Job adjustments under the technology revolution: What will the tripartite social partners do?

October 4, 2018

AER-Industrial Policy Team

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!

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