlng 2 3 3 Dents]Muterla]s 2 3 3 Nutrition 2 . 2 Mlcrobio]ogy 2 3 3 Total 21 SECOND YEAR FIRST SEMESTER Gen.Pathology 2 Pharmacology 2 Restorative Dentistry ) 2 Prosthodondcs I 2 (C&B) Technical ComposJtlon 2 Oze]Physiology 2

mullJdisolp]inary courses are edncaSon "Ibtal Cardiology, Occln_on, • A sense ofprofesslona]_ Radlo]ogy, Behavioral Science, ethicaland soda]responsibility SECOND SEMESTER Ethics and Jurisprudence and Oral Pathology I 2 Geaeral Practice M anagement. Restorative De_Jopment ofanalytical end problem-solvlng skills:

Dentistry I1 Proethodontics II (R P.O.) Prusthod ontios lI] (c,P .) Anesthesiology OrLhndontlcsI (Growth & Devl.) '_4al

_ _q_. 6 3

4 3

_ 6

4 4

2 3

_'_' N.

20 b

3 6

3 4

2 1

2 2 19

_" g2t

Appendix UNrrF.r)

Table STARES

1. Continued...

MAI.AYtilA

lI,_ C_F_.SIA

Thenew

currlet_snt

will Hm at

de.loping xtud,entd ena]yfl_l and problem.so_vlng siflls. Problem-based learning (PBL) has been intxoduced. P]_ Involves the presentation of a cltnleal problem to the smden_

S]ff4GAP O_F_.

Pi-IlLII'PIINES THIRD YEAR

Hrs. Ux_t.* Lea Lab lbta_ Oral Surgery I Orat Diag. & Trea t p]anxing Endodonties Orthodondes H Roentgeno_.ogy P_nelp]es of Medicine

Rese_h pr oJeets wl]l be given more emphasis in the new eurrlc u]um.

Practice Manago-.ment Clthle_l DenSs_y Total

(IT). wfi] be lneorf,technology. orated, exploitIT information where apI_]leable, in the eur_eldum. Stuclents wl]] be able to plug-in amvarlexs locations in the faculty, clinie_ lab oraq.ories, tutorla_ rooms, etc. to_e ab'le to access lr_or_a_on.

_'1

FIRST SEMESTER

and they will axta]y_ end then looi for tke lxformadon _emse]ces. This will lxain the studen_ to be lndepe_6ext learne_'s, an Import._.nt u'a.I t to acquire for survival in the next millennium.

Infcrmati0n. Technology The new eurrlen_Mm wffi

THAIIAND

2 2 2 1 2

2 2 3

_. (_ _._

2 2 2 2

_-_

_Ut

:_ 2

2 6 20 _%

SECOND SEMESTE_R 0_]. Surgery II 2 Techrdeal Composttioa 2 (Methods o_ Research) Peflodo_.fles 2 Ore] Pa_ology ]I 2 (Oncology) Dental 2Turisp:e_.tdeaee& Ethics 2 Commuai(y Dentistry I Fed oc_ontac s IFed_wle Dent_stxy) Ciixlc_]. Dex_]stYy I% ")ÂŁo',a)

J"_" _.

2 1 1

2 3

_3 -_

2 _-

2 2 -

2 2 18

6 21

Appendix Table 1. Continued... uNrr_sTATEs _YS_ DJ[_q3"IS'I'R_

_o_ Interna_Jenalstudent exchange lTrogramshave also been introduced, Sl_den_ _t_Lapply tovisit de_t_J schools inthe US, C_nada, Yapan, and Australle as anelective. This will broadenstudent_' outlook and experience. IntandemwiththeUniverse's brc_,d-hased edu_atlon_ students will have to take a cress J_aeu]tym _iule o[ their ixiterest _Lnd choice, Wi_ these changes, the faculty hopestonurture through the e,aa'rleu]tmt nut only a haowledgeab]e graduate but v_e witha sensee[ von_tdence and pr_de in his pro_es_un. It also hopes to produce L_.dependent_ner_ wlth a commitmenttowed cont_nuing education.

