THE EVOLVING ROLE OF LABOR UNIONS AND THEIR

C O N F I D E N T I A L SECTION 01 OF 03 MANILA 000410 SIPDIS STATE FOR DRL/IL, EAP/PMBS, DRL/CRA, INR/EAP LABOR FOR ILAB E.O. 12958: DECL: 01/26/2015 TAGS: ELAB PGOV PHUM SOCI PINS ECON RP SUBJECT: THE EVOLVING ROLE OF LABOR UNIONS AND THEIR INFLUENCE ON CURRENT POLITICS REF: 04 MANILA 5552 Classified By: Joseph L. Novak, Deputy Political Counselor and Labor At tache, for Reasons 1.4 (b) and (d). ¶1. (C) Summary: While the Philippines has a good record of promoting and protecting worker rights, the labor movement is no longer a potent political force. Union membership is in sharp decline, with labor market penetration falling from roughly 25 percent of salaried workers in 1986 to 9.7 percent in 2004. The reasons cited for the decline include international investment patterns that favor other countries, the creation of "special economic zones," and the large number of Filipinos employed abroad. Labor has had little success in transforming its membership into voting blocks despite endorsement of candidates (notably President Arroyo in 2004) or in gaining "party list" seats for labor representatives. One of the most high profile labor groups in recent years has been the relatively small but activist "KMU," whose strong-arm tactics and defiance of legal orders have been controversial (and not particularly effective). Mainstream labor leaders are nonetheless optimistic about continuing progress in combating child labor, enforcing the minimum wage, and promoting observance of occupational safety and health regulations. Mission, working closely with the AFL-CIO's Solidarity Center, will continue to deploy labor diplomacy tools in order to strengthen the role of the mainstream labor movement. End Summary. -------------- Long Tradition of Labor Activism -------------- ¶2. (U) The Philippines has a long tradition of labor activism. Trade unions came to the fore during the US period (1898-1946),with the assistance of the American labor movement. After independence, the passage of the Industrial Peace Act in 1953 (which recognized the right to organize, to bargain collectively, and to strike) marked the beginning of the modern era of Filipino labor unions, which flourished until the declaration of martial law in 1972, when the Marcos regime banned independent labor activism and strikes. Unions later re-gained the right to operate under then-President Marcos' "New Society Movement," but had no genuine independence or right to bargain collectively. Organized labor subsequently flourished after the "People Power" events of 1986 and elevation of Cory Aquino to the presidency. ¶3. (SBU) The Philippines in general has a positive record on labor issues. Since independence, the GRP has passed numerous laws and regulations to protect workers' rights and conditions. In the 1970's, the GRP took steps to ensure sick leave, overtime pay, and to provide social security benefits. Congress also promulgated a minimum wage law, and there are restrictions on working hours. Labor unions often complain that enforcement of these laws and regulations is spotty, however. More recently, the GRP, acting with the support of the labor movement, has succeeded in strengthening laws against child labor, passing a law in 2003 against trafficking in persons, and stepping up TIP-related prosecutions in 2004. -------------- A Declining Force -------------- ¶4. (SBU) Currently, however, the labor movement is a declining force in the Philippines. Throughout the country, labor federations face declining labor market penetration. Members of labor unions now comprise only 9.7 percent of all wage and salary workers (i.e., non-agricultural workers, etc.),down from a peak of 25 percent of all wage and salary workers in 1986. (Union members currently represent 4.7 percent of the total labor force of 35.6 million.) The decline in union membership was particularly sharp from 2002 to 2004, when total membership fell from 3.9 million to 1.7 million (although at least some of this decline was due to new methodology for counting union members, according to labor officials). The labor movement is extremely fragmented, with 17,935 registered unions as of 2004 (slightly down from mid-2003 heights of over 19,000). In addition, the bargaining power of unions has decreased. Among registered unions, only about 17 percent have actually entered into collective bargaining agreements (CBAs) with their employers. This percentage of CBAs has been generally diminishing since a peak in the early 1990s. ¶5. (SBU) The reasons for the decline are many and complex. Most labor leaders blame trade liberalization, noting plant closures and layoffs as many companies move production elsewhere, especially to China. They claim that the GRP,s efforts to project a more investor-friendly image in response to this trend have led to a more restrictive, anti-union interpretation of laws and regulations related to organizing. Increasingly serious problems faced by organizers, labor leaders charge, include employers who fight the labor union recognition process by questioning the validity of supporting documents, as well as harassment and dismissal of employees who instigate union activities. Organizers assert that employers are able to get away with such tactics for long periods because the GRP does not actively work to prevent their use. ¶6. (SBU) Labor leaders have claimed also that the creation of "special economic zones" (SEZ's) have hurt the labor movement. Although labor laws are the same within and outside SEZ's, labor officials consider enforcement of these laws