From Blogger to Wordpress!

Friends, I have transferred this blog to Wordpress. Blogger.com has been good to me but i realized there are features in Wordpress that I badly need (eg categories, page, etc). I also have problems with my feeds and I've been asking Blogger.com about it but to no avail. It seems Blogger is just too successful to attend to my stupid, trivial queries. So, to friends and bloggers out there who like this blog, to those who have linked me up, I would appreciate if you update your links on me using this address: www.davellorito111.wordpress.com.

Thanks a lot and hope you continue reading my blog.

dave

Malacañang flip-flops on EVAT

WE thought all along that Malacañang badly wanted the EVAT implemented to address the budget deficit and balance the budget by 2008. That is why, against widespread protests, the government raised the value added tax on many products including petroleum from 10 to 12 percent, and expanded its coverage to other products that were not previously covered.

When the Supreme Court finally the lifted temporary restraining order that delayed EVAT’s implementation, Malacañang rejoiced, telling the people that the country could now achieve fiscal consolidation, and that soon the sovereign rating agencies including Fitch and Moody’s are going to get nicer with us, thus enabling the country and its entrepreneurs access to cheaper money for economic expansion.

That is why we were surprised by the recent announcement by no less than presidential chief of staff Michael Defensor saying Malacañang might recommend to Congress the suspension of the coverage of the EVAT law on petroleum products, supposedly to help cushion the impact of rising crude prices on goods and services. Defensor even dared Congress to legislate the EVAT amendment on its own without any prodding from the Palace if it believes in the urgency of the measure.

“The Senate can see that the ones to be most affected by this issue are the people so they would surely cooperate,” said Defensor to Palace reporters. “This is not for the President but for the people.”

Why the sudden of heart? How come, all of a sudden it’s Palace officials who are so hell-bent on reversing hard fought reform measure? Why is Malacañang leading the way for policy backsliding?

Certainly, the proposal looks politically attractive but its definitely ridiculous when viewed from economic and governance perspectives. Suspending VAT coverage of petroleum products means we may have to kiss goodbye the objective of consolidating the country’s finances. The initial estimate says the country will forgo collection of at least P20 billion a year, translating in the continuing lack of investments in economic and social infrastructure that is needed for economic takeoff. Albay Rep. Joey Salceda said the government could compensate for the losses by selling more government assets, but we know that this process takes forever to yield money for the government.

The Philippines right now is not attractive to foreign investors for one major reason: policy instability. Leaders could not help but keep on changing policies midstream, thus scaring away investors. Now, Malacañang is going to hurt the country’s image in the international business community even more with another policy backsliding. The country’s credit rating would again suffer. No one will take us seriously anymore; we simply don’t have the guts to implement what it takes to be an economically progressive country. And for what?

The proposed suspension really doesn’t make sense because its impact will only be temporary. Movements of crude prices in the world market are determined by a host of factors beyond Malacañang’s control (e.g. rising demand from China and rest of the Asia-Pacific region; political troubles in the Middle East and Nigeria; the lack of refinery capacity) and its continuing volatility would make a mockery of Malacañang’s proposed tricks to deal with the problem. Supposing Malacañang got its way and suddenly crude prices radically moved again. Will Malacañang restore EVAT coverage or remove it depending on the movement of crude prices? Crazy.

Common sense dictates that the best measure to deal with volatile crude prices is to allow fuel prices to rise to market levels. This is painful but sensible, as real prices necessarily drive fuel consumption. When prices are high, the sensible thing to do is reduce consumption and this could be achieved through old-fashioned energy conservation measures, including the traffic demand management measures. In fact, allowing market forces alone to determine prices would force people to modify their behavior in order to conserve energy. Of course, this policy should be complemented by other means, including encouraging private investments in alternative energy sources (ethanol, biodiesel, natural gas, wind, among others).

It’s apparent that the proposal to suspend EVAT coverage of petroleum products is really all about making political scores—a fair assumption, seeing the recent spate of populist policy announcements. Palace officials were not bothered by one AFP area commander’s reported remarks about issuing shoot-to-kill orders for suspected military rebels. And yet, just a few days before, the President announced the commutation of death sentences of rapists, murderers, and terrorists. Sensing that it was a popular move, Malacañang announced it will work for repeal of the death penalty law.

Early last year, Malacañang told the world the debate on the mining law was over after the Supreme Court ruled with finality that the Mining Act is constitutional. After that, the government and the private sector sent delegates on a roadshow abroad to tell foreign business the Philippines is now open for mining investments. Malacañang also hosted delegations of investors from China and Australia, boasting that soon the economy will be boosted, courtesy of mining money to be poured in by foreign investors. Yet, a few weeks ago, sensing a continuing critical attitude from the bishops about her administration, the President ordered a “review” of the Mining Act. And now, Malacañang is about to commit another policy flipflop with the backsliding on the EVAT law. Does it even matter what the consequences on the Philippine economy will be?

Policy flip-flops are sometimes seen as signs of either a sincere change of mind, a lack of political will, or plain cluelessness. Yet they could also indicate cynical politics at work.

Charter change on a chartered train

THE D-day is to fall on July 2006. By this time, the Philippines would already have a parliamentary form of government. Will it be federal? Unicameral? Will it be patterned after the French model? Who will be the first prime minister? No one knows the answer. But one thing is certain, at least if we believe House Speaker Jose de Venecia, the deadline is cast in stone.

By the words of no less than President Arroyo, the train for charter Change has left the station and anyone who stands in the way runs the risk of being run over. Too bad because from the look of things, the first casualty by this well-oiled political locomotive will be the truth.

What are the potential benefits of Charter change? How does it affect people’s lives? Will Filipinos progress or suffer? How will the new Charter address joblessness? Why do we need Cha-cha in the first place? What’s the real motive behind the move to change the Constitution?

There are a thousand questions that need to be answered before a voter could decide intelligently whether or not we should change the basic law of the land. But these questions will not be answered because Malacañang, the Real Money that chartered the runaway Charter-change train, is not interested to educate. Well, it now says belatedly it wants to open the floor to nationwide discussions, citing surveys showing poor levels of public awareness on the Constitution and related issues. But given the strict time-bound agenda of its House allies, how sincerely can it allow for time to educate?

The train has left surreptitiously without informing the passengers, the people, where it is heading. The route itself is so short that people would simply have no time to debate its merits or the lack of it. By July, the train will stop and we will get up from our seats to a totally different sets of rules, like Rip Van Winkle waking up to a new crazy world after sleeping through a time warp.

It’s clear that the government is not really interested in an enlightened citizenry come plebiscite time. It’s just three months to the July deadline, yet the government has not produced a single leaflet discussing the virtues of Cha-cha. The Charter-change advocacy commission is there, but how quickly and effectively can it provide the environment for an impartial debate? The government controls a lot of media organizations yet, it has not scheduled single honest-to-goodness debate on the pros and cons of Chacha. Meanwhile, there is only the chartered train, a state-directed initiative to pressure an uninformed citizenry to ride on the train whose destination only the devil knows where.

