This paper evaluates the active labor market policies within the context of labor market trends before and after the 1997 Asian financial crisis and the 1998 El Niño weather disturbance. In the 90s, employment grew every year but it plunged on a downhill trend in 1998 as employment in agriculture, industries, construction, manufacturing, services and mining deteriorated. The jobs generated during this period were transient, not permanent and non-regular.

Displaced workers and those who cannot afford to be jobless created employment usually in the informal sector. The economic crunch forced companies to adopt contingency measures to weather its blows. These measures included implementing flexible time schedule and job rotation; granting smaller salary increase and suspending some benefits; reducing work time; cutting training budget; merging jobs, departments and divisions; deferring expansion plans; laying off workers; and contracting out some services.

The number of newly registered or restored unions fell, and so was the number of new collective bargaining agreements which plummeted as it averaged 1,200 in 1990-96, to about 450 in 1997-2000.

Overseas employment, on the other hand, ballooned from 446,095 workers in 1990 to 841,628 in 2000. As the domestic economy was unable to expand its absorptive capacity to accommodate the growing labor force, many workers found employment overseas.

The paper discusses the various government interventions to address the problem. In anticipation of the massive displacement of workers following the financial crisis and the onslaught of El Niño, government established a labor market information system, and a monitoring system for distressed industries. Displaced workers were provided with a comprehensive package of assistance that included training/re-training, rural works program, employment facilitation assistance, education assistance for their children, livelihood loan referrals and investment counseling. This assistance package for displaced workers has been in effect since the Philippines’ accession to the GATT-World Trade Organization.

The DOLE Mindanao Plan, on the other hand, responds to the immediate needs of workers affected by the armed conflict in Mindanao about middle of 2000. The plan integrated rural works programs, training, livelihood, and employment facilitation.

Government also forged multi/bi-lateral labor agreements and arrangements for overseas employment, created programs to maintain industrial harmony and stability, implemented key employment generators, developed economic zones/growth centers, promoted rural industries and village enterprises, modernized agriculture and fisheries, promoted tourism, conducted jobs fairs, developed local conduits of employment and set up Phil-JobNet, an online job-matching system. Government also reviewed the Labor Code to introduce reforms in the legislative and institutional framework to make it more responsive to present trends and the dynamics of globalization.

The study concludes that a progressive employment landscape will be difficult to attain unless the following conditions are in place: stability in the macroeconomic environment; implementation of reforms conducive to private sector investments (e.g., tourism, ICT, housing); inflow of investments in durable equipment and new buildings; sustained growth in exports; pursuit of policies to increase agricultural productivity and rural incomes; modest recovery of construction; strong growth of services; and maintenance of industrial peace.