30 Four Decades of Development Or Deterioration? 44 Organizing Experiences in Special Economic Zones

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2 TABLE OF CONTENTS 04 Foreword 06 History of Special Economic Zones 13 Special Economic Zones in the Philippines 30 Four Decades of Development Or Deterioration? 44 Organizing Experiences in Special Economic Zones 51 IWS WU: Effective Leadership and Union Democracy at Work 64 Daiho Workers Union: Militance, Flexibility and Education - Instruments for the Defense of Workers Rights 73 WAC: Experiences in Organizing at the Cavite Economic Zone 84 Golden Will Fashion: Organizing Contractual Workers 91 NXP Workers Union: Union-building Amidst Corporate Restructuring 99 Aurora Special Economic Zone: Community Opposition to the Establishment of an Ecozone 109 Hanjin Workers: Bonding for Mutual Aid 120 Amado Kadena Workers' Union: Sour Taste of DOLE Pineapples

3 134 Mactan Export Processing Zone: Forging Alliances, Community Organizing 144 Experiences at the Baguio City Economic Zone: The Ebb and Flow of Worker Organizing 154 Acronymns sed 155 Bibliography 159 Acknowledgement

4 04 Foreword FOREWORD A key component of the implementation of neoliberalism in the Philippines was the establishment of Export Processing Zones -- enclaves which housed foreign companies engaged in semi-processing of products for export, and which were granted numerous incentives and privileges by host countries. The Marcos dictatorship established the first four export processing zones in the country in the late 70 s. From this, traditional export processing zones evolved other forms and types of enclaves that would eventually be rather generically referred to as special economic zones, or simply, SEZs, which received the same privileges as EPZs. These most rapidly expanded under the Macapagal-Arroyo presidency. Under the present administration of Benigno Aquino III, the number of SEZs has reached 243 as of March The rapid expansion of economic zones in the country and the massive conversion of agricultural lands that accompany it, urge a review of the adverse consequences of this program on the national economy and the country s natural resources. Equally important is determining the impact on labor rights, particularly the right to free association, which is labor s most basic instrument for defending its rights and interests. The study is an overview of the current features of special ecozones in the Philippines, and the various changes in the concept and practice in the establishment of these zones. This section also attempts to present the impact on various aspects of the economy. The authors hope that this small study shall contribute in filling in the dearth of materials dealing with workers organizing efforts inside ecozones. For, while studies regarding labor conditions inside ecozones are numerous, very few have attempted to illustrate or discuss the ways by which workers can effectively organize and advance their interests under the generally restrictive conditions inside these enclaves.

5 Ripples and Rising TIdes 05 We hope that this study will spur further researcher and analysis on the issue of special economic zones in the country, which will help in drawing up alternative policies that are more favorable to labor rights and that can bring about real, sustainable development. Crispin B. Beltran Resource Center (CBBRC) Workers Assistance Center (WAC) Ecumenical Institute for Labor Education and Research (EILER) With the support of Stichting Onderzoek Multinationale Ondernemingen (SOMO)

6 06 Organizing Experiences in Economic Zones HISTORY OF SPECIAL ECONOMIC ZONES The end of World War II during the second half of the 1940 s, saw the US as the economically dominant and most powerful country in the world. It suffered very little loss compared to other countries, benefiting in fact from the manufacture and sale of war equipments to countries in Europe and Asia. A few years after the war, big US corporations had a monopoly over production technologies and the export of manufactured goods as countries from Europe and Asia were only beginning to recover from the ravages of war. Since it had a monopoly of global trade and owned 75% of monetary gold in the world, the US was able to impose the US dollar as world currency (Peet, 200). The dollar became the basis for currency valuation in the international market. All global transactions trade, investments and banking were now all based on the US dollar. The Bretton Woods Agreement, IMF and the World Bank To establish a global economic system at the end of WWII, the US led a summit of 40 countries to establish a world of expanding trade, rapid foreign exchange and economies responding to the needs of the US. At the end of the three-week conference in Bretton Woods, New Hampshire in July 1944, the delegate countries signed an agreement that tied their respective economies to the US economy. The US dollar was then declared as a global standard for trade. The International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), now known as the World Bank, were also established during this conference. The IMF was set up to regularize currency exchange rates among member countries and ensure international stability by lending to member countries during periods of crisis in their Balance of Payments (BOP). The World Bank, on the other hand, was established to help in the reconstruction of countries, particularly Europe, by facilitating capital investments, especially economies destroyed by the war and needing aid in setting up infrastructures and facilities.

7 Ripples and Rising TIdes Marshall Plan and Intensified Competition The war brought considerable damage and widespread hunger to the European peoples, especially those in major cities such as Warsaw, London and Berlin. As the US dollar became the dominant currency, it became cheaper for the US to establish factories in Europe, Asia and Africa. Surplus capital was created, which the US exported to Europe and other Asian countries. This led to the rapid growth of Transnational Corporations (TNCs) in these countries. To strengthen its economic foundation in Europe, the US implemented the European Recovery Program (ERP), more popularly known as the Marshall Plan, from US$13 billion in economic and technical support was provided to war-torn countries that had become members of the Organization for European Economic Cooperation. The Plan became a key factor in the integration of European economies when it eliminated restrictions to trade across Europe. The Plan succeeded in rebuilding Europe by Japan s economy likewise grew during this period. In the meantime, US corporations in Europe rapidly expanded. By 1965, the US controlled 80% of computer production, 24% of the motor industry and 15% of synthetic rubber in the European market (IBON, 2005). The Shannon Free Trade Zone was set up in 1956 in Ireland which served as an important transit point for US manufactured goods into Europe. 07 The renewed growth of the European and Japanese economies spurred competition among TNCs, driving companies to invest in research for the modernization of production and to find ways of lowering costs. Modernization of production technologies intensified, helping to create an increasing surplus of products. TNCs needed to lower production costs to keep up with the intensified competition and overcome the crisis of overproduction. To slash production costs, TNCs cut down on labor costs by transferring aspects of production to countries with huge pools of reserve labor. This practice was called global outsourcing, or international subcontracting. But TNCs transferred only those aspects of production that were light and labor-intensive. Aspects pertaining to control and growth of capital and technology remained in the home-front or base countries of TNCs. 1 From Import Substitution to Export-Oriented Industrialization During the period of colonialism, most colonies were exporters mainly of agricultural products which have low-value added while importing machinery and other capital goods from industrialized countries. 1 On a global scale, 84% of R&D employees of TNCs remained within the US in 1999; other R&D employees of US TNCs were based in industrialized countries such as Germany and the United Kingdom in Europe, and Japan. Among employees belonging to R&D are researchers, engineers, scientists, etc. (Moris, 2004)

