The Impact of the AFTA on Philippine Labor and Employment

Economic planners anticipate some adverse short term effects in the implementation of the ASEAN Free Trade Area (AFTA), particularly for workers of inefficient firms.  This could translate to the temporary reduction in working time and/ or income, or even permanent separation of the workers from their jobs.

The emergence of new skills required by new technologies needed to attain or maintain competitiveness of new and growing industries will have to be addressed.

Skills training and re-training programs will be necessary for workers of “losing” industries as they try to find jobs in the “gaining” industries.

Industries which are most likely to gain from AFTA will be the first to experience growth in productivity, with the corresponding boost in employment generation.

Workers’ apprehensions on AFTA stem from the possible cheapening of labor through the freezing of wages in uncompetitive industries, and the displacement of workers in losing industries.  Other foreseen problems include the proliferation and legalization of flexible working arrangements, and an increase in taxes, specifically in value added taxes (VAT).

The perceived anti-protectionist nature of AFTA may create a negative impact on the industrial relations climate, leading to restlessness in the labor front.  Losing industries may resort to plant closures, reduced production, and reduction in working hours.

Manpower resources should be mobilized toward more productive industries with high growth potentials.  Standby adjustment measures of safety nets are also required for affected industries as well as displaced workers.

The principal mechanism by which adjustment-facilitating nets and measures are to be implemented is through the DOLE-supervised Public Employment Service Office (PESO).  The PESOs will serve as one-stop-shops and provide a whole range of services under the DOLE.

With regard to manpower development, the National Manpower and Youth Council (NMYC) training system will take the lead in the provision of training and re-training services.