smo,.P_

r_I_s FOURTH YEAR FIRST SEMESTER Hospital DenOstryI 2 Comm_ty Dentistry II 2 Special studies: Restorat%e Dentistry 1 Pres_odonUes I Ora] Med, & Oral Surgery t [ Orh"..e-Pedo 1 CJinlcal Den_stry HI 30 TOTAL SECOJ_DSEMESTER HeapRal Denflslry II 2 Community Dentistry III I Special Studies: Restorative Dentistry I Pruazhodentics i OralMed & Oral Surgery II i Ortho-Pedo i Clh3JealDentistry IV Total

3 1 i i 1 10 20

_' J'_' _*

_ 1

_ _

1 I 30 l0 20

SUMMARY L Pyol:e_ona] Dental/Medleal Courses 105 IL Clinlca]fH ospIt_I Den_stry 46 HI. Speclal Studies/ Seminars $ Tot_l L59

_'_"

_2, _P_ f3 _3

Appendix Table I. Continued... STATES

• Individuals asl_iring to become regtsteced nurses may pursue an _ssocl_te degree In ntsrsi_g e,J]m1_a Lhtg In AJ).N,; _chelor ef Science Dogie in nursing.called a B.S J4.; et a diploma program, gssocleta arid _xehdoFs Degree programs are offered ha community eo_eges or Universities. The diploma program Is o[[ernd by the ltospital. Lenglh of program var_-s. A,D .bldegrees usually requires _wo years of sch ogling whl]e dlp._om a proyams ]ast _o two 'cothrees_ars.The B.S.bl. !wiltgencrally take four yeers. ' Any of the three possible •programs wlH qtmItfy Individual for er,_y.levet losltl,_ HowereL earnings and advancement will be better [or tlrnse _SH's.Nurses' tr_ttnlng includes cl_ssrnom stud.y, supervisedtraining and cfinlrnl experience. CJasses includea_atomy, microbiology, chen)Js_.y, nutvl,tlon, physiology., psychology, nursing, _nd computer usage.

MALAN_[A

INDONESIA

SINGAPORE

pHILIfiPp_s

• The nursing program is z eemmunity-orJerd_ed, competancy ba_ed program

Components l ,Gencl_]

conststJr.g of two egualty important components--theory and practice (Related Learning Experiences).

of the Curriculum E_uca:lon

36 oredJ_

a. Languages b. Humanites c. Social Science d. Basic Science And MaLh e. Physica_ Edur.

B credits 4 credits 4 credits

* A modified teara teaching spproanh ha handling c]e.ssroom responslbiLite s, i.e., 2. Preprofessicz_l teaching one nursing course is • Education a shared responxtbRity with a specific unltbeing faugh', by 3_ Professional the hculty members whose Education expertiseliesInthat. pzrttCtLtar field.

4. Elective

CHED _ent_

TOTAL CREDITS

BSN: NURSING 1. General EducalJan

L_nguage

and LRorature (21 Unlts_ Mathematics and Namr'_] Sciences (25 units) SocialSciences(27units) Total 73 units 2.Nursing 3. PE Total

72 ttnP.s 6 8

19 credits i credit

_'_

_'_ 72 el'edits 6 credits 142 cyedlts

Barhe]ar of Nursin_ Science Prega'am • Through the na0cn_] entraJtce exanLlna_on organ]red of Minis[ry c_ University Affairs Through a writtenand o_] exam o_ganizod by _e ccnunittee

153 - 159 untt_

Summary 4.N - 105FiursingPracticeIlI

_-_

28 crod_ts

Admission: There are two modes of admission in

•

_'.

_'_ "__" _. C) _'_ _) r_ r_ _*

Applicantmust possessMC CertJflcato or its equl_lent as issuedby theMirdstryof Edncaton. Good I)hysical and mental hralth_and dean record of good behavior,

g3 b_

t_ Ox ",4

bo Ox Co

Appendix UNITED

Table

1. Continued...

STK1]ES

_Z_ILAYSIA

INIJONESIA

SINGAPORE

PI-IILIPPD_tES

THAILA/qD

The ctegree of Bachs]or of Ph_macy widl Honors is awarded after the student has successfully fulfilled all site requirements of a four-year pharmacy program. The Ph_mncy coh.trse consists of basic., core, elsetive, option or minor and language courses. The main course can be divided into basic and core courses_in addisiou slaezive courses Sat p_ov_de additional knowledge on certain areas of pha]'macy wllich the school considers ere importantand useful toward the progress of the profession. Students may choose any elacrlve course that is offered, Minor or option cot_scs, on the oilier hand, are courses in Humanities_ social sciences, and management such as sociology., econom_cs_ public relarions_ marketing,

. Offers a general four-year plan ieading to a degree of ]lathe]or of Sclanee in Pharmacy where instrucUon is focused in the three fields of discipline, namely; community, ma'ttufauturlng and hospital pharmacy. Since the profession of Pharmacy is ear vice-oriented in natare_ _t is inculcated specially in commun ity pharmacy or drugstore practice where the pharmacist and patient eou,h_rge.