To the question of why is the government rushing it without the much-needed debate and information dissemination, we turn to a veteran political analyst who spoke at the Ateneo last week.

Mario Taguiwalo from Pulse Asia says that traditionally radical changes such as rewriting the Constitution come from people who are outside the circle of power. This one, however, is coming from the ruling party which logically would want to retain its grip on power. Given the continuing challenge to the Arroyo administration and the prospects of another impeachment round in July, people naturally surmise it must be related to the President’s political survival. That explains the hush-hush and the mad rush. Therefore, the regrettable part of this cynical public view is that, whatever merit there may be in constitutional change, the motive will always be suspect. Even that could perhaps be surmounted by a genuine, extended public information and consultation series. Alas, that won’t have room with Joe de V’s train schedule.

Will Malacañang have its way in July? The proponents, it appears, are confident. It’s all about momentum, organization, and resources. Certainly, they have all that. The government is now operating on a reenacted budget. That implies that the government’s budget is one big greasy pork barrel that can be juggled to buy the loyalty of legislators and local government executives. That is why the Chacha train is running surreptitiously at the local level and not the national level. They all know that, since people could not vote with their brains given the lack of an honest-t- goodness information campaign, they may just opt to vote with their guts, or what their local leaders will say.

Or will they? According to Pulse Asia, the pro-Charter change sentiment comes largely from an anti-GMA sentiment. Maybe because they thought it’s the best way to get rid of Mrs. Arroyo from the Palace. This sentiment—regrettable because it’s so cynical to equate changing the basic law of the land simply with a regime change— has been rising since last year. But since it’s GMA herself who is now pushing for Cha-cha, some of the pro-Charter change people who don’t like her might yet reverse their views.

The debate has just started; Chacha therefore may not yet be a walk in the park. Cha-cha drivers are well advised not to underestimate the people.

Where might public opinion go on charter change?

THE credibility and trustworthiness of advocates for or against Charter change will matter in the Filipino people’s decision should there be a plebiscite on the governments proposal to change the Constitution, a political analyst from Pulse Asia said Tuesday.

In a forum conducted by Pulse Asia at the Ateneo School of Government at Rockwell in Makati, Mario M. Taguiwalo, political consultant for the private poll agency said that given the complexity of the issues related to Charter change and the limited time for debates, people will likely vote based on what he calls “rationality under constraints.”

“People’s opinions are going to be influenced by advocates or champions whom they trust,” he said, stressing that the political motive of those who are pushing Charter change will be a major consideration. “Who stands and speaks on Cha-cha could matter to people seeking whom to believe.”

Charter change, Taguiwalo said, is very complex issue, made more difficult by the fact that it’s the first time the country is going to have a “people’s initiative.” This, coupled with people’s unfamiliarity with the parliamentary system, unclear connections between Charter change and people’s concerns, make an informed judgment even harder.

Taguiwalo noted that changes in the political process are usually being pushed by people outside the circle of power. But the current efforts to change the Constitution are spearheaded by the Arroyo government itself. “The key issue to the debate is ‘Why do those in power want this?” he said.

Citing the March 2006 results of the Pulse Asia survey, Taguiwalo said 68 percent of Filipinos have “little or no knowledge” of the Philippine Constitution, a figure that was practically unchanged since last year. However, he noted that there has been an “increase[ing] willingness to consider Charter change,” rising to 43 percent in March 2006 from 29 percent in March and 36 percent in October last year.

The survey, he explained, was conducted prior to the launching of a well-funded campaign by the Arroyo government for Charter change sometime in mid-March. On March 30, President Arroyo issued a statement saying the Cha-cha train “has already left the station” and those opposing it should stand aside or risk being run over.

Those who are against Charter change, the survey said, are from rural Visayas and rural Mindanao, age 55 years and older, with elementary or no education and college graduates, working in government, and farmers. Those strongly in favor of Cha-cha are in Balance Luzon, age 18-24 years old, with some college education.

“The debate has just begun,” Taguiwalo said stressing that the Pulse Asia survey results are useful only as “baseline information,” as people’s opinions are likely to change as more information goes into the debates.

Taguiwalo said that prior to the launching of the government’s Cha-cha train, the increasing willingness to consider Chacha is “weighed largely” by anti-Arroyo sentiment. “The pro-Arroyo camp is not necessarily pro-Chacha.”

To point out the possibilities, he raised rhetorical questions: “Will Charter change opinion turn negative with a PGMA-endorsed Charter change?” “Or will anti-PGMA opinion turn positive with her endorsement of Charter change?”

Taguiwalo concluded that the people might yet go for Charter if the proposed changes could offer “credible hopes.” The major hurdle for this scenario, however, is the endorsement by the Arroyo government. On the other hand, he stressed that the people might yet reject Cha-cha if it raises real fears that the proposed change could make the country worse off.

Jobless growth

THE Philippines should be happy to belong to the Asia Pacific region, a collection of fast-growing economies that are the envy of the rest of the world. In the last three years, the region—which includes the two powerhouses China and India—has been growing close to 7 percent, dragging the country along at its slower but still decent rate of 5.2 percent. Amid these glowing growth figures, however, is the continuing reality of worsening unemployment, joblessness, and inequality.

Yes, that’s what the latest report from the United Nations (Economic and Social Survey of Asia and the Pacific 2006) is telling us and policy makers in the country’s planning bodies had better take heed. The report acknowledged that the region has proved to be resilient in the face of global shocks, including rising prices and slowdown in global trade, and has been growing robustly in the last decade or two, yet it also noted that economic growth has not been able to soak up joblessness in the region. Inequality is also on the rise.

Nowhere is this observation more true than in the Philippines. We hear the hype every day: that the country’s services sector has been saving the day for the Philippine economy in the last several years, that call centers and business process outsourcing companies are giving job options to fresh graduates, particularly those who can speak good English, and that the country’s export sector has been selling mostly microchips, a far cry from the day when Filipinos were largely drawers of water and hewers of wood. The country is indeed undergoing an economic transformation that most “analysts” had failed to foresee about a decade ago. The country’s unemployment figures, however, remain at double-digit rates (using the old definition), with the jobless people numbering close to 4 million people.

The old economic theory says that economic growth necessarily addresses poverty, as higher volumes of economic activity require the hiring of more workers. This wisdom still holds, but the reports also says that the relationship between growth and job creation has been weakening lately, owing to a host of factors—including high birth rates and technological change (e.g. computerization, downsizing, among others).

The study also points to the pervasive of fiscal incentives that cheapened capital, thus providing more incentives among factory managers to substitute machines where they could have hired more workers.

