Deputy Executive Director Ma. Luisa Gigette Imperial presented this paper as a reaction to the presentation of Dr. Gerardo Sicat entitled “Reforming the Philippine Labor Market” during the Roundtable Discussion on Philippine Employment and Labor Market Reforms. This forum was jointly organized by the Philippine Institute for Development Studies (PIDS) and the Philippine National Network of Institutes for labor Studies (PNNILS) on September 29, 2004 in Makati City .

The paper seeks to provide readers a good understanding of present labor policies with the ultimate objective of generating recommendations on how to improve the labor policy environment. It focuses on three major issues raised regarding current Philippine labor policies, namely: (1) labor policy is along the standards of highly developed markets, which is not congruent with the country’s level of development; (2) labor policy is highly regulatory and protective of workers’ rights, which is not suitable for a country with a huge labor surplus; and (3) labor policy is pro-employed rather than employment-oriented, therefore aggravating the unemployment problem.

On issue No. 1, the paper admits that Philippine labor policies are along the standards of highly developed markets because they are benchmarked along international labor standards.  The Philippines became a member of the International Labor Organization in 1948, during the time of President Quirino, regarded as the golden years of Philippine labor.  It was during this time that giant strides in labor legislation were taken, never again equaled in Philippine legal history, but which nonetheless laid the foundation on which labor policy would proceed.

It notes that the policy of benchmarking along international standards was instituted at a time when the Philippine economy was relatively more developed compared to its Asian neighbors.  The paper provokes readers to inquire that if the economy has failed to sustain this relative level of development, should labor policy and standards retrogress?

On issue No. 2, the paper explains that labor policy is considered a social policy.  As such, it is inherently protective of workers’ rights and welfare.  The government’s reason for intervening in the market is to balance the cold “invisible hand” of the market, because the reality is that the abundant resource has little bargaining power in a free market economy.  Therefore, there is more need for protective labor policy in a labor surplus economy. The paper emphasizes that among government policies, labor policy is the only one that looks after the welfare of workers – employed or not.

On issue No. 3, the paper reasons out that Philippine labor policies tend to be pro-employed rather than employment-oriented because employment generation is not the primary function of labor policy.   As a social policy, it cannot dictate the path of economic development.  It can only support labor-intensive development, but it cannot determine it.  Since employment is primarily a function of economic growth, then employment generation should be the primary function of investment, trade, fiscal and other economic policies. Sadly, however, these economic policies have no employment bias.  Many are even anti-employment.  In fact, the paper notes that previous Philippine development plans have treated employment as only residual to growth.  As residual, it was taken for granted.  The paper adds that the Labor Department has long been advocating for employment to be placed high in the national policy agenda but it was only in the new Medium-Term Philippine Development Plan that employment was given proper focus.