The faculty s_res to produce highly qualified pharmacists who have full responsihility in securing the welfare of people concer_ing drugs and drug use. Students must complete two years of I_tsle science study and three Fears of professional stud)'. They will also _0e rCcLutred to complete 500 hours of pharmacy clerkship,

aenaur, ting. maaagemenL and advertising. These cou.rses are intended to equip the students to iatsract ¢onstrdet_eiy with scciety_ culil_ate an understandlng auitude toward people and develop a strong sense of reeponsibili D"toward the

is baulked by its af_ihations with the major hospitals in the city to augmen'E tile intense' knowhow in hospilal and elirdea] pharmacy.

PHAIL MA_'x • Pharmacists must graduate from a collage of pharmacy accrcdltsd by the American Council on Pharmaceutical Education. The. minimum rcquiremnat for phsrrnaclst s includes attendance of at least five years of college, resulting in a But'he]or of Science oic s Bachelor of Pharmacy degree, Some indicidua]s choos_ to obta]rL a Doctor of Pharmacy degree or Pharm.D. A bachelor's degree is not required to enter this type of program.Instead the aspiring pharmacist w_,] go through six years of school in a combined bachelor's and dceloral program. (A bachelor's degree tenet awarded), Those who choose to obtain a bachelor's degree first may also go for a doctoral degree, will usually take longer,

but it

Individuals could also ohmic a Masters Science Degree in pharmacy l[ they are Interested in research, teaching, or admBitsu,atiYe positions,

ocram Wlit y, Main courses

b._

_'j • To supplement tile manufactuling pharmacy prugram, plant tours or _-ieits t_ pharmaceutical companies are encouraged as exposure to producing quality medicines. •

Hospital

pharmacy

u'Mning

_' _.

6_ _,_ Ob "_ _.

_. _:_

offered

at level 100,

200, 300_ and 400 Carl "so divided into various disciplines, namely:

_._J q)

C3 Appendix IYNTTE_

Table

1. Continued...

STA']tlES

MALAY_LA

PHARMAL-'_ EnLrancc requirements to colleges of pharmacy vary. Some schools require Individuals to take the Pharmacy College Admission test (P-CAT). Others requtre up to _wo years o£ pro.pharmacy education in an accredited twoyear school, coUege or university. Some schools admit studenLs after graduation,

will

INDONESIA

• •

Pharmaceutical Phermaceuti_t]

• •

technology Physiology pha_rmacology, and Clinical Pharmacy

Chemistry

These ccur:_es are In_egraled In the ourrieuLlum.

SLMGAPORE

PHILIPpEN_

THAILA]_ _'_

_:_ _. :_ _3

Besides these, mathema_cs, s_dlstJes and foren_c pharmacy courses are of [ered as main profe*sional Pharma_utlca]

courses.

Chemistry

emphasizes th_ application of the principles of basic chemistry to the study of drugs, their physieo chemical propertiesj strit_tlires, and their relationshlp to biological aclivlties. Analytical techrdques for idenllfieat.Jon and quality control of drugs and some aspects of natural product chemistry are also covered. Phasmaceutica] Technology provides 0tc liuowhdge in pharmaceutical _ormulat]on and pro T,aea fion_ indusIJ'ial processes_ quality control, micsobiologica] control, besides biopharmacy and pharmacoklnetic

espeols.

Ethics and Pharmacy Legislalion Course is also provided to enable students to gain the necessar yknew]edge pertaining to ethics a_d legal respon_bil_ies era l_lmrrrtacist.