But the most important reason is the lack of the appropriate policy environment for small and medium enterprises, thus raising the cost of entrepreneurship. This problem is especially true in the Philippines where an entrepreneur needs several months of hopping from one government agency to another just to get the papers signed by bureaucrats. Barriers to entry in business are forcing small entrepreneurs to go underground, thus depriving them of the opportunities to establish partnerships with other bigger business organizations.

The government’s failure to provide adequate economic infrastructure linking the countryside to the economic centers has constrained the spread of economic activities, thus limiting the capability of the economy to generate more jobs. In the last several decades, the bulk of the government infrastructure spending has been concentrated on urban areas, thus deepening the rural-urban divide. The urban bias of the government infrastructure policy, therefore, may have contributed to the growth of urban-based outsourcing industry; but this emerging industry itself is not capable of generating broad-based economic growth.

Overall, what the report tells us is that high economic growth alone, as in the experience of China and India, is not sufficient to address poverty and joblessness. In the Philippines where economic growth is not as robust, the growth of the services sector should be complimented by reforms, including the removal of unnecessary barriers to entrepreneurial activity, higher expenditure on higher rural infrastructure, and higher expenditure on education, and skills upgrading. In Malaysia, efforts to attract foreign direct investments have been accompanied by greater efforts to develop the country’s human resources. This is the reason why, high economic growth in this country is bringing in a lot of jobs and reducing poverty. Why couldn’t the Philippines do the same?

UN says job scarce countries should emulate the Philippines

The United Nations has recently urged countries in the Asia Pacific Region plagued with high underemployment rates and limited opportunities for formal sector jobs to emulate the example set by the Philippines by promoting exports of workers “as part of a national development and poverty-reducing strategy.”

In a recent report entitled “Economic and Social Survey of Asia and the Pacific 2006,” the Economic and Social Commission for Asia and the Pacific (Escap) of the United Nations said remittances sent my migrants and temporary workers on contract abroad to their families have greatly helped to raise the standard of living of some of the poorest sections of society in South Asia, South-East Asia, and the Pacific region.

India, China, and the Philippines are the top recipients of overseas workers remittances in the Asia-Pacific region in 2005, receiving US$21.7 billion, US$21.3 billion, and US$11.6 billion, respectively. As a share of gross domestic product, however, the Philippines tops the rest of the region, as OFW remittances accounts for 13.7 percent of the country’s economy. About one for every ten Filipinos are working abroad either as temporary or permanent migrant workers.

“Liberalization of financial markets has made it easier to remit money from one country to another,” said the UN report. “A surge in the number of bank branches seeking remittance-related business in host countries and providing increased range of financial services has also played an important role. Changes in the skill composition of workers going abroad has further contributed to the higher remittance flows [in] the last two to three years."

In the last few years, critics in the Philippines have been saying that remittances have high social costs in terms of the lack of parental guidance in the OFW family leading to juvenile delinquency, drug dependency among children of OFWs, broken families, among others. The report, however, seems to ignore these issues, focusing instead on remittances’ positive macroeconomic impacts.

“Remittances increase a country’s international credit worthiness and lead to lower borrowing costs,” said the UN report. “Furthermore, remittances tend to be stable and countercyclical, thus smoothing out household consumption and investment patterns during episodes of unemployment and high inflation in home countries.”

The report suggests that remittances at current levels, while rising, tends to be underestimated due to continuing high transactions costs that serves as disincentives to sending money home.

“Fees charged by remittance service providers are very high in comparison to the actual costs incurred in transferring the funds,” said the UN report. “For small transfers, fees can reach as high as 10 to 15 percent of the money sent home. For poor migrant workers, who generally send small sums of money, this has encouraged the growth of informal channels for remittances.”

The report urged governments in the Asia-Pacific region that remittances are “private flows of money” that should not be taxed as these incomes were already taxed from the point of origin. Taxes, the report said, would only discourage the transfer of funds through the formal channels.

“Over the medium-term, investments by sending countries in training to produce workers could create a larger pool of workers who could respond to changing market conditions in the worker-receiving countries,” the UN report said. “Once workers can move beyond unskilled jobs and secure higher paying semi-skilled and skilled jobs, their earnings should rise, enabling them to send more money home.”

Political dividends from the expanded value added tax

PORK is pork is pork and is unhealthy to the Philippine economy. Why should it be otherwise?

If we take it from Press Secretary Ignacio Bunye, it’s perfectly alright to pad the proposed 2006 with pork barrel, a product of what he called “EVAT dividend.” He said the government collections from the “reformed” VAT must return to the people in terms of transparent, focused, and optimum spending… As far as I’m concerned, for as long as the process is transparent, and for as long as the benefits [accrue] to the people, then we don’t have any objections."

When has the pork barrel system in this country ever been “transparent” and “optimum”? Try looking at the budget and you will not see any item there explicitly tagged pork barrel, but every member of Congress will tell you without batting an eyelash that the bad political cholesterol is there, buried like needles in a giant haystack and only people like them know where to look. How could it be “optimum” when the basis for allocating those monies is necessarily political and therefore not in accordance with the country’s development plans?

What is alarming is that Bunye is presenting what is essentially a sleazy transaction between Malacañang and the Congress people as an “EVAT dividend.” This is a deception because, in the discussions about the EVAT law, they have been hammering on the people that the law was necessary for “fiscal consolidation.” Now they are using people’s money for their own political expediencies.

“The people’s interest is clearly being prejudiced by the dilly-dallying in the passage of the budget, which may continue to delay the benefits rightfully accruing to the community,” said Bunye. Thus, Malacañang seems to be saying that the additional P4.7 billion pork barrel is necessary to bribe legislators into approving the proposed and much-delayed 2006 budget. Is this the way members of Congress now behave? That they could do legislative work only if their mouths are greased?

But who dilly-dallied for months on end about the proposed budget? It’s Speaker Jose De Venecia, Malacañang’s hatchet man in the House of the Representatives. The government should have submitted the proposed 2006 budget in August, but Speaker de Venecia, apparently at the behest of Malacañang, sat on it for nearly eight months. The House only submitted that heavily-padded or pork-laden budget on the same day the Senate was to hold its last session before adjourning for a 5-week break.

It’s apparent, however, that Malacañang’s efforts to grease the proposed budget through the wheels of Congress is just a smokescreen for the grand design related to Charter change and the political survival of President Arroyo. In an interview with BusinessMirror, Sen. Manuel Villar, the Senate finance committee chief, noted that Malacañang never intended the budget to pass—the design being, so that they would automatically reenact the 2005 budget that would give them the maximum flexibility to use the money as “incentives” to members of Congress and local government executives to dance the Cha-cha. The reenacted budget therefore is one big sleazy pork barrel where every politician could dip his or her hands into, in order to ensure that they would all toe the line. By July, it’s expected that the Opposition will launch another impeachment initiative arising out of the “Hello Garci” controversy, among others, and the one big pork, the reenacted budget, will take care of them.

