Union activism inspired by Duterte becomes a factor of fear of investors

MANILA – On the outside of a sardine cannery in the Manila harbor district, a shantytown serves as a makeshift headquarters for disgruntled employees who went on strike in July.

"They treat us unfairly all these years!" Sonia Gabato, a 54-year-old cannery worker, said on Oct. 6. She and a colleague had just completed a handwritten testimony detailing the allegations made against their employer, which will be submitted to the Ministry of Labor and Employment.

Throughout the city, in the capital's business district, Bonifacio Global City, maintenance agents declared a hunger strike on October 5 in front of the posh condo they had been working for for years. "We will fight until the end," said 58-year-old Abdulatip Tambungalan.

Under President Rodrigo Duterte, who defended labor rights during his campaign, such protests are more common than before. Strikes and impending legislation aimed at solving workers' frustrations risk blurring the prospects of some companies and pushing international investors to think twice.

In 2016, the year of entry into function of Duterte, the number of strikes climbed to 15. In more than three times the number of the previous year, it exceeded the total number of interruptions since 2011. The workers have organized nine strikes in 2017, but this number has still exceeded double digits this year while workers emboldened by the President's rhetoric are impatient.

"[Workers] feel more protected under this administration and they have a broader means of organizing a strike, "Benke Benavidez, deputy secretary of labor, told the Nikkei Asian Review.

Duterte, who once called himself a "socialist", launched a wave of activism with a passionate promise to end contractual or temporary work, which critics say would deprive millions of people of job security.

"I tell you, you choose: stop contracting or I kill you," said Duterte to the companies in early August 2016, in a televised speech delivered a week after his swearing.

In order to put an end to a decades-long communist insurgency, Duterte has appointed Communist Party members to key government positions – including within the Department of Labor. Radical workers' groups have galvanized unions. Strikes at the sardine cannery and co-ownership were sparked by groups associated with the political left, according to the organizers.

The situation was different under the predecessor of Duterte, Benigno Aquino, who showed a low tolerance for labor disputes. In 2011, Aquino warned strikers of Philippine Airlines that they could be prosecuted for "economic sabotage". In 2013, the country experienced only one work stoppage.

Benavidez suggested to the workers to know that Duterte was at their side. "If I have a president like Duterte who would shame the employers in public, my confidence as an employee will be enhanced," said the assistant secretary.

In July, during a state-run mediation process, contract employees competing for permanent jobs with food producer NutriAsia clashed with security personnel. The following month, Coca-Cola Femsa, of Mexico, decided to leave the Philippines after a dismissal move triggered a major strike.

Although some demonstrations went wrong, Benavidez said the strikes could be managed.

Edgardo Lacson, president of the Confederation of Employers of the Philippines, or ECOP, said the strengthening of trade union militancy was not yet alarming. "Yes [affected companies] are involved in essential services such as banking, telecommunications, transport or are of national interest, it would be alarming, "Lacson told Nikkei.

Nobody can guess how long the critical industries that he cited will remain uninterrupted.

In September, a union of the largest telecommunications company, PLDT, filed a strike notice. Alorica call center agents made a similar move, the first in the $ 24 billion local outsourcing industry. According to reports, job security was the main demand of both companies.

Lacson considers the demonstrations as a mere "noise" and points out that employers face a more serious danger.

Earlier this month, three major business groups – ECOP, the Philippine Chamber of Commerce and Industry, and the Philippine Exporters Confederation – joined forces to oppose a bill that would essentially ban work under the law. contract.

The bill in question is Senate Bill No. 1826, also known as the "Law of 2018 on the security of tenure and the end of the endo". Endo refers to the "end of contract" or the practice of hiring and replacing workers every five months to circumvent a law requiring regularization after six months. This keeps labor costs down because permanent employees are entitled to benefits such as paid time off.

In September, Duterte asked Congress to speed up the processing of the bill.

"It is important that we pass this law, and finally put an end to work programs such as" endo "contracts and contracts exclusively for workers," said Senator Joel Villanueva, the lead author of the bill. The legislation would benefit 1.9 million workers in the private sector alone, he said.