8 08 Organizing Experiences in Economic Zones Upon achieving political independence, however, many of these former colonies attempted to undertake their own path to industrialization, from the 1950 s to early 1960 s, through import substitution. This strategy aimed at reducing the importation of foreign commodities through local manufacturing. This strategy, however, did not succeed because the former colonies remained tied to the importation of heavy machinery for production from industrialized countries, due to the absence of a domestic industrial base. The former colonies mainly implemented a limited form of protectionism by imposing high tariffs, raising exchange rates and the imposition of quotas on imports. Eventually, these countries had to turn again to foreign loans. By late 60 s to early 70 s, these countries turned to export-oriented industrialization under IMF-World Bank prescription. A key program was the setting up of the first few export processing zones, particularly in Asia and Central America. The Kaoshiung Export Processing Zone was set up in Taiwan in It was a 68-hectare enclave which housed companies that manufactured hairdryers, sewing machines, garments, semiconductors and electronics. The Maquiladora was set up in Mexico in 1965, along the US-Mexico border, after the US abolished the Bracero Program, which legalized the employment of Mexican agricultural A TNC is a large corporation that operates internationally. It has a parent company that is most often based in developed countries while maintaining so-called affiliates in other countries branches, subsidiaries, representatives or other types of corporate extensions operating under the parent company. The parent company has the power to make decisions concerning all aspects of the business. Furthermore, the profit that is generated by all corporate operations is remitted back to the parent company. It is often the case that TNCs maintain a monoply over one or more industries internationally. Due its wealth of capital and its international presence, the parent company is in a position to forumlate plans and make decisions that have consequences for the countries in which their affiliates operate without taking these countries own needs into consideration. The TNCs have far-reaching economic power and the ability to influence the economic policies the countries in which they operate. workers in the US. The Maquiladora program was envisioned to provide employment by attracting local and foreign investments for exporting semiprocessed products. Implementation of the Neoliberal Policy US corporate profit has been exus corporate profit has been experiencing a 50% drop in rates of profits since the 50 s. Manufacturing shrank, and unemployment increased. The US

9 Ripples and Rising TIdes witnessed an oil crisis in the 60 s when the Organization of Petroleum-Exporting Countries (OPEC) declared an embargo in 1973, causing oil prices to skyrocket in the US and other countries. This pushed the US economy into stagflation as the oil shock inflated prices at a time when the real economy was in a downturn. US war spending in Indochina likewise bore heavily on the economy, along with the concessions it gave its allied countries in the anti-communist crusade. As a way out of stagflation, the US and other industrialized countries focused on lowering costs of production and gaining greater control over the economies of underdeveloped countries. From the Keynesian policy of high social spending, the US and other industrialized countries turned to neoliberalism. Through the IMF-World Bank, neoliberalism further opened up the economies of underdeveloped countries to foreign capital. From loans meant to aid reconstruction and recovery from war, the twin institutions shifted toward huge development loans to underdeveloped countries. The crisis also resulted in the increased BOP deficits of former colonies, turned neocolonies, which have long been facing unequal trade relations with industrialized countries. The former once again turned to the IMF-World Bank to prop up their economies. In the 80 s, the IMF prescribed Structural Adjustment Programs (SAPs) in exchange for more aid to avert bankruptcy of underdeveloped 09 economies. A key component of SAPs was the implementation of a strategy of export-oriented industrialization, which involved the establishment of export processing zones. The IMF and World Bank, including the US Agency for International Development (USAID), promoted economies based on the global market, with minimal state intervention and adhering to the tenets of liberalization and privatization. It was also within the framework of SAPs that the World Bank implemented its policies. The World Bank focused on development loans for infrastructural projects that would supposedly bring about development in underdeveloped countries. These included the construction of dams, roads, ports, bridges and airports. In reality, such projects served to prepare the stage for the entry of big TNCs, mainly to be housed in EPZs, in underdeveloped economies. According to the IMF-WB, EPZs can bring these benefits to their host countries: employment for domestic labor that would otherwise be unavailable in a nonindustrial country; transfer of skills and knowledge from foreign corporations to local workers; transfer of technology from foreign to local corporations; development for underdeveloped regions; development of sectors considered vital to the national economy such

10 10 Organizing Experiences in Economic Zones as electronics, communication and information technology. The establishment of EPZs facilitated the transfer of low value-added but laborintensive stages of manufacturing to underdeveloped countries such as those that can be found in the garments and electronics industries that catered to the needs of the industrialized countries. Governments of host countries competed in granting numerous privileges and incentives to foreign investors, such as exemptions from tariffs and other forms of taxes. Included in these incentives was a guarantee of industrial peace, which in the case of some countries, even meant exemptions from national labor laws. Governments and private developers likewise established infrastructures and facilities that were better than the national average; often, they also provided police protection to ensure that production inside the ecozone is not disrupted by labor unrest. It was during this period that the rapid expansion of EPZs in various parts of the globe took place--in the Philippines, India, Indonesia, Bangladesh, etc. But the rapid implementation of neoliberalism was not to happen without the transformation of former communistruled Russia and China toward the capitalist path. China, in particular, implemented economic reforms within the frame of liberalization which signaled the integration of the Chinese economy into the global capitalist system. Among the reforms that China undertook was the setting up of numerous EPZs along the coastal part of the country. First to be set up were the EPZs in Shenzhen, Zhuhai, Shantou and Xiamen in Next were the enclaves in 14 coastal towns, and in the province of Hainan in In 1992, there were a total of 60 EPZs in the country. By 2007, 30 out of the 42 million globally employed by EPZs can be found in China. (Fu and Gao, 2007). The Current Situation In 1975, there were only 25 countries with EPZs employing a total of 800,000 workers. By 1986, the number rose to 47 countries with a total of 1.9 million workers. The number even doubled in 1997, with 94 countries and a total of 4.5 million workers employed in EPZs globally. (Cling and Lettily, 2001) By 2008, according to a report prepared for the ILO in March 2008, EPZs and other types of special economic zones have risen to a global figure of 3,500 in 130 countries, employing a total of 66 million people (ILO, 2008). The same report stated, however, that EPZ employment constituted only a small fraction of the national employment figures in host countries, and a mere 0.5% of global employment figures. The same report likewise stated that the socalled export-oriented industrialization strategy only worsened the dependence of underdeveloped economies on foreign capital.

