Job losses reported as firms stop operations

MANILA, Philippines - Concerns of job losses due to a continuing economic downturn came into sharper focus yesterday, with the country’s main exporters group announcing industry retrenchments and company closures and the Trade department baring a government initiative to aid displaced workers. The layoffs and shutdowns revealed by the Philippine Exporters Confederation, Inc. (Philexport), however, were limited to relatively minor industries, and the Labor department also said it did not expect total job losses to exceed one million. Philexport, in a statement, said it had conducted a survey from November to December last year to determine how the global crisis was affecting Philippine exporters, particularly in terms of job cuts, a decline in orders, and shutdowns. Questionnaires were sent to Philexport’s 3,758 members but only 12—representing the handicraft and jewelry sectors—replied, Flordeliza C. Leong, Philexport senior manager for services advocacy and communications, said in a telephone interview. The survey showed a total of 395 workers from three of the 12 respondents had been retrenched, while two firms had ceased production. Three of the respondents reported a lack of orders, while five cited as much as a 50 percent decline in demand. The survey also showed that six of the Philippine Chamber of Handicraft Industries, Inc.’s 130 members were dormant and half had downsized, while five of the 50 member companies of the Home Accents of the Philippines, Inc. had folded and 10 had laid off workers. “Crisis-hit companies say they have shifted their marketing to other countries such as Spain, Portugal, United Kingdom, China, Vietnam, India and the Middle East [They also said] they will be engaged in product development [to enhance competitiveness]," Philexport said. Leaders of handicrafts and jewelry industry groups confirmed the situation. "Many of exporters I know didn’t have orders three months before Christmas. Costume and fine jewelry makers in Cebu are also suffering. And I know one or two members that are downsizing," Guild of Philippine Jewellers, Inc. President Mia S. Faustmann said. Philippine Chamber of Handicraft Industries, Inc. Executive Director Ajun L. Valenzuela said "layoffs have become very common in the past eight months. Members are in a wait-and-see position." National Statistics Office data showed that fine jewelry exports rose 5.5 percent to $22.969 million in the 10 months to October last year from $21.772 million in the same period in 2007, accounting for just 0.05 percent of total exports. The same data showed that exports of "basketwork, wickerwork & other articles of plaiting materials" declined by 45.64 percent year-on-year to $2.364 million in October 2008 from $4.35 million, accounting for 0.06 percent of total exports. The Philippines earns most of its export revenues from electronics products. Next: Govt to create jobs for displaced workers Govt to create jobs for displaced workers The Department of Trade and Industry (DTI), meanwhile, yesterday announced that it would be focusing on preparing livelihood programs, and identifying funds and projects for infrastructure spending, to create jobs for displaced workers. To finance the thrust, the DTI is looking to tap the P100-million Industrial Guarantee and Loans Fund of the National Economic and Development Authority (NEDA) and will ask for approval to realign its own budget, Trade Secretary Peter B. Favila said. "I am mobilizing the entire DTI to embark on a massive training and development program like how to start a business as an immediate intervention for displaced workers. Essentially, I’m telling DTI to focus on job generation programs," he said. "It’s hard to say how much [will be needed] at this time ... I will review my budget profile to see what items can be realigned for the purposes of this program," he said in Filipino. Mat-making, small-scale retailing, and simple footwear assembly are among "menu of businesses" that may be offered, Mr. Favila said. The Trade department is also banking on infrastructure spending to generate additional jobs. A review of a P100-billion pump-priming fund to be shouldered by the public and private sectors and a $1.1-billion unallocated portion of Chinese overseas development assistance (ODA) is also progressing, Mr. Favila said. "I’m working on the framework on how the P100-billion fund is going to operate. We will see what happens within these coming weeks ... I’ll [also] be meeting with NEDA for an inventory of major projects that will provide jobs ... that can be funded by the China ODA," he said. In terms of priority industries, Mr. Favila said the Trade department’s efforts would be focused on the tourism and business process outsourcing sectors. Next: Job losses to be lower than expected Job losses to be lower than expected Asked to comment on mounting talk of massive layoffs, meanwhile, Labor Secretary Marianito D. Roque told reporters yesterday that job losses would not be as high as feared. "Some projections said that 11 million would lose jobs which is too high; that would mean that the economy is crawling. It is my belief that the effect could be less than one million for both overseas workers and local employees because our economy is resilient," he said. Mr. Roque also said the economy would likely perform better this year, and that a tax exemption for minimum wage earners would provide an economic boost via increased consumption. He stressed, however, that the Labor department was not officially making projections regarding job losses. But he said the most affected sectors would be electronics, garments, and automotive components because many of their clients are in economies experiencing a recession. The business process outsourcing sector will remain strong, he claimed. New graduates looking for jobs will also have a difficult time looking for a job but this is not a cause for concern, said Mr. Roque, as it is normal for unemployment to balloon around April. Trade Union Congress of the Philippines secretary-general Ernesto F. Herrera, for his part, said the 11-million job loss forecast includes overseas Filipino workers (OFWs). "It would be good if what the DoLE (Department of Labor and Employment) said would come true but on the practical side, I do not think that we would have less than one million workers who would lose their jobs," Mr. Herrera told BusinessWorld in a telephone interview. The Labor department has said that 50,000 OFWs could be displaced in a worst case scenario. So far, 3,567 overseas workers have returned home as of December 23 last year. The department has also monitored layoffs in some local companies but no consolidated numbers have been released. The Labor department said it would release a retrenchment tally by next week. - Jessica Anne D. Hermosa and Emilia Narni J. David, BusinessWorld