Corporate Watch
By Amelia H. C. Ylagan
“Up to 10 million Filipinos could lose jobs in the Philippines due to COVID-19,” Department of Labor and Employment (DoLE) Secretary Silvestre Bello III said during a Senate hearing on coronavirus pandemic updates on May 20. He said 2.6 million workers have already been laid off due to temporary closure of business establishments (GMA News, May 20).
These are chilling statistics, correlated to those of the despairing statistics on the status of COVID-19 infections in the country. As of May 20, the confirmed cases of the novel coronavirus infection were 13,221, of whom 842 persons died — a 6.36% mortality rate. Will Bello’s estimate of the parallel contagion in the labor force (the lay-offs, cut-jobs) increase the latest reported 5.3% unemployment rate (3.868 million unemployed as of January) to 19% (13.868 million) unemployed because of COVID-19’s economic impact?
“I hate to say it, but it’s possible,” Bello said at the Senate hearing.
Call it sinister and macabre, but COVID-19 has killed more families than the acknowledged 6.36% of confirmed cases — and will kill more in terms of jobs and businesses lost in the quarantine restrictions and in the shifted paradigms in micro- and macro-economics. More than four million Philippine families (one in every five) went hungry over the past three months, doubling from December amid lockdowns to stem the coronavirus outbreak, according to a Social Weather Stations survey in early May, in a report carried by Bloomberg on May 23.
A focus analysis in the BusinessWorld (May 14) cited that “more than 99% of the roughly one million business establishments in the country in 2018 were micro, small and medium enterprises (MSMEs), according to the Department of Trade (DoT). The smallest of them accounted for 88% of the total, or a little more than 887,000 establishments. These have raised the quality of life of their families and workers, having created 5.7 million jobs or 63.19% of the country’s new jobs in 2018, data showed. About 436,000 of the country’s 1.6 million small businesses were forced to halt operations amid the lockdown, with one million of them operating with a skeleton workforce, according to the Department of Finance (DoF).
The vulnerability of jobs in time of the coronavirus (which weaknesses will most probably prevail long after quarantines are lifted) is reflected in a tabulation of “Businesses allowed to open under quarantine” in the BusinessWorld of May 13. Businesses were grouped by the government Inter-Agency Task Force (IATF) in four categories, evidently based on customer-contact needs that company personnel will have to serve within the constraints of social distancing to avoid contamination of and by others. The option of “work-from-home” elevated the lower categories upwards in the Expanded Community Quarantine (ECQ), Modified ECQ, and General Community Quarantine (GCQ, or the most-relaxed ECQ) listings.
It is indicated that Category IV businesses, which have the most customer-contact (like travel, tourism, group recreation, personal services and the like, will give less opportunities for jobs in this time of the coronavirus. Malls (for non-leisure stores and retail services for essential needs) are in Category III, which can have controlled customer contact and reduced staff (because of physical space allocation for again, social distancing). Note that the initial testing of malls re-opening has reportedly been graded “unsuccessful” because of the hordes of over-eager shoppers that were said to have violated social-distancing when malls were allowed to partially open (50% staff, on rotation) on the weekend of May 15.
Category II concerns financial, commercial, and manufacturing businesses that can do administrative functions by work-from-home (tech-based), previously barred under ECQ, but to be allowed full operations in GCQ. Category I can do all things they do under ECQ, Modified ECQ and GCQ: hospitals and health care manufacture, manufacture of essential goods, all agriculture and food production, delivery services, telecoms and media among other essential goods and services.
The Categories can be used as a template for gauging which businesses and economic activities will survive, which will have to downsize or adjust, and how much employment these surviving, new or re-engineered businesses will generate as their contribution to the livelihood and well-being of the Filipino labor force, and of course, towards the businesses’ own profitability — else why be in business?
Bello, in his own words said the jobs to be lost will mostly be from the service sector: “Karamihan po ’yan sa service sector. Malaki po ang tourism, ’yung allied businesses like restaurants, then transportation.” Services comprise 58.6% of the total employed in January 2020, according to DoLE statistics. And we must talk of the fate of our Overseas Filipino Workers (OFW), and our Business Process Outsourcing (BPO) workers, both from the service sector, which are vulnerable in this global pandemic, basically because of the downturn in the economies to which we export these services.
A BusinessWorld infographic on May 15-16 showed “Which economies stand to lose the most if remittances run dry?” Estimates of the Global Knowledge Partnership on Migration and Development (KNOMAD) showed that the Philippines received remittances of $35.17 billion in 2019, from some 2.8 million OFWs, contributing about 10% to GDP. The Philippines has the largest share of OFW remittance in the world, where Egypt comes a far second with $26.791 billion (8.9% of GDP), and Ukraine, third, with $15.814 billion (10.5% of GDP).
In April, Carlito Galvez, chief implementer of the national policy against COVID-19 said that around 100,000 OFWs were to be expatriated by their host countries, as international airports were partially reopening to allow foreigners to go home to their countries. (GMA News, April 14). It is not far fetched that more OFWs will be coming home to the Philippines, because of the changes in the economic status of their employers, who may have assessed their needs versus fear of close personal contact in this time of the pandemic, and in anticipation of future similar situations. It is reported that importing countries for personal services are now organizing indigenous services and facilities like retirement and nursing homes, day-care facilities, and housemaid services to avoid OFWs.
The volatility and sharp decline in fuel prices in this pandemic (and after) also affect the incomes and tenure of millions of OFWs in the Middle East. What to do with, say a million or so displaced returning OFWs globally who (except for the technical service workers) do not have other expertise? Someone said, train them to be BPOs. (Hmmm, perhaps a few.)
Way before the pandemic, BPO was bruited about as the perfect replacement for the declining OFW remittances (BusinessWorld May 01, 2015). The Philippines was already second overall among the world’s offshoring destinations, next only to India’s pioneering BPO industry, but first in the call center sub-sector, because young Filipino agents spoke better English. The real estate sector responded wildly with commercial buildings to house call center hubs in ready-made communities to serve the 1.2 million or so BPO agents. The BPO industry generated $23 billion in revenues in 2017.
The BPOs have been exempted from the quarantine. But the BPO Industry Employees Network (BIEN) revealed that because of the low volume of work and calls, BPO companies have been forced to dismiss workers, especially those on a project basis. Workers are placed in floating status because of account closures. There are also companies that have already issued notices of retrenchment because of the impact of COVID-19 on the businesses and economies that BPOs in the Philippines service abroad, BIEN said.
So there is the rough tally of the “about 10 million jobs” that DoLE Secretary Bello declared to be endangered and possibly lost because of COVID-19, and its merciless upheaval of human life and livelihood. He is appreciated for his honesty and candor in seeing the big picture beyond the palliatives of wage and income subsidies. But he should really get to work with the DoT, the government managers and socio-economic planners, and all other agencies relevant to the COVID-19 disruptions to plan and execute a strategy for the most basic need of the people: physical and economic survival.
Let’s see the plan for those 10 million threatened jobs.
Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines.