11 Ripples and Rising TIdes 11 Shannon Free Trade Zone While the opening up of certain parts of the world to facilitate free trade was already practiced during ancient times, the Shannon Free Trade zone can be considered the blueprint of modern economic zones. The 50 s was a decade of Ireland s opening up to the world economy. Ireland catered to the industrial needs of Europe, which was then recovering from the destructive effects of WW II. The Shannon Free Trade Zone was set up near the Western coast, beside the Shannon International Airport, which was then a strategic point for the free flow of manufactured US goods to various parts of Europe. Companies in the zone engaged in the semi-processing of imported raw materials, which were then exported. The Irish government granted tax privileges to the largely US-owned companies engaged in manufacturing and international services. Ireland s economy expanded in the 90 s due to computer exports. A third of computers sold in Europe came from Ireland, but said manufacturing was mainly low-tech assembly and repacking of imported computer parts. By 1994, ten TNCs controlled 75% of value added to the products, and 40% of economic growth was due to the manufacturing sector. Along with rapid economic growth, came a housing bubble which saw the prices of housing increasing to as much as 250%. The country s foreign debt also increased due to the deregulation of the banking industry. It was at this point when Ireland was dubbed the Celtic Tiger by advocates of neoliberalism. Despite the economic growth, however, workers wages went on a downward trend. Taxation likewise increased 40% from 1987 to the mid-90 s. Worker strikes, already happening in the 70 s, saw an upsurge. Only a decade after, however, with the onslaught of the economic and financial crisis in the US and Europe, the roar of the Celtic Tiger was said to have weakened --many factories closed shop and moved to other countries with even lower wage costs, unemployment soared to 13.4%, housing prices fell, and many properties were foreclosed; the government became immersed in foreign debt. Under the tutelage of the IMF, the Irish government implemented austerity measures which involved cuts in social spending. The government implemented a US$69 billion bailout for the banking industry--certainly a huge amount for a country comprised by only 4.5 million people.

12 12 Organizing Experiences in Economic Zones Nevertheless, governments and other advocates of neoliberalism continue to promote the purported benefits of EPZs to host countries, asserting that it was only necessary to implement reforms in order to maximize these benefits. Despite its failure to bring about development, governments of so-called emerging economies --many of whom are former socialist countries--are still actively promoting this strategy under IMF prescription. This provides the US and other Western industrialized countries new grounds for the extraction of raw materials and the exploitation of cheap labor.

13 Ripples and Rising TIdes 13 SPECIAL ECONOMIC ZONES IN THE PHILIPPINES Since the Spanish colonial rule, the Philippine economy has been tied to the export of raw materials for the needs of the international market. Agricultural products such as coffee beans, sugar and tobacco were the primary exports. US colonial rule intensified the country s export orientation. To facilitate the speedier transport of agricultural products, the colonial government set up refineries for sugar and petroleum, and other infrastructure. The mining industry was given impetus with the extraction of gold and other minerals for US industrial needs, which was then rising as one of the leading industrial nations in the world. The destruction wrought on by WWII on the Philippines paved the way for US aid into the country. Along with the Tydings Rehabilitation Act came the Bell Trade Relations Act, which gave parity rights to US corporations for the exploration of mineral and other natural wealth of the country, allowing them to own and manage public utility companies and granting them the right to immediate profit repatriation. This continued under the Laurel- Langley Agreement, which, while ending in 1974, had already succeeded in legalizing US corporations almost unrestricted access to Philippine natural wealth. The Philippines received $550 million from Japan as war reparations as provided for by the Treaty of Peace between Japan and countries it occupied during WWII. By the end of the 1940 s, however, the war reparations fund had been depleted due to the unrestricted importation of luxury goods, public projects and graft and corruption in government. To stem the outflow of dollars from the country, the Philippine government imposed importation controls in 1949, as well as on foreign exchange in To circumvent these restrictions, US corporations established subsidiaries in the country. Most of these were factories for the assembly and repackaging of imported materials using imported machinery. As imports were not reduced and only took on other forms, the BOP deficit reached $58 million from The country was forced to borrow from the IMF in 1955 and from the World Bank in The two financial institutions imposed the conditions of eliminating

14 14 Special Economic Zones in the Philippines import controls, which the Philippine government implemented in Export-Oriented Industrialization The country s external debt, however, ballooned within three years, from $257 million in 1962 to almost $600 million in To enable the country to pay its debts, the World Bank recommended the Export-Oriented Industrialization (EOI) strategy, which consisted of three main policies: export diversification instead of import controls; free trade instead of protectionism; economic liberalization to attract foreign investments. The EOI was then envisioned to attract foreign direct investments through the establishment of export-oriented businesses that would help the country earn dollars. The Marcos dictatorship enacted Republic Act 6135 (Investments Incentives Act) and RA 5186 (Exports Incentives Act) which guaranteed, among others, the right of foreign capital to repatriate their profits, freedom from expropriation and reacquisition, and the granting of tax credits and exemptions. A key to attracting foreign investments was the setting up of Export Processing Zones (EPZs). The town of Mariveles, Bataan in Central Luzon was converted into a Freeport Zone under the management of the Free Trade Zone Authority. In 1972, only two months after the declaration of Martial Law, Marcos signed Presidential Decree (PD) 66 which established the Bataan Export Processing Zone (BEPZ), the first EPZ in the country. Under PD 66, companies exporting more than 70% of their products were given the following privileges: tax exemptions, including tax credits for domestic capital equipment, exemption from taxes for imported raw materials and equipments, export taxes and provincial and municipal taxes; priority in Central Bank allocations for foreign exchange for export;reducedrates for both land lease and water utility fees; government expenditures for infrastructure and buildings which will be leased to companies at very low rates; accelerated depreciation on fixed assets. Next to be established were the EPZs in Baguio, Mactan and Cebu. The establishment of these EPZs systematized the country s integration into the network of TNCs for international subcontracting. Exports shifted from the traditional raw agricultural materials to semi-processed goods. Corazon Aquino Presidency With the downfall of the Marcos dictatorship and the succession of the Aquino presidency, the government promoted, under the tutelage of

15 Ripples and Rising TIdes the IMF-World Bank, the slogan of Recovery and Reconstruction purportedly to lift the country out of the economic stagnation wrought about by the Marcos dictatorship. Part of the slogan is the advocacy of free trade and minimal state intervention for the free flow of capital, which set the stage for the rapid implementation of the policies of deregulation and liberalization in the country. Under the slogan lifting the countryside from poverty, the Cory Aquino regime encouraged the conversion of vast tracts of agricultural lands, such as the Hacienda Luisita owned by the Cojuangcos, into commercial and industrial estates. Industrial estates (IEs) are vast tracts of lands with roads, water system, facilities for electricity, communication and other physical infrastructures, which were built primarily for the use of an industrial community. IEs receive incentives similar to that of EPZs. The IEs, in contrast to EPZs, were opened up to the private sector. Ownerdevelopers entered into joint ventures with foreign companies. An example would be Central Techno Park inside Hacienda Luisita, which is a joint venture between Itochu Corporation, a big Japanese firm, and the Yuchengco and Cojuangco families. The IEs are not under PEZA regulations. The owner-developers may set their own rules and policies for the zone, although PEZA claims to have the right to monitor the IE s compliance with national labor laws. Ramos Administration The Ramos administration shed all lip service to national industrialization. Instead, it pushed for the expansion of the service industry, striving to create what it termed a globally competitive labor force. 15 This administration likewise hastened the liberalization of various sectors of the national economy under the tutelage of the IMF, and in compliance with the General Agreement on Tariffs and Trade of the World Trade Organization (GATT-WTO). The Ramos presidency enacted RA 7844 or the Exports Development Act of 1994 to encourage exports by the private sector through incentives such as exemption from customs duties, duty-free importation of machinery and income tax holidays. It likewise enacted RA 7916 or the Special Economic Zone Act of 1995, which established the Philippine Economic Zone Authority (PEZA). RA 7916 abolished the Export Processing Zone Authority (EPZA), which was created under PD 66 during the Marcos dictatorship. Moving away from the term Export Processing Zone as defined by PD 66, RA 7916 used the term special economic zone, which indicated an broadening of the categories of businesses that were eligible to receive incentives:

16 16 Special Economic Zones or ecozones selected areas that are or will be developed as agro-industrial, industrial tourist/recreational, commercial, banking, financial or investment centers; Industrial Estate lands developed according to a comprehensive plan under a single and sustained management, and with provisions for basic infrastructures and facilities. An IE may or may not yet have established factory buildings and facilities for the use of an industrial facility; Export Processing Zones a specialized IE outside of customs territory (whether physical or administrative), largely for the production of export goods. Companies located inside EPZs were allowed to import capital equipment and raw materials without tariff, taxes and other import restrictions; Free Trade Zones - a separate and policed place adjacent to a seaport or airport where imported products may be unloaded for immediate transfer or storage, repacking, mixing or selection without tariff except if the goods are to be transferred from one Free Trade Zone to another. Ecozones may be set up through the initiative of : private companies; the local government with the support of National Government; and the National Government. Other expanded benefits include : Allowing the sale of goods to the local market; Extension of loans to private ecozone developers from the savings of the funds of the Office of the President; Privately-owned IEs may maintain their autonomy, with PEZA limited to monitoring functions; Government support for up to 50% of expenses for the training of skilled and unskilled labor or management development programs. RA 8748 amended RA 7916, which exempted companies or locators inside ecozones from local and national taxes, except for property taxes for the developer. Instead, they now have to pay a five percent (5%) annual remittance based on their gross earnings that will be divided into: three percent (3%) for the National Government and two percent (2%) for the local government that has jurisdiction over the ecozone. RA 7196 legalized the almost limitless conversion of lands for the setting up of ecozones in virtually every region in the country. This includes: 1. Morong, Hermosa, Dinalupihan, Orani, Samal and Abucay in Bataan; 2. Ibaan, Rosario, Taysan, San Jose, San Juan and Lipa and Batangas cities in Batangas; 3. Cagayan de Oro in Misamis Oriental; 4. Iligan, Lanao del Norte; 5. Saranggani; 6. Laoag, Ilocos Norte; 7. Davao and Samal, Davao del Norte; 8. Oroquieta, Misamis Occidental; 9. Tubalan Cove, Davao del Sur;

17 Ripples and Rising TIdes Baler, Dinalungan and Casiguran, including the waters and islets of Aurora; 11. Naga and Iriga in Camarines Sur, Legaspi and Tabaco, Albay, and Sorsogon in Sorsogon; 12. Bataan Island in Batanes; 13. Lapu-lapu in Mactan, Balamban and Pinamungahan, Cebu and Toledo in Cebu, including its waters and islets; 14. Tacloban City; 15. Barugo, Leyte; 16. Buenavista, Guimaras; 17. San Jose de Buenavista, Hamtic, Sibalon, and Culasi in Antique; 18. Catarman, Bobon and San Jose in Northern Samar; 19. Ternate, Cavite; 20. Polloc, Parang in Maguindanao; 21. Boac, Marinduque; 22. Pitogo, Zamboanga del Sur; 23. Dipolog City-Manukan Corridor, Zamboanga del Norte; 24. Mambajao, Camiguin Province; 25. Infanta, Real, Polillo, Alabat, Atimonan, Mauban, Tiaong, Pagbilao, Mulanay, Tagkawayan, and Dingalan Bay in Quezon; 26. Butuan City and Agusan del Norte, including its waters and islets; 27. Roxas City, including its waters and islets in Capiz; 28. San Jacinto, San Fabian, Mangaldan, Lingayen, Sual, Dagupan, Alaminos, Manaoag, Binmaley in Pangasinan; 29. Autonomous region; 30. Masinloc, Candelaria and Sta. Cruz in Zambales; 31. Palawan Island; 32. General Santos City, South Cotabato and its immediate environs; 33. Dumaguete City and Negros Oriental, including its waters and islets; 34. Ilocos Sur; 35. La Union; 36. Laguna, including its waters and immediate environ; The Bases Conversion and Development Act (RA 7227), which was adopted in 1992, allowed the conversion of the US bases in Clark and Subic into ecozones and freeports. The aforementioned Act likewise established the Subic Bay Metropolitan Authority (SBMA) and Clark Development Corporation (CDC), which were tasked to manage these zones. ODA Loans for Ecozone Infrastructures To aid the rapid development of ecozones in the country, the government adopted RA 8182, or the Official Development Act of 1996, which exempts ODA from the country s foreign debt limit of $10billion, provided that these ODA prioritize infrastructure projects, countryside development and ecozone development as provided for by RA7196. By the end of 1996, ODA loans had reached $12.13 billion. These loans came from the Japanese government ($5.9 billion or 52%), World Bank ($3.2 billion or 26%) and the Asian Development Bank ($2.7 B or 22%). Around 77% of over-all ODA loans went to infrastructure projects (NEDA, 1996). From , at the end of the Ramos presidency, an average of 75% of total ODA loans were being spent on infrastructure projects.

18 18 Special Economic Zones in the Philippines Table 1. Establishment of Special Economic Zones based on Administrations Status and Classification Marcos Aquino Ramos Estrada Arroyo Operating 4 wd* Manufacturing Information Technology Tourism Special Economic Zone 9 Medical Tourism Park 1 Medical Tourism Center 1 Idineklara Manufacturing Information Technology 56 Tourism Special Economic Zone 2 Agro-Industrial Economic Zone 4 Being Developed 184 Approved 474 Newly Approved** 340 *no data available **current minus approved source: PEZA In 1997, however, the Asian financial crisis occurred, reducing the inflow of foreign investments into the country. In 2001, a political crisis occurred, ousting the two-year old Estrada presidency. The government of Gloria Macapagal-Arroyo succeeded via constitutional ascension. Gloria Macapagal-Arroyo Regime The Arroyo administration spelled out in its Medium-Term Development Plan (MTPDP) for policies which continued to rely on exports and on attracting foreign investments. The government carried out huge public spending on infrastructure projects purportedly to facilitate the speedier flow of goods and services.