Meanwhile, as Malacañang and its minions squander the people’s money on Charter change, expect Bunye’s spin machine to continually hit the Senate about “dilly-dallying” on the budget. Given the questionable circumstances by which the budget was crafted, we could expect senators to look carefully into the details, thus forcing a stalemate. That will even trigger Bunye’s spin machine into high gear, blaming the senators for their intransigence. Worse, as Villar himself feared, some proadministration congressmen actually have the cheek to now say that Charter-change opponents should blame the Senate for causing a budget reenactment with their “delays,” thus providing the Executive elbow room to source funds for a Cha-cha plebiscite from the reenacted budget. If the senators would only approve the House-endorsed budget without thinking, goes the congressmen’s logic, then the 2005 budget won’t be reenacted and funds for the plebiscite cannot be easily sourced.

But all this is a virtual smoke-and-mirrors exercise for the real drama which is the Cha-cha and this administration’s political survival.

The greatest tragedy, besides having a politicized budget and having the appropriations process ruined, as Villar complained, is to hold hostage all that scarce resource for the most cynical of purposes. To think that the BIR is being flogged and threatened with lateral attrition to collect every additional peso from the expanded VAT.

It would take a genius of a taxman to explain well why more taxes must be collected so they can be given back as “EVAT dividends”—and why poor blokes like us must believe we can substantially get this back if they pass through our congressmen.

Leftists should leave call centers alone!

Recently, KMU, a leftist “labor” organization criticized call centers as a hub of exploitation, stressing that local labor is just a small fraction of what local call center agents get in the US. Precisely. We have those call centers here because we pay lower wages. That’s our comparative advantage. But it doesn’t mean call center agents here are “exploited.” The purchasing power parity between Americans and Filipinos are different.

Besides, call center agents are not forced to work in those offices. No one is violating their free will. One would be surprised to find out that many call center agents are former teachers, nurses, computer programmers, and office clerks. That means they came to call centers because they get something more. Their pay is significantly higher than what KMU organizers receive from their organization. Their pay is even higher than what the typical private sector business offers. Call center working environment is definitely a lot better than the typical factory we have here in the Philippines.

If there are people who should complain about “call center exploitation” it should be the call center agents themselves, and not the KMU. These people are smart and tech-savvy; they have all the avenues for their grievances. They could always post their complaints in web fora and web logs but try surfing about “call center exploitation” and you can’t find one entry. Well there are the usual rantings about call center life but these people know they could always leave and find life elsewhere. If they don’t like their work environment, they could always get another outsourcing job and they don’t need labor unions to represent them. Yes, workers in call centers are empowered. Call centers in fact pay them before they start working or even during their training stage, and they get more benefits including night differentials, rice allowances, and performances bonuses. Yes, the call centers actually do all they can to retain staff knowing that agents could always find another job somewhere.

KMU also belittles the call centers for not contributing directly to “industrial development.” What do they expect? It’s a service industry, stupid! But it doesn’t mean that they don’t contribute much to the economy. In fact they do. India for instance has been growing at 7-9 percent on the strength of its outsourcing industry, including call centers and software engineering. Our own rough estimate is that total payroll of call centers (assuming 70,000 seats and 200,000 call center agents) in the Philippines alone could run up to P3.6 billion a month. That kind of money translates to a huge purchasing power that powers up the factories [where KMU does its organizing], and other service industries (from sari-sari stories to banks, sidewalk vendors, taxis, and everything else in between). It’s nice that we have all these outsourcing services because it means many of us would no longer have to go abroad to get this kind work.

Of course, call centers could be boring, but it’s a real job that pays real money for people’s real needs. Call center jobs, KMU say, are “dead end jobs” but so are the jobs of janitors, security guards, nurses, drivers, clerks, journalists, labor organizers, librarians, soldiers, toll both operators, communist cadres, among many others. Why is KMU so condescending on these perfectly honest professions?

Given its socialist, nay communist, ideology, KMU necessarily longs for a socialist smokestack utopia that no longer exists (not even in North Korea and Cuba). But for call center agents who just want to have something to pay for their family’s needs, a job is a job is a job. But why should KMU begrudge them? Couldn’t the KMU be a little bit sensitive to these call center workers? After all, majority—we say 70 percent of these call center workers—comes from poor families. The children of the middle class could not just bear the pressures of such kind of work.

Apparently, the Leftists are denigrating the call centers because the industry has rendered them irrelevant. They are criticizing industry because they could not do their usual agitation within the sector. Yes, they couldn’t collect union dues from them because workers there do not have a need for their presence. But it’s nice, however, that other labor organizations like the TUCP are not doing the same. Maybe these organizations are a bit more broad-minded to appreciate the sector’s contribution to society.

KMU’s statement against call centers show just how KMU has become a reactionary entity. Outsourcing has become a new international division of labor that has bestowed a lot of economic benefits to India, the Philippines, former communist countries like Hungary, Poland, and Russia. Now, Communists governments like China and Vietnam have embraced this industry as a way to strengthen their economies. And why should KMU be against this industry? I guess the KMU, supposedly a labor front, should be a bit less judgmental of workers in the service sector.

I’m raising this concern because KMU’s armed underground counterparts may yet harass or destabilize the industry after the gods in KMU and the Left has given their thumb of disapproval. We really pray they won’t do that, for the sake—not of the government—but of the ordinary people who are making a living out of this emerging industry.

To all the KMU and the Left movement, please leave the call centers and their workers alone.

The devil's budgeting system in the Philippines

Don’t you wonder why Philippines doesn’t have an operational budget now? The answer is simple: President Gloria Arroyo and her minions at the House of Representatives have totally messed up and politicized the country’s budgeting system. They don’t want the country to have a fresh 2006 budget because Arroyo and her political operators want to have a full flexibility to juggle funds for their political gambits including charter change, the 2007 mid-term elections.

Normally, the President submits the budget to the House of Representatives immediately after her State of the Nation Address during the opening session of Congress in the last Monday of July. The House has to approve the budget from August to October for immediate submission to the Senate. The Senate in turn will deliberate on it to be followed by the deliberations within the bicameral committee to reconcile the Senate and the House versions. The Senate and the bicameral committee have two months (November and December) to finalize the budget so that the President could sign it by the end of December.

What happened is that the House, led by Arroyo’s reliable ally, Speaker de Venecia sat on the proposed budget for eight months and passed it only on the same day the Senate was to adjourn for a five-week break during the Lenten season. This pattern only suggests that the President and her allies were not really interested in having a fresh budget at all. This is because the only way the Senate could pass the budget when the senators resume session in May 15 is when they pass the House version wholesale without even touching it. But this is also dangerous because that would mean the Senate is going to pass a budget that is full of pork to bribe local government executives so they would dance to the tunes of Malacañang: Cha-cha, evading the second impeachment attempt, and the 2007 mid-term elections.

