APEC, Neoliberalism, and the Filipino Workers PDF Print E-mail
Written by Partido Lakas ng Masa   
Friday, 06 November 2015 13:51

APEC, Neoliberalism and the Filipino Workers

By Sonny Melencio


1. In 1996, the Asia-Pacific Cooperation (APEC) summit met in Manila during the administration of Fidel V. Ramos. Then US President Bill Clinton was one of the leaders of the countries gathered at APEC. The summit was held at Subic Freeport, Olongapo City.


2. There were a number of progressive groups which protested against APEC and the neoliberal globalization that it represented. Two alternative conferences were held – one was Slam APEC (Solidarity of Labor Movements Against APEC) which was held in an abandoned factory of Rubberworld in Novaliches, Quezon City. This was joined in by a number of unions under the Bukluran ng Manggagawang Pilipino (BMP) and its allies in the labor movement and other sectors. The other one was the Manila People’s Forum participated in by NGOs and POs (people’s organizations) against APEC and its neoliberal agenda.


3. These two coalitions staged a long caravan which snaked its way from Manila to Olongapo City. It was blocked from entering the APEC Summit site in Subic.


4. The Ramos government’s propaganda on APEC and its agenda of ‘globalization’ focused on its role of creating more jobs, developing agriculture and industries, and therefore stimulating Philippine economy. The government boasted that foreign investments would hurriedly come so the Philippines can join the march towards globalization of the entire economy.


5.  On November 18-21, 2015, the Philippines will host another APEC summit. The leaders of the 21 capitalist countries in Asia-Pacific, led by the US President Barack Obama, will meet in Manila. The countries or ‘economies’ belonging to APEC consist of the following: United States, Japan, Philippines, Malaysia, Indonesia, Thailand, Australia, Brunei, Singapore, South Korea, Canada, New Zealand, China, Mexico, Chile, Vietnam, Peru, Russia, Papua New Guinea, Hong Kong, and Taiwan.


6. After 19 years since the first APEC summit in the Philippines, we can readily say that the promised heaven under APEC and ‘globalization’ failed to materialize. But more than this, we have to look at the role played by APEC in what happened after.


7. APEC impelled an economy based on an economic growth that favored only a small number of landed elite and capitalists in the country. It fosters exclusive growth that marks a growing gap between those who have access to wealth and resources those who have not. This is a type of economic growth that is possible only through increased exploitation of the working class and the wanton abuse of the country’s environment and natural wealth.

APEC, WTO and other free trade agreements


1.  APEC was established in 1989 to supposedly improve trade and economic relations among countries around the Pacific Rim. It was actually one of the many instruments of a neoliberal trade regime that the United States wanted to create in a global scale.


2. APEC covers the Asia-Pacific, a large economic growth area in the world today. Concurrently, in the northern hemisphere is the project of NAFTA (North American Free Trade Area) that aims to form the Free Trade Areas of the Americas, which will include the US, Canada, Mexico, Central America, and South America.


3.  Another grand project around APEC is the World Trade Organization (WTO) which is being set up as the economic policeman of global trade. WTO aims to be the global body that implements and monitors neoliberal trade (also called ‘free trade’) among participating economies.


4. Both the APEC and the WTO are tools being advanced by the United States as the main imperialist power today. It’s not surprising that even other developed capitalist countries in Asia-Pacific are quite wary about them. The Japanese government for instance was one of those that opposed the mandatory trade liberalization that the US insisted on during the APEC Osama summit in 1995.


5. Various Latin Americans led by Venezuela, Brazil, and Argentina also opposed the NAFTA project in the Americas in 2003. This project was put on hold in the Americas since then.


6. The WTO also met similar opposition among activists and among developing and underdeveloped countries of the world:


  • Huge protests by 50,000 anti-globalization activists greeted the WTO ministerial summit in Seattle in 1999. The mass protests, capped by street barricades and skirmishes with the police, were able to scuttle the ministerial meeting.
  • During the 4th WTO ministerial summit in Doha, Qatar, various governments formed a bloc to oppose the extensive liberalization of the agricultural sector in their own countries while the US and the European Union were subsidizing their agriculture. India and Brazil led the formation of the Group of 20. The Group of 33 followed, led by Indonesia and the Philippines. The biggest coalition was the Group of 90 which opposed the US/EU investment policies and other WTO liberalization schemes. The Group of 90 also staged a walkout of its representatives during the 5th ministerial summit in Cancun, Mexico.
  • The WTO project was stalled during the Bali Summit in 2013 when India and several other countries opposed the US/EU proposal on food security and other trade liberalization policies.