19 Ripples and Rising TIdes 19 Table 2. EPZ Companies based on Industry Categories (December 2010) Industry Category Radio, Television and Communication Equipment and Apparatus 216 Real Estate Activities 213 Warehousing and Storage 172 Fabricated Metal Products, Except Machinery and Equipment 168 Call Centers 159 Rubber and Plastic Products 123 Software Development 119 Garments and Textiles 107 Business Process Outsourcing 103 Electrical Machinery and Apparatus, N.E.C. 84 Manufacturing, N.E.C. 44 Medical, Precision and Optical Instruments, Watches and Clocks 44 Automotive and Motorcycle Products 43 Engineering, Architectural and Other Design Services 43 Recycling 43 Other IT-enabled Services 32 Food Products and Beverages 31 Paper and Paper Products 29 Machinery and Equipment, N.E.C. 28 Electricity, Gas, Steam and Hot Water Supply 25 Others 226 source: PEZA Bilang It enacted the Comprehensive and Integrated Infrastructure Program (CIIP) with a total cost of Php1.7 trillion for the years alone. Loans came mostly from the World bank, the Asian Development Bank (ADB), Japan Bank for International Cooperation (JBIC) and China Eximbank. The government gave sovereign guarantees for these loans ( Senate Economic Planning Committe Office, October 2006). The types and number of ecozones receiving incentives expanded the fastest during Arroyo s presidency. Almost half of existing ecozones were approved during her term. It was also her presidency that registered the highest number of approved ecozones when

20 20 Special Economic Zones in the Philippines compared to the total number approved by previous presidencies. Even businesses such as SM Cyberzone 1 and Robinson s Place in Novaliches were granted ecozone status by Arroyo. The granting of ecozone status in such large numbers was in line with the Agreement on Subsidies and Countervailing Measures (ASCM) signed by members of the World Trade Organization, including the Philippines, in The agreement prohibited the granting of subsidies to export establishments as well as the use of local instead of imported materials. So as not to be considered illegal or discriminatory under the agreement, the government had to grant incentives on a nationwide basis and to companies other than those engaged in exports. National Overview of Special Economic Zones In December 2010, there was a total of 239 EPZs, and others still awaiting approval through a presidential proclamation. A number of other ecozones were also still being developed (PEZA Website). There are four (4) public EPZs: the Bataan Export Processing Zone, Mactan Economic Zone, Baguio City Ecozone (BCEZ) and the Cavite Economic Zone (CEZ). These are under the jurisdiction of PEZA. There are also four (4) Special Economic Zones under different administrative agencies: the Cagayan Special Economic Zone and Freeport in Table 3. EPZ Companies based on Type of Enterprise (December 2010) Type of Enterprise Bilang Export Enterprise 1093 Information Technology Enterprise 504 Facilities Enterprise 236 Logistics Service Enterprise 171 Tourism Enterprise 24 Utilities Enterprise 15 Agro-Industrial Enterprise 3 Medical Tourism Enterprise 3 Domestic Market Enterprise 2 Free Trade Enterprise 2 Source: PEZA Cagayan, the Zamboanga City Economic Zone in Mindanao, the Subic Bay Freeport Zone in Zambales and the Clark Special Economic Zone in Pampanga. These receive the same privileges and incentives as those under PEZA jurisdiction. Ownership of ecozones have also been opened to foreign capital through joint ventures. A study covering 38 ecozones revealed that Filipinos owned 18 of said ecozones, while 20 others were joint ventures between Filipino industrialists and foreign corporations mainly from Japan and the US. An example would be Laguna Technopark in Southern Tagalog, a joint venture between Ayala Corporation and the Japanese corporations Mitsubishi and Kawasaki Steel.

21 Ripples and Rising TIdes 21 Table 4. Summary of Operating SEZ (December 2010) Classification Number Size (Ha) Agro Industrial IT Parks and Centers Manufacturing Medical Tourism TOTAL Source: PEZA, 2010 Table 5. Summary of SEZ being Developed (December 2010) Classification Number Suze (Ha) Agro Industrial IT Parks and Centers Manufacturing Medical 0 0 Tourism TOTAL Source: PEZA, 2010 In December 2005, there was a total of 1,094 firms in various ecozones in the country. The number increased to 1,965 locators in February 2009 (Office of the President, 2009). At the end of 2010, there were a total of 2,052 locators on PEZA s list. According to the types of ecozones, operating ecozones are divided into 148 IT parks and centers, 64 Manufacturing, 13 Agro-Industrial, 10 Tourism and two (2) medical ecozones as of December 31, Ecozones being developed include 60 IT Parks, 26 Manufacturing, seven (7) Tourism and three (3) Agro-Industrial. While there are more IT parks/centers, manufacturing ecozones occupy a far bigger land space. Of the total hectarage occupied by currently operating ecozones, which totals 39, hectares, Manufacturing ecozones occupy 96% or 38, has. Of the 1,624 investor companies in the SEZs, 580 are Japanese-owned, followed by Korea (245), with the US coming in third (231). The most numerous are Filipino-owned (776). However, while the US only ranks third, it is still the biggest investor in the country at $4.5 billion in (IBON) Based on industry category, companies investing in Radio, Television and Communication Equipment and Apparatus are first (216), with Real Estate Activities as second (213) and third comes Warehouse and Storage (172). Based on Enterprise, Export companies are first (1093), with Information Technology enterprises second (504) and Facilities enterprise coming in third (236). Labor Force Ecozones registered a total employment figure of 1,520,968 workers from January-August Based on the October 2008 Labor Force Survey,

22 22 Special Economic Zones in the Philippines this number constitutes only around six percent (6%) of the 22 million workers in the industrial and service sectors in the country. Most of these workers are in low value-added manufacturing, with electronics at the top for several years, followed by garments. The Information Technology sector was the third biggest employer. The IT industry however became the leading sector in terms of employment in August 2009 as massive retrenchments in the garments and electronics industries occurred due to the 2008 global economic and financial crisis. Labor Conditions One of the myths promoted by advocates of ecozones is that workers enjoy better working conditions in companies located inside ecozones. This may be true in some large companies that have strong labor unions that actively work for their members interests, but the basic export-oriented character of industries located inside ecozones, and accompanying labor flexibilization schemes widely practiced in many companies in ecozones undermine basic labor rights such as those pertaining to fair wage, job security, free association and safe working conditions. First, as export-oriented enterprises rely on the vagaries of the international market, employment becomes subject to market demand. Most export industries expand their workforce when there is high demand in the international market for their products; the number is reduced or downsized when demand is down, which may lead the company to downsize, temporarily close down or even move to other locations with much lower labor costs. Secondly, prevalent labor flexibilization schemes deprive many workers of their just wage and benefits and have made working conditions increasingly difficult while stymieing worker protest. Table 6. Employment in SEZ (Enero-Nob) Direct Indirect* n.d.** n.d.** Total n.d.** n.d.** * Labor power from other companies provided for SEZ investors (e.g. subcontractors, brokers, cargo handlers/ forwarders, canteens/restaurants, banks, utilities, construction, janitorial and maintenance services) ** no data available Source: PEZA, 2009 at The Philippine Star, 2011

