Financial crisis to hit workers most – study

MANILA, Philippines - Ordinary workers will suffer most of the devastating consequences of the world economic slowdown, a Church-based study group claimed Tuesday. An article on the Catholic Bishops Conference of the Philippines website said this claim stemmed from a study of the Ecumenical Institute for Labor Education and Research Inc. (EILER). "The international labor migration serves as an outlet for the surplus labor that cannot be absorbed by stunted domestic industries in these countries, as well as an important source of foreign exchange remittances that help pay for imports and debt-service. But recessions and rising unemployment in the advanced capitalist countries are invariably associated with the tightening of borders to keep out foreign workers," said Paul Quintos, EILER Inc.'s executive director. Quintos said that because the Philippines is dependent on labor export, there is a big possibility that the country will experience soon reduced earnings from remittances, lower consumption spending and higher local unemployment. He said the crisis will clamp down wages and social spending. In a bid to pass off skyrocketing production costs, employers would lay off workers, promote casual employment and suppress workers rights. "On this note, workers must counter the capitalists' desperate attempt to shift the burden of the crisis onto the people by consolidating their ranks, reaching out and organizing more workers in the factories, offices and in the communities, building unity with other affected sections domestically and internationally, and waging more concerted workers' actions," he said. The CBCP article said Quintos claims to be an expert on world economics, and is a graduate of the London School of Economics. "As the US falls into recession, the rest of the global economy is being sucked downwards with it. The collapse of credit instruments originating in the U.S. is also weakening the financial balance sheets of banks and other overseas holders of these investments, affecting not just the banking sector but also stock markets abroad. Hence the US is exporting a credit crunch overseas and pushing the entire global economy towards recession," Quintos said. He added that in the US alone, due to less investment and slower consumer spending which push slower economic growth and even recession, almost 10% of the workforce is now unemployed or underemployed, and job losses continue to mount. "The private-sector has shed 411,000 jobs over the past six months. The nominal rises in employees' earnings are falling well behind inflation now running at 4%. This implies continued losses in the real value of wages or the purchasing power of most workers which has been stagnant or declining since the 1970s," he said. Quintos said the effect of the current global financial crisis on the welfare and livelihoods of working classes in the countries like the Philippines will be more severe and protracted. "The global credit crunch means reduced capital flows for third world countries that are chronically dependent on foreign capital inflows to pay for older debts, sustain imports from the advanced capitalist countries and paper over chronic deficits," he said. "On the other hand, since most of the unindustrialized countries are dependent on exporting agricultural products, raw materials, minerals, low-value added manufactures and services (e.g. business process outsourcing) to the advanced capitalist countries will be faced with shrinking exports due to the combination of depressed consumption in the US," he added. He said that as financial instruments and stock markets become less attractive to financial investors, speculative capital shifts more into commodities trading such as oil, minerals and agricultural commodities, he furthered. "This will contribute to the precipitous rise in food and energy prices beyond what conditions in the real economy warrant, thereby rapidly eroding the real incomes of the vast majority especially in the third world," said Quintos. He said food accounts for 30-40 percent of the consumer-price index in most developing countries, compared with only 15 percent in the G7 economies. Furthermore, he claimed that two-thirds of the world's population had already suffered a double-digit inflation rate in mid-2008. "This (soaring food and energy prices) is pushing millions of people deeper in poverty. In the Philippines, for instance, the Asian Development Bank estimates that for every 10 percent increase in food prices, about 2.3 million more falls into poverty. These people, soon, will be joining the more or less three billion or almost 50 percent of the world's population, who are living on less than US$2 a day," he said. - GMANews.TV