_" t'_

_.,. _.r.._, __, :_

t_ OX ',0

270

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About theAuthors Dr. Leonardo

A. I_nzona

Jr. is the Chairman of the Ateneo

de Manila University (ADMU) Department of Economics where he is also an associate professor. He obtained his doctoral degree from the University of the Philippines School of Economics in 1992 and was a post-doctoral fellow at Yale University from 1994 to 1996. Prior to his current post, Dr. Lanzona was the Director of the Ateneo Center for Economic Research and Development from 1996 to 2000. He also did research work at the International Rice Research Institute and the Institute on Church and Social Issues in the 1980s. His areas of expertise include labor, agricultural and development economics, econometrics, and policy formulation and development planning and he had written several research studies and publications on these topics. Dr. Fernando 2/'.Aldaba is the Asia Research and Advocacy Officer of the Catholic Institute of International Relations, a U.K. nongovernrnent organization (NGO) and an assistant professor at the ADMU Department of Economics. Fie was Director of the Ateneo Center for Economic Research and Development and also Executive Director of the Ateneo Center for Social Policy and Public Affairs before assuming his current post. Apart from being an academician, Dr. Aldaba is involved in a lot of social and community work and served as National Coordinator of the umbrella organization Caucus of Development NGO Networks (CODE-NGO) from 1990 to 1993. He was instrumental in the formation of several other NGOs and people's organizations (POs) dealing with labor, AIDS and legal assistance, among others, and is a board member and consultant of various NGOS and international and local development organizations. Dr. Divina M. Edralln is the Director of the Center for Business and Economics Research and Development of the De La Salle UniversityManila (DLSU) where she also obtained her Doctor in Management degree in 1991. She is also a full professor at the College of Business and Economics. Dr. Edralin is a management consultant and trainor of trade unions, schools and NGOs. She also conducts research on HRD, industrial relations, gender, entrepreneurship and child labor. 275

Dr. Virginia A. Teodosiois a full professor at the University of the Philippines School of Labor and Industrial Relations and Administrator of the Cooperative Development Authority. She obtained her Ph.D. in Political Economy from the University of Sydney, Australia in 1988. Dr. Teodosio is a leading advocate of cooperative housing and other forms of cooperativism and is the national president of the Alliance of Cooperatives. She has written numerous books, monographs and articles on tripartism, labor and industrial relations, housing cooperativism, and other labor issues that have been presented in international and local conferences. Dr, Tereso S. Tullao Jr. is a full professor at the DLSU College of Business and Economics where he was also the Dean from 1996 to 2001. On a Ford Foundation scholarship, he took up his Master's degrees in Development Education at Stanford University in 1974 and International Economic Relations at The Fletcher School of Law and Diplomacy, Tufts University, USA in 1980where he also got his Ph.D. in 1982. Dr. Tullao received several Outstanding Teacher awards from DLSU and one from the Metrobank Foundation. He also had short stints as Visiting Professor at the Institute for International Studies and Training, Japan, Shanghai. University of Finance and Economics, PRC, Ohio University, USA and Waseda University, Japan. In between his academic duties, Dr. Tullao also served as consultant of various government and private institutions on economic and educational issues. A prolific writer-researcher and an advocate of broadening the understanding of economics especially among the masses, he wrote several studies in both English and Filipino on issues regarding economics and education. He is the author of the first Filipino-English dictionary of economic terms which earned him a Manila Critics Circle award in 1990.

276

About thePASCN established on November 23, 1996 by virtue of Administrative he Philippine Study Center Network (PASCN) was Order No. 393, asAPEC the Philippines' response 1:othe APEC Leaders' Education Initiative. Among the goals collaborative research on APEe-related of information organizations,

between

or among

academic

or research

of the PASCN are to promote issues; facilitate the exchange

government

and nongovernment

institutions,

business

sector

and

the public in general; encourage facnlty and students of higher education to undertake studies, theses and dissertation on APEC issues; undertake capacity_building

programs

to APEC; and provide private

organizations The Network

Ateneo

de Manila

for government

technical

assistance

on APEC-related is composed University,

agencies

on matters

to government

and

initiatives.

of the Asian Institute

Central

agencies

Luzon

State

of Management, University,

De La

Salle University, Foreign Service Institutc, Mindanao State University, Silliman University, University of Asia and the Pacific, University of the Philippines, Philippine Secretariat.

University institute

of San

Carlos,

for Development

277

Xavier Studies

University as Lead

and

Agency

the and

, ~

~ k'

!III

. JI!2I

. III