23 Ripples and Rising TIdes 23 Table 7. Average Direct Employment based on Industry (August 2009) Industry Average employment Wage (Milions PhP) General Manufacturing 186,122 18, Electronics and Semiconductors 188,261 24, Real Estate, Renting and Business Activities 1, Information Technology Services 192,835 46, Hotels and Restaurants Education Electricity, Gas and Water Supply Other community, social and personal service activities Transport, storage and communications 16,182 2, TOTAL 585,035 92, Source: PEZA Contractualization, which has become prevalent with the onslaught of neoliberalism, has further pushed wages down with the availability of even cheaper labor. Aside from the core of regular workers, many workers even in bigger and more profitable companies are hired as contractuals, apprentices, learners, casuals, fixed-term or projectbased. They perform work that is usually also done by regulars. The difference lies in the fact that they usually receive lesser pay, and often do not receive benefits enjoyed by those on regular status. There are even reports of learners who do not receive wages. In the case of the International Wiring Systems, a third of its workers are contractuals. In DOLEFIL, this reaches 73%, while organizers estimate the figure at the Baguio City Economic Zone (BCEZ) to be around 70%. Flexibilization also includes schemes such as compressed workweek and job rotations. Multi-skilling is also commonly practiced according to the needs of production, without workers receiving additional pay. Production lines are merged to cut down on manpower. In other cases, companies hire production support members who may be required to perform any task in the production process. According to PEZA, ecozones directly employed around 608,387 workers in However, the bigger number of 912,581 indirectly-employed ( see table 6) is comprised by casuals and contractuals employed in subcontracting

24 24 Special Economic Zones in the Philippines Table 8. Average Direct Employment in SEZ based on Regions (August 2009) Region Employment Wage (Millions PhP) Central Luzon (III) 23,703 2, Southern Tagalog (IV) 265,166 31, Bicol (V) 1, Western Visayas (VI) 3, Central Visayas/Cebu (VII) 100,308 9, Eastern Visayas (VIII) 3, Southern Mindanao (X) 3, Davao (XI) 12,836 1, SOCSKSARGEN (XII) Cordillera Autonomous Region 8,473 1, National Capital Region 164,297 43, TOTAL 586,035 92, Source: PEZA and other agencies providing various types of services to ecozone locators. A 2006 study involving six (6) companies inside Laguna Technopark, Inc. (LTI) revealed that contractuals receive 9-63% lower wages as compared to regulars. Many benefits enjoyed by regular workers such as meal allowances, free shuttle services, health cards, etc. are not enjoyed by contractuals who constitute a bigger percentage of the workforce in these companies (CTUHR, 2006). If some workers enjoy the minimum wage as mandated by law, the absence of a national minimum wage due to the Wage Rationalization Act results in a wide disparity of wage levels for workers performing the same work. This Act has made a national wage fight difficult because decisions for wage increases are now dependent on regional wage boards, which can only decide for their respective jurisdiction. In the case of Laguna Technopark, for example, which straddles the towns of Santa Rosa and Binan in Laguna province, workers at the Binan side of the enclave receive P320 as a minimum wage while those on the Santa Rosa side receive only P298. Furthermore, with the privatization of ownership of ecozones, many of these are able to impose their own policies and wage systems without sanction from the state in cases of labor standards violations. Government agencies tasked purportedly to monitor implementation

25 Ripples and Rising TIdes 25 of international labor standards lack teeth in performing their functions. In 2003, the number of business establishments in the country was estimated to have reached 810,362 but the Department of Labor and Employment only have 198 inspectors who are projected to be able to inspect 48,000 or only around six percent (6%) of the total number. In 2004, the Department of Labor and Employment implemented the Labor Standards Enforcement Framework (LSEF) which was supposedly an alternative mechanism for labor inspection. The program identified three ways of monitoring labor laws implementation: Self-Assessment for establishments with 200 or more workers, or those with Collective Bargaining Agreements (CBA) whatever the size of their workforce; Regular Inspection for those with workers; Training and Advisory Visits for those with 1-9 workers, or those registered as Barangay Micro Business Enterprise (BMBE) whatever the size of their workforce. Nevertheless, LSEF implementation remained low in because it covered only around 11% of target establishments. There are also no sanctions for non-participation by companies falling under the Self- Assessment category (Hirose and Vitasa, 2007). No-Union, No-Strike Policy There is no formal declaration, but a no-union, no-strike policy de facto exists in many of these enclaves, even those under the jurisdiction of PEZA. This is done through a combination of direct restrictions on workers actions inside the ecozones, direct repression of workers strikes and a so-called regime of social control (Mckay, 2004) that extends to workers communities around or near the ecozone. While the state professes minimum intervention, it actually plays a vital role in the repression of workers actions through its police and other armed forces, local government units and even labor laws that are supposed to protect labor rights. According to PEZA, there are 71 unions in 63 companies in 22 ecozones in the country (Roundtable Discussions on Freedom of Association in SEZs, October 2010). At first glance, this seems to point to a favorable condition for labor organizing in ecozones. But this is actually a negligible figure if compared to the total number of ecozones, which stands at 239 in December This means that unions can only be found in only around nine percent (9) of ecozones in the country. Compared to the over-all number of locators, 63 companies only constitutes 3% of 2054 registered locators in December At the Laguna Technopark 1, there are around 107 companies and an estimated 70,000 workers in mid-2009, but unions, many of which are considered yellow or company-sponsored, can only be found in 24 companies. There are also no known unions at the Mactan Export

26 26 Special Economic Zones in the Philippines Processing Zone and BCEZ in Baguio according to organizers interviewed by the study in On the other hand, almost all sectors inside the enclaves belong to some form of organization that promote their respective professional interests. For enclave owner-developers, there is the Philippine Ecozones Association (PHILEA). For the individual capitalists, there are associations based on location, nationality and industry. Professional management associations exists for those at the management levels. At the Mactan Export processing Zone, for example, investors are gathered into the Mactan Export Processing Zone Chamber of Exporters and Manufacturers (MEPZCEM). Human Resource Managers of the zone also have the MEPZ Human Resource Association (MEPZ-HRA), which acts on behalf of companies inside MEPZ. In August, 2007, for example, MEPZCEM and MEPZ-HRA submitted a joint resolution rejecting worker demand for a wage increase due allegedly to the tight financial situation of companies inside the zone. A month earlier, however, the two associations launched a grand sports festival that aimed to promote unity between exporters and manufacturers (Aboitiz Land, 2007) Enclaves within enclaves There are cases of enclaves within enclaves, which are usually subcontracting arrangements between a main foreign-owned corporation and its subcontractors. An example would be the Toyota Special Economic Zone at the Laguna Technopark in Santa Rosa, Laguna. It is comprised by Toyota Motors Philippines, which is engaged in car assembly, and four other corporations, which supply or manufacture parts for Toyota Motors. According to organizers from the Cordillera Labor Center, two other smaller companies, Pythos Technology Philippines and Pycon Technology Philippines, both subcontracting agencies, can also be found inside the Texas Instruments Compound at the Baguio City Ecozone. Another form of an enclave within an enclave can be found at the Clark Special Ecozone where the government leases portions of the land to a foreign investor at dirt-cheap prices. The investor in turn leases portions of the leased land to other investors. The main investor then acquires the right to impose his/her own policies and restrictions within the leased portion, including the right to build additional enclosures and employ his/her own security forces while retaining the right to protection by the local police and security forces employed by Clark ecozone. Under such situations, it becomes doubly difficult for organizers to reach workers due to the layers of security and police forces the former have to go through to be able to enter the premises, if entry is allowed at all.

