US embassy cable - 05MANILA410

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. 
 
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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