globalization and labor

As I'm sure the entire world knows by now, I guested last night in The Explainer. The topic was labor. Host Manolo Quezon gave a comprehensive discussion on the labor picture here in the Philippines. Particularly interesting for me was on how the change in work distribution in the last ten years reflect the way the Philippine economy changed. Then I had to come in and ruin the show. My segment dealt on the issue of how globalization affected labor.

Some points I raised during the show and some which I forgot to raise out of sheer nervousness:

- economic studies have indicated that "the countries which find it easier to fire are the same countries which find it easier to hire." In other words, the focus here is on productivity, the ability to engage in business that would succeed. By doing so, such results in the creation of more and better jobs.

- as discussed by Manolo, the make up of labor has changed dramatically over the last ten years. The pie chart exhibited during the show sees the identity of the pie slices (representing the different sectors) changing from 1997 to 2007. What must be pointed out, however, is that not only has the pie slices changed but the pie got bigger as well over the years.

- businessmen, more than lower tariffs (or increasing tariffs, depending on whose side you are on), lowering of taxes, etc., all find secondary to the need to have consistent and stable policies upon which to plan and do business. If you have a country like the Philippines whose policy changes not only from administration to administration but from month to month or on a case by case basis, then you can understand why business finds it hard to do well here.

- business leaders (and even lawyers) must realize that they have to make a more determined effort to understand the intricacies and ramifications of what is going on in international trade. No longer are companies subject to mere national laws alone. Even at this moment, companies are subject to international rules that are either prevailing at the regional level (i.e., ASEAN) or multilateral (i.e., WTO, WIPO, WCO). In short, companies from here on end have to contend with at two sets of rules for each and every transaction: local and international. This will only get worse if the Doha Round fails as it is anticipated that there will be a proliferation of bilateral trade rules (right now, such as ASEAN, ASEAN-Korea, and ASEAN-China; with the following possibles: JPEPA, RP-US, ASEAN-India).

- Business cannot and should not rely on government for information or data or possible planning for the simple reason that it is their business. Instead, it should be the other way around. Business should be quite specific in what they want and, more importantly, be able to intelligently convey what they want in the international trading arena. This won't happen unless they take the time and effort to realize that there is a need to understand or grapple with international trade rules. So far, the only industries I know who are quite consistently successful at this are sugar, cement, tuna, and poultry.

- labor should not blame (or at least not solely blame) globalization and trade for any loss of employment. There are a host of other factors, primary among them are changes in technology, which eliminates the need for certain type of workers. Another could be changes in fashion or taste. If anything else, globalization and increased trade results in more opportunities for job creation. It also generates wealth (see studies by Jeffrey Sachs) that could be used for welfare purposes, such as subsidies for workers or re-training or further education.

- legislating minimum wages and increasing taxes on the rich may not be the most effective ways in which to better the situation of labor. To legislate minimum wages is inefficient, scares off investors, and locks in resources in areas which should not be engaged in. Increasing taxes on the rich (at least to a certain extent) has the same effects. The better way is to give workers more ability to be mobile, and making business have greater productivity (which we sorely need to improve on) and competitiveness and let the benefits follow. Even then, the focus should be subsidizing workers who had to accept lower wages from reasons that could be traced to temporary dislocations caused by globalization, re-training, and better education

- finally, Filipinos should take heart in that the way the global economy is headed, greater education, intuition, language skills, quicker absorption of data, and adaptability seem to be the needed capabilities. All these are areas in which the Filipino is strong at. We should just wake up and realize that, rather than being skeptical of globalization, the Filipino is best positioned to take advantage of the benefits of and succeed in a more open world.

Thank you's to the following for their valuable insights (errors in understanding mine): Bobing Venida, Tong Buencamino, Oswald Lorenzo, Pons Intal, Ciel Habito, Dondi Teehankee, John Avila.