The senators, of course, will have to examine the budget for several weeks and this scenario is also crazy because if they are to go through the motion of deliberating it, we might just end up having a fresh 2006 budget only somewhere in September! And while the Senators are cracking their brains out, the reenacted budget prevails, thus giving Malacañang all the money for its political machinations. The Senators could deliberate the budget the death but Malacañang doesn’t really care because it already has the cash and the flexibility to spend on whatever “project” it fancies sans the accountability that is usually attached to having a fresh budget.

Of course, Malacañang is not really interested in a budget to be signed in September because the real game plan, it appears, is Cha-cha and Arroyo’s political survival which, according to the time-table of Speaker Jose de Venecia, will commence by July. How would Malacañang do that against people’s opposition and possible thumbs down from the Supreme Court, boggles the mind (unless they already got enough numbers among the Supreme Court judges). But that danger is even secondary. The immediate danger here is the rise of the Devil’s budgeting system, one that is completely politicized and brazen and could completely sidetrack the country from addressing important socioeconomic problems.

Once the government politicizes the budgeting process, every planning exercise being done by the country’s planning bodies completely vanishes in the wind. No one will respect the country’s planning process anymore knowing that government decisions are always subject to the whims and caprices of the occupants in Malacañang and all their sycophants in Congress, the bureaucracy, the local government units. The immediate casualties in this politicized budgeting process are the Filipino people outside the circle of power because government expenditures will be driven by the imperatives of political quid pro quos. For one, the 2005 reenacted budget doesn’t contain much for capital expenditure. It doesn’t bother Malacañang of course because that’s not the primary reason for deliberately delaying the passage of the 2006 budget.

Arroyo and her apologists have been stressing that the country’s economy should strengthen its firewalls against the noise of politics. This is plain hypocrisy. By tampering with the country’s budgeting system, it’s no less than the President and her minions themselves who are actually tearing down the firewalls of the economy. And she has to do it simply because she needed to ensure her own political survival even at the expense of the economy and the people’s well-being.

Getting intoxicated with call centers?

THE graduation season is here again and fresh graduates—400,000 of them—are probably now wondering whether or not there’s a place for them in the country’s job market. If one is reading the newspapers, especially the weekend editions, it would appear that there are indeed fresh opportunities for them: call centers and outsourcing companies. Of course, there are always overseas jobs for skills that are in demand abroad (e.g. teachers, caregivers, pilots, mechanics, geologists, among others).

On the part of policy makers the big question should be: Would call centers and related industries that are “globalized,” overseas employment, actually solve the problem of joblessness in the country? It’s high time that policy makers ponder this because it appears that the hype created by this emerging industry and its supposed benefits to the economy seems to have lulled the government into complacency. Since the passage of the reformed VAT for instance, the government seemed to have totally lost the appetite for real reforms.

Several examples come to mind. The budget for 2006 has not been approved because, two weeks after passing it on second reading, the House has not yet passed it on third reading and transmitted it to the Senate. A lot of investors are awaiting the passage of the “rationalized” fiscal incentives law so they would have a predictable investment policy regime for their investments, yet the same measure is languishing in Congress. Also, private-sector locators in Camp John Hay and Clark are still waiting the passage of a new law providing them the fiscal incentives that were promised them when they signed up with these special economic zones—but were virtually rendered nonexistent by a Supreme Court ruling. Given the continued volatility of international crude prices, the Philippines has the chance to play catch-up on biofuels as earth-friendly and renewable alternatives to fossil fuel, yet the President’s allies in the Senate are sitting on the two-year old biofuels bill mandating the preblending of ethanol and biodiesel.

Outsourcing and overseas work, indeed, are fast transforming the Philippine economy. A decade ago, one couldn’t hear of any company or industry that pays great money before the recruit has started working. Since the last two years, customer care companies have been doing just that. Consider the recent job market announcement for call centers: P2,000 signing bonus; P15-18,000 ($353.00) basic monthly pay; training at P15,000 ($294.00) ; 20-percent night differential; P3,000 ($59.00) signing bonus; and performance bonus. (That pay levels will not make you rich in the Philippines but its attractive enough for new hires).

That means that if you are one of this year’s graduates and can speak English well, there are jobs that could actually pay real money. In fact, some call centers are so desperate for skilled workers that they institutionalized the pirating of workers as part of their human-resource strategy. One call center in Ortigas, for instance, has a “referral system” that rewards each staff with P3,000 for every call center agent that the staffer could bring to the office, and P5,000 for a recruit with supervisory experience.

Remittances of course have also been rising at double- digit rates in the last three years. And this means two things: first, job creation through overseas placement. About 3,000 persons are leaving the country each day as caregivers, nurses, doctors, pilots, mechanics, managers, household maids, engineers, technical people. And second, remittances are assumed to create jobs indirectly. High domestic demand theoretically translates to more business activities among the country’s farms, factories and offices. Supposedly, greater economic activities also sustain and even create more jobs.

Despite these gains, however, employment has remained as a problem—and this is why critics of the government continue to harp on the failure of the economy to touch the lives of ordinary people. Government officials, including Finance Secretary Margarito Teves, have been saying that ordinary citizens can only start feeling the benefits of higher economic growth if the country attains a sustained 7- percent rise in the country’s gross domestic product. So people will just have to be patient until the economy hits 7 percent for them to start feeling any improvement in their lives.

The truth is that government economic planners are entirely missing the entire point: that we are not undertaking real reforms the country needs in order to fuel an economic takeoff, contrary to the press releases of Malacañang. The continuing growth in the services sector as well as the continuing inflows of remittance money have been an important pillar of the economy yet survey after survey shows that they are not making a dent on the country’s unemployment problem. What this trend suggests is that getting back to the basic stuff of boosting the country’s “real economy”—its farms and factories—through real reforms like greater expenditure for economic and social infrastructure, more competition in port operations and shipping to enhance efficiency and cut costs, reducing the cost of power, providing a consistent and uniform investment incentive system, among many others, are still very, very important. Sad to say, it’s something that the government is actually not doing.

Maybe it’s too intoxicated reading those dozens and dozens of “wanted” ads pages, and has deluded itself into thinking everything is alright and someone else is taking care of the economy anyway.

"Life is a Bell Curve": My new personal site at Multiply.com

Friends: I opened a new account at Multiply.com for my personal musings ("Life is a Bell Curve"). The site contains a personal blog ("All Seasons"), photos, reviews, music, and video. (I dont have postings on music and video yet). In fact, you can open your own free account and we could form our own network there. This account WITHOUT BORDERS will remain as my "think blog" and will continue to have the same content. You may click below to visit my new personal site:

http://davellorito.multiply.com/

I'll be transferring all my book reviews, movie reviews, and photos there as well. You are all welcome to visit and post comments. Thanks.

Market Center debut: What does it mean for print media?

Anybody out there who has read the Financial Times today may have seen the full spread advertisement of Market Center offering up-to-date global financial information. I immediately checked its website and was amazed at the amount of data available free of charge. Free worldwide quotes. Free charts with multiple studies. Market coverage on stocks, futures, and forex. S&P, Dow Jones, Nasdaq, Nikkei, Hang Seng, FTSE—they are all there. Yes, free of charge!