7. Since the WTO and APEC are finding resistance among developing and underdeveloped countries, the US and EU, and other imperialist powers are slowly shifting their schemes into forging bilateral and multilateral trade agreements, also called Free Trade Agreements or FTAs, with several Third World countries to recover the bid for economic domination. In 2012, the US had 21 FTAs in a number of countries, EU had 23, and Japan had 13.


8. The usual contents of the FTAs are the following:


  • Provisions that favor the interests of the developed capitalist powers;
  • Strict implementation of intellectual property rights that also favor the advanced capitalist countries;
  • Strict protection of agricultural sector in the developed countries while intensifying liberalization in the developing countries;
  • Subordinating the rights of the workers and the protection of the environoment to

trade liberalization; and

  • Granting transnational corporations the right to sue governments on contract violations of trade agreements.


9. Today, the focus of US in the Asia-Pacific is the formation of TPP (Trans-Pacific Partnership) Agreement as the overriding trade agreement among 12 countries in the region (Philippines is not yet part of this). Governments that are negotiating with the US on the TPP are not even receiving a copy of the proposed agreements. Negotiations are done in secrecy and on stealth; US negotiators gather the representatives of participating countries in a room, and provide them with copies of the agreements which they retrieve after discussions. Wikileaks has exposed the secret documents as favoring only the interests of the imperialist countries and the big corporations. This is the TPP for the Asia-Pacific region, and there is also the TTIP (Trans-Atlantic Trade and Investment Partnership) that covers countries in Europe and the Western hemisphere.


The neoliberal globalization

1. The neoliberal globalization that is being pursued by the imperialist powers (led by the United States; and Germany and France in EU) is not only related to trade. Its main pillars are the interconnecting policies of privatization, liberalization and deregulation of the economy. Two of neoliberalism’s overriding principles are the extensive demolition of the welfare state system and the intensive exploitation of the working class.


2. The previous role of the state is to provide direction to the economy and to implement measures that will redistribute income so that the poor will not feel left out by the system. Under the neoliberal system, this interventionist role of the state is done with, and the economy is left in the hands of the private sector, particulary to the big corporations. This is why neoliberalism is sometimes called the implementation of corporate globalization.


3. While neoliberalism means that in principle the government leaves the running of the economy in the hands of the private sector, neoliberalism also ensures that the role of the government is focused primarily or solely in the creation of the best climate for big capitalists’ investments to prosper.


How did neoliberalism emerge?


1. Neoliberalism first emerged as a reaction to the crisis of capitalism in the 1970s. This was the crisis of accumulation of capital called ‘stagflation’ that hit many of the developed countries at that time. The stagnation of the economy was coupled with a running inflation that wipes out the real value of money at a quick rate. The economy could not recover fast and unemployment became rampant even in the advanced capitalist countries. In the middle of 1970s, countries like Britain needed the IMF bailout to keep their economies afloat.


2. To revive the economy, one of the methods used was the merger of ownership and the running of corporations in the hands of senior management. This means providing them with big incentives in the form of stocks and shares in the business. The increase in the value of stocks relative to the value of production revives the economy somehow.


3. This in turn increased the financialization of the economy. It means the creation of more wealth through money. Increased profits began to come from financial/money endeavours rather from physical production. This also impels financial speculation that increases profits from capital. The big corporations formed or joined big financial operations such as in banking and financial institutions. Others invested in the real estate business which also spawned speculation.


4. It’s no wonder that neoliberalization creates more wealth to those who have already access to money and resources (mainly land). This marks the foundation of ‘exclusive growth’ in the local and global economies. The net worth of 358 richest people in the world in 1996 was equivalent to the joint income of the poorest 45% (around 2.3 billion people) of the world population. The net worth of the 200 richest people in the world doubled to $1 trillion in just four years till 1998. In 2011, the Philippines was reported to have the highest income inequality rate in ASEAN. According to ADB in the same year, the 10% richest families in the Philippines have amassed more than one-third of the total income in the country.


