By Reneo Ofreneo – October 4, 2018
Apart from the Security of Tenure (SOT) bill pending in Congress, two other major labor reform proposals await the government and its employer and union social partners. The first relates to the proposed law recognizing the right of workers in the huge informal sector to form associations as well as the right of the informals to negotiate with the national and local governments on basic social and economic services. Dubbed as the Magna Carta for Workers in the Informal Economy or MCWIE, this laudable bill has been languishing in the legislature since the 13th Congress.
The other reform proposal need not be legislated. It is a proposal for the tripartite social partners to develop a Social Contract or partnership on how industry and workers/unions should cooperate in managing work adjustments under the Fourth Industrial Revolution (FIR), referred to these days by industrial relations practitioners as “industry 4.0”. Like productivity, union-management cooperation does not work if imposed as a law. The old productivity gain sharing law is a dead law. The parties themselves must learn to respect one another and build up the partnership through shared values and a purposeful sharing of gains and pains.
The FIR is a fusion of “cyber-physical systems”. It weds the capabilities of people and machines. Thus, the rise of robots, artificial intelligence machines. Inextricably, the FIR has been ushering in changes in the way business is managed, including the way work is organized. Most of the studies point to a dismal future: jobless growth, meaning less or reduced job hiring. Example: robots are reducing the demand for electronics and auto parts assemblers. Similarly, “sew-bots” are replacing some of the shoe and garments workers, while “chat bots” are doing part of the usual interactive work done by call center agents.
The dilemma for the Philippines is that its industrial production is greatly dependent on the “automatable” assembly of electronics, auto parts, garments and shoes, and the leading segment of its service sector, on the “automatable” ICT-enabled call center operations. There is clearly a need for the DTI and PEZA to revisit the government-planned program of scaling up the country’s participation in the global value chains (GVCs) of the multinationals at a time when these multinationals are reducing worldwide the outsourcing of labor-intensive industrial processes due to the FIR or technology revolution. For example, Adidas has managed to bring back shoe manufacture to Germany and the United States through the magic of robotization.
There are, of course, new industries that are emerging under the FIR such as the ride-hailing transport industry and the online freelancing business. The immediate problem, however, is how to maintain and grow jobs outside these new industries, meaning how to preserve jobs in the existing businesses and industrial establishments at home, export-oriented or not.
Whether the unions like it or not, the bigger and highly-capitalized firms are likely to institute job-displacing technological innovations and work adjustment measures because of business survival requirements in an increasingly technology-driven market. These adjustment measures raise critical policy concerns which the government and the tripartite social partners need to address.
First, how should the tripartite social partners deal with the dislocating impact of the technology revolution on business and employment, especially in industries that are most vulnerable to automation and robotization? Can they come up with a consensus or a social agreement on information sharing, consultation with all the stakeholders and on appropriate adjustment measures, for example, modernization measures that do not lead to job displacement?
Second, has the government developed, with the cooperation and support of its tripartite social partners, a concrete road map on how the Philippines shall survive and prosper in the digital era, specifically, programs promoting job creation, social protection and education/skills development for all. There are some vague pronouncements on this coming from the DTI. But there are no such announcements from the national Tripartite Industrial Peace Council (TIPC).
On the other hand, there are no Labor Code provisions dealing with the rules for ICT-related or cyber-based work. For example, should Grab drivers be treated as “independent contractors” or employees? Who pays for their social security coverage under the SSS? Where are the metrics to measure and ensure fairness in transactions related to online freelance work? How about fairness in the work loads or assignments given to those who work from home? Can the Grab drivers, online freelancers and all those working from home outside the formal building offices also enjoy the rights to form unions and bargain collectively?
Finally, at the macro economic level, are there programs for the excluded, especially the unbanked and the informals who have no access to the Internet? Without a vigorous affirmative program for the excluded, social and economic inequality in the Philippines, considered one of the worst in Asia-Pacific per a World Bank study, is likely to deepen. Study after study shows that technology modernization exacerbate inequality because technology-based industrial transformation usually lead not only to less workers being hired but also because productivity – and profits – are doubled or multiplied, with the gains going mostly to the pockets of the investors themselves.
Clearly, DOLE needs to convene the TIPC to address varied concerns under the FIR. The unions, in particular, have urgent tasks, such as understanding how the technology revolution is affecting jobs, industry by industry. They should be able to formulate alternative policies and programs on how to preserve and create jobs while society or industry is modernizing.
But, overall, the tripartite social partners should be able to sit down together to anticipate and discuss the unavoidable technology changes and, together, forge “strategic choices” in terms of business and work adjustments. Paging Secretary Bello of DOLE and Secretary Lopez of DTI!