I don’t have money to invest in these markets. Neither am I into stock market analysis. But do you know the implication of this? This is just another manifestation of the power of the "new media." That print journalism is getting obsolete by the day. What I mean is that investors in the stock and futures markets no longer have to buy the tangible newspaper. All he needs to do is go online and bingo, he has all the information that he or she needs real time to guide his investment decisions.

How could the tangible paper survive this trend? I can think of a few. The newspaper should be able to provide analysis, trends, and forecasts so that readers would still find it relevant. (But of course, someone else online could also do the same.) It means newspapers will have to provide something more, something new and creative, something more profound than what the hypertext of online publications could provide. The tangible newspaper will really have to find a niche to survive. It will have to evolve and adapt. Into what? I don't know. But such a search for relevance will transform the way journalists cover and write stories. This is a very exciting world.

Related post

Will newspapers go down the way of the dinosaurs?

Hope renewed for Philippine biofuels industry

COULD the country’s political combatants pause for a moment and move quickly to consolidate the bills promoting biofuels in the country?

If there’s one urgent measure the legislators need to address soon (besides the long-delayed budget which the House took all of four months to produce and now wants to toss to the Senate in the, to borrow basketball lingo, “the last three minutes”), it’s this one. Widespread use of biofuels in the Philippine context would mean converting coconut oil into biodiesel and sugar or corn into ethanol, a move that could reduce poverty in the countryside. Corn and coconuts are among the major crops tilled by poor farmers.

But the greater relevance of the bill is our own modest contribution to the global efforts to address climate change. The stakes here are no less than the survival of this planet, its flora and fauna, and most of all, the fate of the human race. It is no idle advocacy of some rich, western-trained kid, as what some right-wing champions of unbridled oil exploration have for years painted those Greenpeace activists. This is a direction not to be taken because it’s a fad; it simply is the only way to go, and the sooner we realize it and do something decisive about it, the better our chances of averting a very real risk.

The April 3 issue of TIME Magazine highlights this point. The bad news, it reports, is that “climate disruptions are feeding off one another in accelerating spirals of destruction.” The signs are getting clearer: the melting of the polar ice caps that leads to the rising waters and floods in low-lying areas, more lands devastated by drought in some parts of the world, and the greater threat of diseases that could affect millions. And recently, the impact of global warming are manifested in such violent disasters such as the Category 5 Cyclone Larry (with 290 km an hour wind burst) that devastated some parts of northeastern Australia, the drought induced-blazes in Indonesia, and Typhoon Katrina and destroyed a larges swathe of built up areas in New Orleans. In short, what appeared to be Hollywood hype for the “Day After Tomorrow” movie has dawned upon us with a suddenness no one thought possible. Will the Philippines, which has always been ranked among the top five most disaster-prone areas in the world, be the next major calamity area? It’s possible.

According to the Ethanol Alliance, an organization composed of Sugar Regulatory Administration, the Center for Alcohol Research and Development, Sugar Master Plan Foundation, Petron, and the Philippine Sugar Millers Association and which is pushing for a national ethanol program, biofuels are important for these reasons: they are simple to use, biodegradable, nontoxic, essentially free of sulfur and aromatics, and don’t contribute to global warming. They can be used in compression- and spark ignition engines without any major modifications.

What is exciting about biofuels is that, because of rising prices of fossil fuels, they have become an economically viable business worldwide. On the supply side, Brazil has shown the world that ethanol is no longer hype. In fact, analysts are now looking at Brazil as the “next Saudi of alternative fuels.” Thailand is also speeding up its own ethanol production; and surely the Philippines could also do it, given the enthusiasm of the private sector to pursue our own biofuels program.

In biodiesel, Chemrez, Inc., a Filipino company, is already exporting biodiesel to Japan, Australia, and the United States and will soon inaugurate the biggest biodiesel production plant in Asia. That’s good news for the country’s coconut industry.

And on the demand side, the markets for biofuels are unlimited both in the domestic and the global markets. In fact, most countries in the world today from Asia to the US and Europe have their own program to shift or partially replace fossil fuels with biofuels to reduce import bills, meet their greenhouse gas-emission-reduction target under the Kyoto Protocol, improve people’s health, and promote a cleaner environment. If the country could produce enough volume to meet local and global needs, biofuels might yet be the silver bullet that could reduce poverty in the countryside.

In fairness, government, especially the Department of Energy is really working hard on the issue, together with the private sector. At DOE’s recommendations, for instance, the government has already reduced tariffs for environmentally friendly car parts, apparently to encourage the production of vehicles with hybrid, flex-fuel, or natural gas fed engines. Early this year, Shell has issued a statement that it will soon start blending its gasoline with ethanol while Flying V has actually started selling pre-blended biodiesel at its fuel stations.

What is only lacking now therefore is the passage the proposed biofuels bill that will provide the framework for implementation of a comprehensive biodiesels program nationwide. The proposed bill also contains provision mandating all the oil companies to sell preblended biodiesel and ethanol. Right now, biodiesel are being sold as an additive or fuel enhancer in separate bottles making it relatively expensive. Once, the oil companies start preblending, the cost of biodiesel will significantly go down as producers of coconut methyl esther will be selling said intermediate input in bulk. Preblending therefore will be the fastest way to ensure wider use from consumers, thus ensuring the viability of the biofuels industry.

Is China a threat or an opportunity?

Is China a threat or an opportunity? For Jorge Mendoza Judan, Philippines’ commercial counselor and Department of Trade and Industry-China Team Leader, the question is irrelevant. The task at hand, he said, is “riding the dragon” so that Philippine entrepreneurs could take advantage of the China’s roaring success.

Speaking before graduates of the Asian Institute of Management yesterday, Judan said China is currently the fastest economy in the world, the fourth largest exporting nation, the world’s third largest importer, and currently the 7^th largest economy in the world. “China will be the second largest economy in the world by 2020, next only to those of the United States,” he said.

Philippine entrepreneurs, he said, should take advantage of China’s rapid growth by utilizing a two-pronged strategy of forming strategic partnerships or guanxi with Chinese entrepreneurs while capitalizing on specific niche markets, particularly electronics and semi-conductor; fruits like mango, bananas, pineapples (fresh, processed, and juices); coconut oil and coconut alcohol and its derivatives like coco coir and virgin coconut oil; ore and minerals including nickel, iron, copper; and e-services.

He said that success in doing business in China requires understanding the subtleties in Chinese business culture.

For instance, while Western-educated business persons are usually obsessed with “bringing home the bacon” after participating in a trade show, that approach doesn’t work in China. One has to establish guanxi with Chinese business people first by gaining their trust and confidence before any business deals could be made. That requires spending a lot of time socializing with Chinese entrepreneurs.