27 Ripples and Rising TIdes 27 The Role of the State in Worker Repression Labor control also occurs outside the zone in which the local and national governments play a key role. As part of their employment generation program, local governments often organize labor recruitment events for SEZs and other companies within their jurisdiction. These activities often serve as venues as well for promoting anti-union ideas among the job applicants. There are also reports of local village officials talking to parents of workers to discourage their children from joining unions; there are likewise reports of these officials talking to owners of boarding houses where workers live to prohibit activities such as labor education and meetings within their premises. An important element in the state s role in worker repression is the use of layers of readily-deployable security, police and military forces inside and around these enclaves that are used to suppress worker protest actions and undertake anti-union campaigns in surrounding communities. In the case of Laguna Technopark, aside from the security agency emirates hired by the Ayalas, owner-developer of the said ecozone, each locator or company also employs its own security force, aside from the PEZA police, and other police or military units such as the LIPAG (Laguna Industrial Park Action Group), Regional Special Action Force (RSAF) and the 202nd Infantry Battalion, which has set up a detachment beside Toyota Corporation and which undertakes Civic-Military Operations in nearby communities. In Mactan, Cebu--where the more significant EPZs are located--can be found the Mactan Benito Ebuen Air base and the Naval Forces Central. Among the cases of human rights violations against workers documented by the Center for Trade Union and Human Rights (CTUHR) are those of violent dispersals of picket-lines, surveillance and harassment of union leaders. According to the CTUHR, there were 24,228 cases of worker labor rights violations in Around 13,913 or 57% were committed against workers from ecozones. The data only covers 11 companies inside five (5) ecozones. Of this number, 6,713 were cases of anti-union discrimination and harassment, more than 500 were cases of illegal dismissal and 7,200 suffered reduced workweeks. Other instances include the May 2008 case of gun-pointing by a member of the Philippine National Police (PNP) and a security guard of the Calamba Premiere International Park (CPIP) in Bgy. Balatino. Calamba City in Laguna where workers of Sensuous Lingerie, Inc. where staging a protest action at the CPIP main gate. Union leaders of the International Wiring System, Inc. at the Luisita Industrial Park have been the object of

28 28 Special Economic Zones in the Philippines threats and harassment by members of the military and hired goons. Soldiers have organized anti-communist lectures in surrounding communities, implicating the union leaders and activities. Unidentified men also visited the homes of the leaders in the wee hours of the morning to ask them about their union activities. These were the subject of complaints filed by the union with the International Labor Organization (ILO) in On August 6, 2007 masked men fired at the picket-line of workers from PhilsJeon Garments, Inc. at the Cavite Economic Zone. The armed men also abducted two male union leaders who were later found gagged and blindfolded in an isolated area of the province. When legal authority is needed, the Department of Labor uses Assumption of Jurisdiction (AJ) and other laws, even at the stage of filing of Notice of Strike (NOS) to preempt or crush worker strikes. Health and Safety Reports of unsafe working conditions and workplace accidents contradict PEZA s claims that occupational health and safety standards are generally upheld within the ecozones. A case in point is that of Daiho Philippines, a plastics manufacturing firm, which continues to use polyvinyl chloride (PVC) despite the ban on the material due to its carcinogenic effects and dangers to the environment. There are also cases of hernia among male workers who have to daily lift heavy items, the combined weight of which sometimes amount to 233 kilos per hour. The situation is worse at Hanjin Philippines, a shipyard located inside the Subic Freeport Zone. According to Task Force Hanjin, there were a total of 5000 cases of workplace accidents and 40 deaths from Work pace acceleration is usually done by the company in order to meet deadlines in shipbuilding contracts. Shipbuilding is normally allotted only three months. As a result, workers are often obliged to work anywhere from hours. When the issue was publicly exposed by non-governmental organizations, the DOLE admitted to having failed to monitor labor conditions as Hanjin has refused entry to the Department s inspectors. It was only in 2009 when the Department was finally able to conduct an inspection after a public outcry over a worker s death. The DOLE then reported that Hanjin committed several labor standards violations including the lack of safety nets and gears, lack of seminars on workplace risks and dangers, lack of safety officers and a 24-hour clinic or doctor to attend to injured workers. There were also reports of stale food served to workers and cases of malaria. These are but a few of the largely undocumented cases pertaining to workers health and safety inside ecozones. Many cases remain undocumented, such as miscarriages among women, cancer, heart diseases, body pains, urinary tract infections and over-fatigue due to the hesitation of workers to report their situation

29 Ripples and Rising TIdes 29 out of a fear of dismissal, inadequate compensation from the company in case of illness and the lack of a comprehensive and systematic monitoring and documentation system by government agencies.

30 30 Development or deterioration? FOUR DECADES OF DEVELOPMENT OR DETERIORATION? It has been almost four decades since the first EPZ was established in the country. If PEZA is to believed, EPZs have substantially contributed to Philippine economy due to the export earnings brought by companies inside the zones. According to PEZA, around PhP1.502 trillion of foreign investments have entered the country via ecozones since More than 80% of export earnings in 2004 also came from companies located within these zones. In 2010 alone, registered investments in ecozones have reached P204 billion, 17% higher than the P175 billion registered in These figures are the highest so far since 2001, according to PEZA. For 2011, PEZA expects investments to rise by 10%, to around P billion (Osorio, 2011). An examination of data and statistics regarding the national economy almost 40 years after the first EPZs were established, however, does not reveal a flattering picture. After being second only to Japan in terms of manufacturing output and economic growth in the 50 s, 1 the Philippines in 2009, has slid to 13th place among its Asian neighbors based on Gross Domestic Product (GDP) (IMF, 2009). Because the Philippines remained tied to exports while being dependent on imported materials for manufacturing, economic growth has likewise been subject to the unstable conditions of the international market. Within the last 30 years, Philippine economy suffers loses whenever crises occur in capitalist countries or their neocolonies. This can be seen during the Latin American crisis of 84-85; in 1991 when a crisis occurred due to the Iraq-Kuwait war; during the 1997 Asian financial crisis; in 2001 due to the 1 Philippine manufacturing reached a 14.05% growth from In fact, it already reached a point when industry was begin to outpace agriculture in This was considered the Golden Age of manufacturing (Yu, 2004). However, most of the industries set up were for the manufacturing of consumer goods, while machineries and other capital inputs remained imported. While importation of luxury goods went down to 40%, capital goods importation went up by 80% (Rosello, 1989).