The bill prohibits all contracts of employment, even the outsourcing of seasonal workers, opponents believe.

"Prohibit all forms of employment contracts will be disastrous, especially for micro, small and medium enterprises," said the companies in a joint statement. "Higher costs for doing business and lower productivity rates will give a lot of our [smaller employers] no choice but to close stores or employees. "

Small businesses make up 99% of Filipino businesses.

Legislators have also introduced other pro-labor bills before the mid-term elections next year. The proposed measures include the extension of maternity leave from two to three months, granting an additional two months a year pay to workers and the imposition of a salary national daily minimum of 750 pesos, up to 521 pesos depending on the region.

Investors become nervous.

Evangeline Daquilanea, senior consultant at Willis Towers Watson, said that these bills heightened the anxiety of foreign companies that had already suspended their plans to expand, fearing another proposal to reduce tax exemptions. income tax in order to pave the way for a reduction of corporate tax.

"These are things that companies are pretty anxious about – if [business in the Philippines] will be sustainable at all, "she said.

The competitiveness of the country is at stake. Corporate investors "could look in other countries" with less headaches, warned PCCI President Alegria Limjoco.

For now, Duterte 's approach to work looks like a win for the working class. According to Benavidez, an unprecedented 303,000 employees have become permanent since taking office. Workers raised about 2.5 billion pesos ($ 46.4 million) in monetary benefits from voluntary arbitration, said the Labor Department.

The Japanese manufacturer of electronic components Murata Manufacturing has felt the impact of this year, while it was ordered to more than 400 regular workers to be employed in just two weeks. This meant that the company was forced to extend benefits such as food allowances. Murata says her staff costs have jumped 20%.

However, companies whose profit margins are shrinking can not expect much sympathy from workers hit by inflation close to 10 years.

The Philippine Trade Union Congress, the largest group of moderate workers, said at least four union members had asked their employers to renegotiate collective bargaining agreements because of rising commodity prices.

The Congress of Trade Unions on Monday demanded an increase of 334 pesos in the daily minimum wage compared to the current 521 pesos in Metro Manila.

Lacson said employers could only absorb a daily rise of 20 pesos. "We already have one of the highest minimum wages in ASEAN," he said.

Mr. Lacson is nevertheless optimistic: the bill on job security will reflect the interests of businesses in its final form. "We do not bother the president with that," he said. "We talk with the economic managers, who advise him on what to do."

Some signs even indicate that Duterte is beginning to rethink his union populism.

In September, he accused strikes organized by a leftist group called Kilusang Mayo Uno, or May Day movement, to be responsible for the closure of factories. This month, he fired Joel Maglunsod, a former left-wing union leader, in the midst of friction with the Communist Party.

Lacson said that Duterte's recent moves are encouraging. "We hope that he will eventually see the light," he said.

Benavidez also said that the government would promote "regulation" of contract work "rather than prohibition". But the spokesman of the Congress of Trade Unions, Alan Tanjusay, said that Duterte should follow and abolish the contract work.

The rising cost of living, traffic degradation and perpetual floods are weighing on net pay, said Tanjusay. The hardly increasing wages, he said, are a "recipe for social upheaval".

"At the moment, Duterte's popularity rating is still high, but when it's at a point where it's difficult to [appease] Mr. Duterte will have a problem, "said Tanjusay.

Protecting the interests of workers and investors is always a difficult exercise, especially in a country where a fifth of the population is poor and many live on minimum wage.

In December 2016, a study by the Philippine Institute of Development Studies, a state-run think tank, had warned against the ban on contract work. "It appears that the need to immediately end the endo is exaggerated and could significantly hinder the achievement of inclusive growth," said researchers at the institute, claiming that such jobs "play a role valuable in keeping the Philippines economy efficient, competitive and inclusive. "

Some ordinary workers say that appearing on a regular paylist is not everything.

Rica, 19, became a permanent staff member of a fast food company in June after working on contract for more than a year. "But what's more important to me is to have a stable job, a place of work where people do not fight … and a company that is doing well."