especially poor within the zones. Union membership within the SEZ's is less than three percent. Furthermore, some local government officials have unilaterally declared areas within their jurisdiction as "strike-free" zones or "non-union" zones in order to attract investors. ¶7. (U) "Contractualization" of work, subcontracting, the growth of the informal sector, and the high unemployment rate also hamper the organizing of labor unions, according to labor leaders. Worker concerns relate primarily to gaining or keeping employment, not on the rights that labor unions offer, so much so that at least eight million Filipinos have become Overseas Foreign Workers (OFWs),usually laboring without the benefits of union membership at home or abroad. In addition, when they return home, they often are unfamiliar with unions and even suspicious of them due to their non-union work experiences abroad, according to some observers. -------------- Not Much Current Influence In Politics -------------- ¶8. (C) The 1987 Constitution mandated that 20 percent of seats in the House of Representatives would be for representatives from "multi-sectoral" organizations (rather than representatives from legislative districts),with one-half of these seats initially reserved specifically for labor, peasants, urban poor, indigenous cultural communities, women, and youth. Nowadays, such organizations must garner at least 2 percent of the votes cast in the party list category to qualify. In recent elections, the Trade Union Congress of the Philippines (TUCP),the largest mainstream labor umbrella group, attempted to win seats under this system, but even it was unsuccessful. ¶9. (C) The personality-driven nature of Filipino politics limits the political influence of organized labor. Rather than choosing candidates based on their platforms regarding labor issues (or other substantive matters),workers tend to support candidates on the basis of personal, familial, or geographic ties. Because successful candidates frequently reward voters with patronage in the form of contributions for weddings, baptisms, and burials, workers often support the candidate judged most likely to come out on top and not the candidate their union might have endorsed. Increasingly, candidates do not even see labor unions as reliable "vote banks," due to the decline in the number of union members and the general fragmentation of the movement. Even though the TUCP and the Associated Labor Union (another large mainstream umbrella grouping) supported President Arroyo in the 2004 election, few commentators viewed this endorsement as especially important, and it is unclear how many additional votes she reaped as a result. One of President Arroyo's ten point agenda, however, was specifically aimed at creation of six to ten million jobs by 2010. -------------- A leftist influence -------------- ¶10. (C) One of the few media stars among Filipino unions is the Kilusang Mayo Uno (KMU),or "May First Movement," formed in 1980 when nine small unions merged. No statistics on current membership are available. The KMU presents itself as a proponent of &genuine, militant, and nationalist unionism,8 while attacking mainstream unions for "selling out" to the rich. According to mainstream labor activists, the KMU is closely linked with the Communist Party of the Philippines (CPP) and the FTO-listed New People's Army (NPA). Often standing alongside the KMU in its picket lines are other CPP/NPA front organizations, including Bayan Muna (a left-wing party),Gabriela (a women's group),Migrante (a radical NGO),and Kilusang Magbubukid ng Pilipinas ("Peasant Movement of the Philippines"). Leftist groups succeeded in expanding their number of party list seats from three to six in the May 2004 elections. ¶11. (C) The KMU's tactic of choice these days is "the people's strike,8 in which it works with other CPP/NPA-affiliated groups to maximize political pressure on employers to force concessions (often unsuccessfully, though). In pursuing such methods, the KMU has sometimes defied legal "return to work" orders; courts have ruled such actions illegal. In recent months, the KMU helped spark the confrontation at Hacienda Luisita in Tarlac Province (reftel) and to organize a large-scale strike by public transport drivers in Manila that stranded hundreds of thousands of commuters for part of a day. Mainstream labor critics of the KMU note that its efforts do not result in higher wages or better conditions for workers. Many observers claim instead that the KMU's major focus is to extort money from employers, funds that it then passes to the CPP/NPA. -------------- Comment -------------- ¶12. (C) Having achieved most of its basic goals in building a legal framework for worker rights in the 20th century, the labor movement now faces tough times in remaining politically relevant and in attracting (or even retaining) members. Mainstream labor leaders nonetheless are optimistic that they can continue to make progress in such areas as combating child labor, enforcing minimum wage laws, and ensuring observation of occupational safety and health regulations. Mission, working closely with the AFL-CIO's Solidarity Center, will continue to deploy labor diplomacy tools -- political and public outreach, involvement in USG-funded projects and visitor programs, etc. -- in order to strengthen the role of the mainstream labor movement. Visit Embassy Manila's Classified website: http://www.state.sgov.gov/p/eap/manila/index. cfm You can also access this site through the State Department's Classified SIPRNET website: http://www.state.sgov.gov/ Ricciardone