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.

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Long Tradition of Labor Activism
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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.

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A Declining Force
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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.
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Not Much Current Influence In Politics
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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.

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A leftist influence
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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.

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Comment
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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.


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