“Guanxi simply means relationships, the heart of almost all business transactions in China,” said Judan. “Formally, Guanxi is a relationship built on a practiced form of respect and obligation that adheres to Confucian hierarchical values where favors are given and received only when there is mutual benefit involved and in accordance to how people behave themselves.”

According to the National Statistics Office (NSO), the Philippine merchandize exports to China reached more than $4 billion dollars in 2005, representing a 53 percent rise over its 2004 figures. In the year 2000, China was not part of the country’s export markets; in the just five years, China has claimed the fourth spot, next only to the United States, Japan, and the Netherlands.

Currently, the country’s top exports to China include semiconductors, parts and accessories of machines, storage units, input or output units for automatic data processing machines, cathodes and sections of cathodes of refine copper, petroleum naphtha, electronic integrated circuits and microassembly, flat roll product of alloy steel, and fuel oils.

To be able to sell Philippine products to China, Philippine entrepreneurs—he explained—should focus on niche marketing, build-up brand and product image, develop internet presence, tie-up with existing foreign companies, and actively participate in trade shows.

Right now, the Judan says the DTI are also giving priority promoting fresh and processed fruits, marine or acquatic based products like tuna and carageenan, coconut by products including virgin coconut oil, coco-based alkyd resins and oleochemicals, abaca, natural rubber, and e-services including information technology services, and business process outsourcing.

“Offshore Nation” and the myths about services globalization

This book Offshore Nation: Strategies for Success in Global Outsourcing and Offshoring (McGraw-Hill, 2006) written by Atul and Avinash Vashistha is a must read for all those who want to maximize the benefits of business process outsourcing. As an avid observer of this emerging industry in the Philippines, its value lies on how it dispels the myths surrounding this exciting industry.

Myth 1: that services globalization adds risk to business organizations. Not true, says the authors. “Offshoring can actually reduce the risk … by reducing your cost structure and diversifying your supply base to economies that are removed from the fluctuations of your home country economy and your core markets, and by providing access to a much larger labor pool.”

Myth 2: Offshore suppliers use slave labor. Reality: “The workforce is generally from the middle or even upper-middle classes of their respective countries… The delivery facilities in countries such as India and the Philippines rival or even exceed those of the US and UK,” says the book.

Myth 3: The infrastructure is poor at offshore centers. Reality: “The IT parks in India, the Philippines, China, Hungary, Mexico, Ireland and other big offshoring locales rival those of Silicon Valley in terms of telecommunications, power generation and other infrastructure—and in many cases exceed them,” says the book.

This book’s quotation on Ernest Cu of SPI Technologies engaged in various outsourcing activities (eg. content editorial, production and electronic delivery; medical transcription; legal transcription; content aggregation; among others) here in Manila really amazes me.

“One potential client came to us with some graphic needs and asked if our capacity can handle it? We have 35 g-series Macs, high-end four-color scanners, and handle at least 20,000 graphics a month. Can we handle it? I told him we can handle 10 times that.”

Outsourcing unaffected by Manila's political noise

My impression was that the State of Emergency didn’t have any perceptible negative impact on the country’s outsourcing industry. After the lifting of Proclamation 1017, I had the chance to talk to Robert Sears, executive director of the American Chamber of Commerce and Industry regarding the matter and he confirmed my observation. He said the conference of American chambers all over the Asia-Pacific Region was pushing through. We were not concerned, he said. “We have faith in the Philippines.” The conference, in fact, pushed through without any hitch.

“There was minimal impact…,” said NeoIT, in its recent report entitled Philippines: Impact of Current Political Developments on Offshore Outsourcing Industry. “Service delivery has been unaffected by these protest rallies… Power companies and telco providers continued to provide uninterrupted service throughout the country. Airports and seaports experienced normal operations as well.”

Based in California, neoIT provides consultancy services to companies that are outsourcing their operations globally.

neoIT also said expansion plans of existing service providers are pushing through. Specifically, the operations of the ICT group in Riverbanks Center in Marikina have started. Call center eTelecare is going to hire 3,000 more agents in addition to its 4,100 staff. “The benefits of leveraging the Philippines to address business imperatives of global services sourcing far [outweigh] political issues,” concludes neoIT.

Yahoo's booboo: Now i know why editors still have their places under the sun!

The story "Arroyo sad about leaving Red Sox" in the March 22 edition of Yahoo Philippines (yes, the Philippines is interesting enough to merit a separate Yahoo page!) seems to tell us that President Gloria Macapagal Arroyo is in some way connected with the Red Sox, an American baseball team. Or is she a former fan of the Red Sox? Try clicking the headline and you will know that the story is not about President Arroyo but Bronson Arroyo, a baseball player, who is transferring to another team. Why this booboo? It's apparent that the one choosing the stories for Yahoo Philippines is a machine, a computer. My conclusion? Human editors are not yet obsolete, contrary to some observations that the journalism profession is going down the way of the dinosaurs. The machine simply doesn't have the subtle sensitivity to distinguish between Gloria the president and Bronson the baseball player. It's nice to know that we journalists still have our own place under the sun. For how long?

Restricting skilled labor migration is absurd!

SUMMARY: “Labor is just like capital in a free market place. Investors will take their money to where it will get the best return. Workers will take their skill to where it will get the greatest reward… Thus the proposal that government ought to ban or in any way restrict the migration of aviators and aircraft mechanics is simply absurd and ridiculous,” says former Senator Ernesto Herrera. Please read the entire post.

It’s nice to know former senator Ernesto Herrera has taken the cudgels for overseas Filipino workers who are likely to be hit by the proposed travel ban or moratorium on skilled Filipino workers. In the recent employment summit, the Department of Labor and Employment (Dole) and the Philippine Overseas Employment Administration are contemplating of said measures supposedly in the name of “national interest” and “public welfare.” Senator Herrera calls these proposed policy “ridiculous” stressing that government “cannot effectively prevent Filipino pilots and aircraft maintenance engineers from leaving the country, should they decide to seek greener pastures abroad.”

Could the government restrict or control workers deployment overseas? The government thinks it could. Could the government prevent Henry Sy or Lucio Tan from bringing out their money for some investments in China or elsewhere in the name of national security or public welfare? Definitely not. What the government bureaucrats are contemplating therefore is simply another form of double standard. It’s unfair and unjust.

Would the migration of labor not kill the local companies that need these skills? Of course not.

ICTSI example
Take the case of the International Container Terminal Services, Inc (ICTSI), a Filipino global ports management company. ICTSI operates a lot of ports here in the Philippines and abroad, specifically international container terminals in Suape, Brazil; Port of Gdynia in Poland; Naha in Okinawa (Japan); and Madagascar. Because of ICTSI’s global reach and apparent success in port operations, it has taken the attention of “poachers” who are on the lookout for skilled workers particularly in areas of port management, operations, and administration; port development and construction; and port planning and programming.