5. Under neoliberalism, the economy is dysfunctional as it does not respond to the real crisis (unemployment, poverty, and the likes) that it should be aiming to solve. Technology has not prospered in areas that will spur production but has become adjuncts to the financialization of industries. The information technology (IT), which is the main form of technological advancement today, is primarily servicing the needs of the BPO industries (business process outsourcing), such as the call centers. In 2000, the IT industry captured 45% of all investments, while investments in production and infrastructures had dwindled.


6. Because production has not been developing and wealth is being shared by less and less people, the remaining physical forms of wealth are now quickly being plundered. In many countries especially in China, Mexico, and even in the Philippines, the land which has been communal, public and ancestral is being privatized and seized from the hands of farmers and indigenous people. The exploitation of natural wealth by transnational corporations has increased several fold in many Third World countries, while the interests on debts by these countries are raised several times to squeeze more wealth from them.


7. Even if neoliberalism does not solve the economic crisis, and rather intensifies it more, the crucial point of the policy is the consolidation of the economic power of the big capitalists and corporations. Neoliberalism increases their profits even if it means more poverty and hunger for more and more people.


8. The financialization of the economy has also been proven an unstable solution to the crisis even in temporary terms. The ‘bubble economy’ that it had spawned had burst several times and wiped out much of the wealth it created in decades. In the final analysis, the stable pillar of neoliberalism is the extortion of more profits from the real creators of wealth – the working class. Neoliberal capitalism would not have survived without this. Where can they squeeze more profits if not in the blood and sweat of the working class?


Neoliberal globalization and the working class


1.  After the Second World War, there were two important factors that contributed to the development of the situation of the working class in many countries in Europe and the West. One is the welfare state system (implemented in Europe but not in the United States). And the other one is the forging and strengthening of the union movement. Both these factors were founded on the heroic uprisings and struggles launched by the working class in these parts of the world.


2.  After the war, the technology of mass production in factories was introduced and led to the lowering of costs of production and the raising of productivity of workers in many industries. This has spawned the need for a collective bargaining system in workplaces that spurred the widespread organizing of workforce. The expansion of this new force – that threatens to link up with the sporadic revolts of the working class in many parts of the world – has neutralized the opposition of many capitalists to the need of providing more sustenance to their workers.


3. This is context of the advance of Social-Democratic ideas to many workers in the advanced capitalist countries. Social Democracy thrives on the idea that it is still possible to reform capitalism so as to benefit the working people. The historic ‘Tripartite Contract’ was introduced in society: it means that while capital hands over a large share of its profits to the workers, the labor aristocrats will abandon the aim of dismantling and changing the system, and the state will endeavour to reduce the wide wealth gap between the rich and the poor by carrying out progressive taxation and providing widespread social services under a ‘welfare state system’.


4. On the aftermath of the 1970s and 1980s crisis, capitalism started to reorganize the capitalist system of production worldwide. It implemented a neoliberal system of transition of the economy. In the workplaces and in every industry, it enforces the weakening of the working class through the imposition of widespread contractualization of labor that also leads to the collapse of unionism.


5. Under globalization, capital begins to end the system of welfare state that has existed for a number of decades in several advanced capitalist countries since the Second World War. However, it is not enough that the welfare state is dismantled even if it means that the state can now plow back to the capitalists the share of profits  given before to the workers. For the capitalist class, this is not enough. The end of the welfare state should be combined with more extensive ways of squeezing profits from the blood and sweat of the workers.


6. This is the might of contractualization for capitalism. Under globalization, the process of production is reorganized to give way for widespread contractualization of labor. Through this, the cost of labor is permanently reduced, labor standards are kept depressed, and the union movement, which has heretofore stood as high and mighty, is severely weakened and is made to bow down to the interests of capital. The divide-and-rule strategy was implemented among the ranks of the workers. Under the slogan of ‘labor flexibility’, the production process was split between the ‘core labor’ and the ‘peripheral labor’. At first, capital maintained the quality benefits for the core workers; later on, the core workers were eased out by the number of contractual workers who replaced their jobs inside (and outside) their workplaces.


7. Capital made use of technological developments to advance the new system of work in the workplace. The new IT and computer technology spurred the lean system, the just-in-time system of production, and the likes, which speed up the entry and flow of capital, the global sourcing of industries, and the relocation of jobs in several parts of the world. On these bases, contractual labor further decreased the costs of labor in the workplaces and became the norm of capitalist operation worldwide.


8. The system of contractual labor which existed on the sidelines in workplaces for several decades has now become an international system. From janitorial services, it spreads into the engineering and software development departments; from security guards, it creeps into the sales personnel, the high-skilled interns, and several other jobs. The former army of regular workers has now become an army of casual and contractual workers.


Contractual or Precarious Labor


1. The contractual labor that became widespread in 1990s has been called precarious labor by the International Labor Organization. According to the ILO, the contractual workers are composed of workers who have temporary job contracts and are in a ‘triangular relationship’ with themselves (as workers), the capitalists (employers), and the subcontractors or agencies. The ILO also considers contractual labor those who are identified as self-employed but are in reality integrated or dependent to the companies which use their services. They are also called temporary workers, agency labor, subcontracted labor or bogus self-employed workers.


2. Contractualization has come to dominate the workforce worldwide, both in the advanced capitalist countries and the developing and underdeveloped economies.


  • In the European Union countries, the share of contractual workers to the total salaried workers jumped from 8.3% in 1990s to 14.7% today. Temporary and contractual work accounts for 30% of total wage jobs created the past few years.
  • In China, the country which has become the center of globalization or outsourcing of production in the past two decades, contractualization has made a dramatic mark. In 1986, almost all of the jobs in China were under fixed-term contracts. From 2005, it is reported that out of the 73% employed rural migrant force, 47% do not have any contact, 25% have short-term contract, and only 1% have long-term contract. The wage of workers without contract is equivalent to a mere 20% of those with contract.
  • In India, the use of contract workers vis-a-vis regulars have gone up from 13% in 1993-94 to 30% in 2005-06. The contractual workers have surpassed the number of permanent workers.
  • In South Africa, the factories and mines are largely being run by service providers, labor brokers and the likes who have become middle-men of the capitalists. The wages of the contractual workers are less than half of the wages of the workers under the core employers.
  • In Latin America and the Caribbean, the share of the contractual workers have gone up from 19% in 2002 to 26.5% in 2007.


Proletariat then, precariat now


1. The contractual workers are also called the new proletariat, but since their jobs are precarious, they're better known as the ‘precariat’. The phenomenon of the precariat is brought about by the globalization of the economy, the new technology, the global mobility of capital, and the dismantling of labor laws that give protection to the workers, and the entire range of state policies under neoliberalism.


2. All these have created an army of casual and contractual workers who suffer permanent job insecurity and who are devoid of rights to labor in its essentials. If the proletariat is the wage slave of the capitalist, the precariat is the wage slave of the capitalist and the agency. The precariat is composed of workers who suffer direct capitalist exploitation, but is thrown out of the system, or is made to fend off for itself, from to time.


3. The capitalists argue that this system of contractualization of labor cannot be avoided and is needed for industry to develop. And in order to implement this ‘development’, the state is forcing many countries to create ‘regulatory environment’ for globalization. This environment includes the passage of laws and statutes for the extensive implementation of contractual labor, or the repeal and rescinding of laws that contradicted such. The contractual environment is not only fostered in the private sector but also in the public sector which is now being run by a growing number of contractual workforce.


The Herrera Law and the contractualization system in the Philippines

1. It is not surprising that the Herrea Law (RA 6715) or the Herrera amendment to the Labor Code was passed in 1989 – the year when APEC was formed and when it started to promote the implementation of the neoliberal agenda in Asia-Pacific and in several countries. The Herrera Law is a key example of its implementation in the Philippines, through the ardent support of big-time labor aristocrat Herrera.


2. Herrera Law legalizes the contractual system of work. Before this, contractual work was limited to jobs that were not related to the main production in the enterprises; it consists mainly of jobs in the periphery, such as janitorial, security, messengerial work and the likes.