Dubai World Ports, one of the largest port operators in the world based in the United Arab Emirates, practically knocks on the doors of ICTSI to pirate its employees. The numbers of employees being “raided” each year could sometimes reach 30, many of them highly skilled gantry crane operators. Captain Francis Andrews, ICTSI’s senior vice president and operations manager of the Manila International Container Terminal, says this “raiding” of ICTSI skilled staff each year gives them problems but it doesn’t disrupt their operations. This is because, he explained, its employees are multi-skilled; the company could easily redeploy them to other functions when the need arises. Also, the company keeps on training more people each year in anticipation of rising demand for skilled operators of port handling equipment worldwide. Besides continuous in-house training, ICTSI also provides productivity incentives for container handling equipment operators so that their employees get more money as their efficiencies improve. Families of these workers are also given attractive incentives including medical and dental benefits. Thus given the choice between working abroad and staying with the company, many of its staff would rather not leave for the added incentive of being with the family and being able to watch the kids grow.

A thousand ways to retain staff
There are a thousand and one ways to retain staff without resorting to coercive measures. The fear that only journalists will remain in this country if we open the floodgates to overseas jobs is understandable. The latest statistics say the current number mining engineers, geologists, and geodetic engineers would not be enough meet the demand for these skills in the next four years. The Dole blamed low labor supply on few tertiary schools offering said discipline and even fewer students who passed the board examinations. The reason for this trend is that in the last several decades, mining (prior to the Mining Act of 1995) were stagnant for lack of fresh investments. It’s only after the Supreme Court declared the constitutionality of the Mining Act that allows 100 foreign equity ownership (through the financial and technical assistance agreement) when the mining industry has started to hire more skilled professionals. Give it a few more years and soon smart kids will flock into this profession.

Filipino worker as No. 1
Ask Professor Eduardo Morato of the Asian Institute of Management about skilled labor migration and he will tell you that the real problem lies with local capitalists. Citing a recent survey by AIM in tandem with the Switzerland-based Institute of Management Development, Morato said Filipinos is Number 1 in the world in terms of skill and competence. Yet Morato complains that local business owners do not know how to motivate their employees. Their idea of a good employee is someone who works hard, is meek as a lamb, and gets slave wages. That’s the reason why headhunters and multinationals are always on the lookout for skilled Philippine professionals whom they could pirate. They know that if they could put in a better working environment, the Filipino professional would always excel and contribute a lot to the company.

Moral lesson? Local employers and the government should change their mindsets. They should stop looking at the skilled Filipino working class as “surplus” to be employed at the lowest price. They should start looking at the Filipino working class as an asset to the country, people whose skills are appreciated and valued for the good of the country.

Skilled Filipino workers of the world unite!

Government is thinking of employing coercive means to restrict OFW’s freedom to work abroad. Please read the rest of the post.

It seems the Government is really bent on restricting skilled overseas Filipino workers’ freedom to work abroad. Yesterday, Representative Roseller Barinaga (Second District, Zamboanga de Norte) suggested in an employment summit that government should employ coercive means like putting a “moratorium” or ban on the deployment of skilled workers pursuant to Republic Act 8042 in a bid to address “domestic labor shortages” in the mining and aviation industries during an employment summit last week. A few weeks ago, the Philippine Overseas Employment Agency has revealed government plans to restrict deployment of nurses and teachers.

My view is that it’s not in the best interest of the country to restrict people’s choices in life unless the country is experiencing a real crisis like war. Putting a moratorium on deployment of skilled workers violate the people’s right to travel, to seek employment, and pursue his or her own happiness. In this day and age, government and industry managers should stop thinking as if workers are slaves whose work, lives, and souls they control. People have choices and the State or business leaders should learn to respect that fact. After all, real development is really all about expanding people’s choices.

Restricting people’s job choices is not an effective way to produce more skilled workers for both the airline and the mining industries. That approach will only drive skilled workers away to foreign shores. The best way to keep skilled people here in the country is for the local industry to apply economic incentives, including better employment package. You want their skills? You treat them with respect by giving them better pay!

Allowing the free interaction of labor supply and demand is the better way to develop more skilled workers. Allowing local wages to rise in important skills will encourage a lot of smart kids from all over the country to take up these professions. Coupled with private sector initiatives like the setting up centers of excellence in certain skills like airline maintenance, geodetic, and mining engineering, nursing, and education, the Philippines could actually emerge as major supplier of these skills all over the world while satisfying our own local requirements. All we need to do is shift our mindset away from destructive protectionism that has been hobbling the country’s capability for economic development.

Airline or mining companies will probably say that they can’t match what is offered abroad. That’s baloney. Last Friday, Professor Eduardo Morato from the Asian Institute of Management has disclosed that local airlines are now sending their planes for servicing and maintenance to companies abroad that are manned by Filipinos mechanics and engineers. Morato said local airlines could have saved a lot more by keeping those Filipino airplane mechanics by paying them comparable salaries back home. Skilled mechanics, Morato said, leave the country because local airlines are not good at managing their workers and treating them with respect.

The coercive measure the government is contemplating vis-à-vis the mining and the airline industry should alarm the Filipino working class in this country. Once in place, the same coercive measure could extend to other industries until most Filipinos are no longer free to choose their place of work. Besides, mining and aviation, the government has also been contemplating about restricting overseas placement of teachers and nurses. Whom are they going to go after next?

The world is fast globalizing and countries in the Asia-Pacific Region are growing at dizzying speeds. These countries are going to need lots of skilled workers from the Philippines. It’s obvious that the State and its cronies are going to ban the deployment of accountants, crane operators, bank managers, MBA graduates, lawyers, surveyors, civil engineers, information technology experts, human resource managers, among many others soon. The State will restrict their deployment until one day Filipinos will wake up knowing they could not longer leave the country because some bureaucrats and political cronies thought their quasi-slavery is necessary for “national security” and “public welfare.”

These coercive measures will only hurt Filipinos even more as people who have skills may resort to illegal means to go around the labor export ban or moratorium. The difficulties to seek employment abroad may also force skilled workers who are already abroad not to return home for fear of not being able to get back to their overseas jobs. That also could mean they are going to keep their dollars abroad so they have something for themselves once they retire in foreign shores. This will certainly have devastating impact of the local economy. Restrictions on job mobility would also mean lack of market signals for the skills that the country needs, thus perpetuating the current trend of so many people with college degrees who could not find work because of job-skills mismatch.

Related posts

Government contemplates restrictions on overseas deployment of workers from "critical industries"

Don’t blame the nurses for the “medical crisis”

Terrorists as heroes

"People should not be afraid of their governments. Governments should be afraid of their people," says V (played by Hugo Weaving) in the film "V for Vendetta" (Warner Brothers), apparently paraphrasing political philoshoper John Locke. More so if such government has wronged the likes of V who is lethal with both the blade and the bomb.

Please see my full review of the film V for Vendetta in Without Borders: Films and Books.