3.  Under Articles 106 to 109 of the Herrera Law, the Secretary of Labor has been given the right to issue orders and directives that promote the hiring of contractual and non-regular labor. Before this, the contractual system is only limited to janitorial and other casual work as mentioned, but since then, it has become the normal system of operations in all sectors of industries – from manufacture, wholesale and retail trades through the BPOs today.


4. Herrera Law muddies the definition of regular jobs and promotes the system of contractualization by providing power to the Secretary of Labor to issue guidelines on how to implement contractual work. While there was a vague reference to the differences between job contracting (which was legal) and ‘labor-only contracting’ (which was illegal), the Herrera amendments provided all power to the Secretary of Labor to define the regulations on these labor arrangements.


Department Order No. 10


1. In 1997, the Department of Labor & Employment (DOLE) issued Department Order No. 10 in pursuance of the Herrera amendments to the Labor Code. DO No. 10 stipulated at once that the “contracting and subcontracting arrangements are expressly allowed by law” although subject to some regulations. According to DO No. 10, such arrangements are essential “for the purpose of increasing efficiency and streamlining operations which is essential for every business to grow in an atmosphere of free competition.”


2.  DO No. 10 also spelled out the ‘permissible’ type of contracting or subcontracting. Aside from jobs not directly related or not integral to the main business or operation of the company – such as janitorial, security, messengerial jobs, temporary work, and the likes – the range would now also include “works or services temporarily or occasionally needed to meet abnormal increase in the demand of products or services,” “works or services temporarily or occasionally needed… for undertakings requiring expert or highly technical personnel to improvement the management or operations of an enterprise,” “services temporarily needed for the introduction or promotion of new products,” although only for the duration of the introductory period.


3.  These tacit and even vague provisions of the Herrera Law and DO No. 10 only lead to the widespread contractualization of labor and the annihilation of regular employment. In many workplaces today, the former category of regular jobs is now around 10-20% of total jobs, while contractual work jumps to around 80-90% of total jobs. Contractualization has also been the norm for many big Philippine companies belonging to the Top Ten like SM, San Miguel, PAL, PLDT, Coca-Cola, and others. If we look at the top 40 Filipino multimillionaires today, almost all have businesses founded on contractual labor in the manufacturing, wholesale and retail, real estate and financial sector industries.


4. These are now the results of the imposition of contractual work in big companies:


  • At PLDT, from 16,000 regular jobs in 1995, there are only around 3,000 regulars today.
  • At SM, 92% of workers are contractuals (this has been the way SM operates ever since).
  • At San Miguel, from 26,000 regulars, there are only 1,000 regulars today.
  • At Philippine Airlines, the remaining 2,600 regulars in 2011 are rehired as contractuals by agencies owned by PAL and the hired workers have been dispersed in various departments to curb unionism.


5. Contractualization is an apocalypse unleashed by capital to wipe out unionism. Under DO No. 10, for instance, contractuals are not allowed to form unions since the hired workers are deemed to be working under agencies and subcontractors. Hence they are not deemed to be the responsibility of the company: they cannot bargain with it, nor are they allowed to stage a strike at company premises to demand for their rights. Because of these restraints, many unions, which have been in existence for decades, are wiped out in many companies. In 1989, there were around 2.79 million workers belonging to unions. In 2012, there are only around 1.79 million workers unionized. From 627 registered unions in the 1980s, there are only around 200 registered unions today.


6. The unions cannot be faulted for doing nothing against contractualization. There were a number of strikes held against this system. But these were brought down by the violence inflicted on the strikes by the state and the police, and the repressive provisions of the Herrera Law (under the so-called illegal strikes, all participants are meted out the penalty of work dismissal). Unions that went on strike met series of defeats: at SM, LRT, PLDT, Meralco, ABS-CBAN Internal Job Marketers, Triumph International, Ever Gotesco Mall. Nestle, San Miguel, Lepanto Consolidated, Toyota Nissan, Honda, Yokohama, Phil. Jeon, and Hacienda Luisita.


7. The labor situation becomes more distressing as the use of contractual labor in big companies also led to the massive closures of several small and medium-scale businesses that could not compete with the big ones. This contributed gravely to the unemployment crisis in the Philippines.


8. In tandem with the Herrera Law in 1989, the government approved RA 6727 or the Wage Rationalization Act which passed on to the regional wage boards the enactment of minimum wages. Before, wage increases were legislated by Congress and tended to be uniform all over the country. Under the 'rationalizarion' law, a neoliberal policy is adopted that means the lowering of the minimum wages of workers in all industries in cities and provinces outside Metro Manila.


Department Order 18-A (2011)


1.  DO No. 10 is now replaced by DO No. 18-A Series of 2011. The new order maintains the contractualization system under new regulations, but made the following amendments:


  1. Increased the capitalization fund needed to become a legitimate labor contractor. Contractors or agencies – whether they be corporations, partnerships, or cooperatives – should have a paid-up capital of not less than P3 million. Contractors under single proprietorship should have a declared networth of not less than P3 million.
  2. Increased the contractors’ registration fee at the DOLE (previously it only amounted to P100, now it’s P25,000 for every three months).
  3. Issued a new definition of the illegal labor-only contracting system: It is labor-only contracting if the workers are repeatedly hired under one or several agencies after the five-month period of contractual work.
  4. The employment contract of worker to the agency should have the same duration as the service contract of the agency to the company.
  5. If there is a union in the company that is using an agency, the company is obliged to show to the union the service contract with the agency. The agency is also obliged to show to the union the employment contract of the contractual workers in the agency. Any violation to these regulations is deemed labor-only contracting, and therefore illegal.
  6. The number of contractual or agency workers should not surpass the number agreed upon in the CBA (collective bargaining agreement) of the union and the company.


2.  The DO No. 18-A is a regulation that maintains contractualization in the company. While it broadens the differences between legal and illegal contractor, it is not aimed at eradicating nor abating the system of contractualization. Job contracting and the tripartite relationship between workers, the company, and the agency are maintained. The agencies – whether they are corporations, partnerships or cooperatives – are allowed to continue their business and to act as middlemen for the capitalists. In this manner, the real capitalists, the big corporations, are freed of their responsibilities to the workforce. This again works to the advantage especially of the foreign companies whose capital can enter and leave the country as they please.


How to eliminate the system of contractualization?


1.  Recently, there are a number of victories scored by the workers against contractualization. The workers of Tanduay who went on strike against contractualization won their case when the labor court decreed that the 103 contractuals should be considered regulars. Almost on the same period, the contactual talent workers dismissed by GMA-7 (a TV network) after long years of work with the station, held a series of protest actions in front of the network. They too were ordered reinstated by the labor court. These point to the power of direct action, strikes and protests, that workers can do to pressure the capitalists to regularize contractual labor.


2.  The contractual workers can also come together under one big umbrella to force Congress, the Department of Labor and the government to take action against contractualization. The campaign should also be around the repeal of the Herrera Law and the rescinding of all department orders that maintain the system.


3. Contractualization is an international phenomenon brought about by neoliberal capitalism. This restructuring of capitalist production is being imposed by APEC and all ‘free trade’ agreements that serve the interests of the imperialist powers and the big local and foreign corporations. We need to get out of APEC, better yet, dismantle it, as it does not serve the interests of the working class, the poor and the entire Third World nations in the Asia-Pacific. The genuine association that builds solidarity (not competition) among countries is like the ALBA which has been formed by the Latin-American and Caribbean nations to genuinely assist each other. ALBA is led by the socialist-inspired governments of Venezuela, Bolivia and Ecuador.


4. The ultimate solution in the Philippines is the overthrow of the landlord-capitalist government that remains a puppet of imperialist powers while plundering the remaining wealth of the nation. Instead of this kind of government, we should replace it with a government of the workers and the masses which will institute social justice and a grand wealth redistribution program that will wipe out poverty, hunger, and unemployment in the country.#


October 26, 2015


Walden Bello, “The Corporate Free Trade Project Reloaded,” Telesur, 27 August 2014.

ILO's Bureau for Workers' Activities (ACTRAV), “Policies and Regulations to Combat Precarious Employment,” ILO 2011.

Guy Standing, “The Precariat: The New Dangerous Class,” Bloomsbury 2014.

Department Orders No. 10 and No. 18-A, Department of Labor and Employment, Philippines.

Last Updated on Friday, 06 November 2015 13:58



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