31 31 Figure 1. GDP Growth by Economic Sector (1997 to 2 nd Quarter of 2009) Source: National Statistics Coordination Board from Lim (2010) dot-com bubble and the 2008 US crises (Lim, 2010). While foreign direct investments increased in the 80 s, it has been on a downward trend since the crisis up to the present. The Philippines likewise receives the smallest share of the pie compared to its Asian neighbors Thailand, Singapore, Malaysia and Indonesia. Instead of industrialization, the share of industry likewise diminished, particularly manufacturing, in the economy. Instead the economy witnessed the rapid rise of the service sector. Balance of Trade (BOT) From 1999 to 2003, the BOT deficit worsened. Imports rose while export earnings varied. From a favorable balance in , the country experienced deficits from : from US$907 million in 2001 up to US$1.265 billion in 2003 (Castell, Marvin. n.d.). The US remains the biggest trading partner of the country garnering 19.9% of total trade in the country. Nevertheless, income from exports to the US only amounted to $7.263 while imports from the US totaled $7.4 billion or a deficit of $137 million. Among exports to the US, electronics was at the lead with $3.481 billion. However, manufactured electronic products also constitute the biggest imports from the US at 77% or $5.708 billion (ibid). Thus, trade deficit from the US alone already amounts to $2.27 billion.

32 32 Development or deterioration? Figure 2. Share of Agriculture, industry and Service; and Manufacturing and Construction Subsectors SERVICES While total exports rose by 33.8%, from $38.42 billion in 2009 to $51.43 billion in 2010, total imports likewise rose by 26.9%, from $ billion in 2009 to $ billion in BOT registered a deficit of $3.27 billion. OFW Remittances The long history of unequal trade relations has led the country to experience persistent BOP deficits. For the first years of decade 2000, however, the country s BOP registered a surplus. According to the IMF, the current account balance grew in by % due to the rapid increase of OFW remittances as per Central Bank figures (Gomez, 2011) Source: National Statistics Coordination Board from (2010) INDUSTRY Manufacturing AGRICULTURE Construction nd Q 2009 In 2010, total OFW remittances reached $ billion, according to the Central Bank (Gomez, 2011). This should be a welcome development for the country s longterm economic growth. A study by the Asian Development bank found out, however, that most of these OFW remittances are spent on food and other consumer products, generating very little investments and domestic capital growth, thereby creating very little long term benefit for the economy. Budget Deficit Almost 40 years after, there seem to be no end to the national budgetary deficit of the country.

33 33 Table 9. Philippine Foreign Trade, , (FOB in $million) Year Total Trade Export Import Balance of Trade , , , , , , , , , , , , , , , , , , Source: IBON, 2010 From P11.1 billion in 1995 when the the government enacted the Special Economic Zone Act, the deficit increased to almost P300 billion in 2010 (IBON). One factor in the ballooning of the public deficit is the low collection rates from corporate taxes. According to then president Fidel Ramos himself, in his second State-ofthe-Nation Address in 1993, government revenue losses rose from P3.3 billion in 1986 to P25 billion in 1992 or 2/3 of the capital budget of the National Government in The problem of low tax collection is often attributed to corruption and inefficiencies by the Bureau of Internal Revenue (BIR) but there has been no review of the adverse consequences of the numerous tax privileges and exemptions granted to locators within ecozones. Data from the Board of Investments (BOI), reveal that lost taxes amounted to P133.6 billion in 2004 due to tax and duty exemptions granted by PEZA. This accounts for 47.2% of the total amount of lost taxes due to exemptions (Landingin, 2006). The burden is eventually passed on to the people: in 2006, as prescribed by the IMF, the government raised the Value-Added Tax from 10 to 12% to compensate for the low collection. But the problem remained unsolved: collection again decreased to 7.2% from January-March 2009 (Lim, 2010). Endless Debt Cycle A more important factor to the seemingly unsolvable budgetary deficit, however, is the issue of gargantuan foreign borrowings for infrastructure projects undertaken by governments since the Marcos dictatorship. Under the concept of establishing industrial corridors, almost all of the infrastructure projects--from roads, bridges, airports, etc.--are meant to facilitate the unbridled operations of

34 34 Development or deterioration? Figure 3. Growth of OFW Remittance Source: IBON foreign and local big business, especially those within ecozones. The result is the skyrocketing of the country s foreign debt. In September 2010, the country s external debt reached $59.8 billion, with public debts constituting 75% of the total. (Agcaoili, 2011). According to Margarito Teves, Secretary of Finance during the Arroyo presidency, P300-P320 billion is used annually for the country s interest payments alone. One of the main sources of foreign debts is Official Development Assistance (ODA) from foreign governments and international financial institutions. From an average of US$741 million from , ODA figures increased to US$1.3 billion in 2006, with 2007 figures registering an additional $1.26 billion (ibid). In December 2010, ODA loans have amounted to US$9.61, according to the National Economic and Development Authority (NEDA). Not all these projects, however, are able to bring about their promised benefits. Many are unable to meet deadlines and still many others do not even see completion, resulting in even bigger project costs than the original. This, in turn, becomes an excuse for government to seek additional foreign loans for the same project. A study done by the Philippine Center for Investigative Journalism in 2008 revealed that seven (7) out of ten (10)

35 Table 10. Government Budget Deficit as a Percent of GDP Year GDP, current prices (Billion Peso) Deficit (Billion Peso) ,077.2 (37.2) (3.5) , ,354.7 (134.2) (4.0) ,444.0 (146.8) (2.7) ,006.5 (269.8) (3.9) % of GDP Source: ADB Key Economic Indicators-Philippines 1999 and 2003 ( ); DOF Fiscal Update ( ), 2010 data from Bangko Sentral ng Pilipinas 35 ODA-assisted projects do not deliver on their promised benefits. The study covered 71 out of 161 projects funded by the World Bank, Japan Bank for International Cooperation (JBIC) and the Asian Development Bank. The projects cost a total of US$6.6 billion. (Landingin, 2008) To ease the burden of debt payments, government will have to impose more taxes. The result is an endless cycle of more debts and more taxes for the people. Whatever capital flows into the country, however, is easily outstripped by capital outflows. From the 70 s up to 2002, it is estimated that $US 131 billion has fled out of the country, or 2.8 times the country s total external debt (Beja, 2006). 2 2 Economists have varying methods for computing total capital flight but they all agree on the conclusion that the figure is staggering, and is even increasing along with the country s foreign debt. According to Beja (2006), capital outflow grew even rapidly increased after neoliberal policies were implemented in the country. Figures for capital outflow however, do not yet include the amount of capital repatriated by TNCs within ecozones where facilities exist for immediate profit remittances by these corporations to their parent companies. Unemployment One of the sterling promises for the setting up ecozones is jobs creation. Forty years after, however, the country is experiencing one of its worst unemployment crisis ever. From a 5.4% average rate of unemployment from and 9.8% in the 90 s, the country s average unemployment rate has reached 11.2% for (IBON, 2010). Mass unemployment, even in provinces or cities where EPZs were established, has remained a problem. A glaring example is CALABARZON, where the biggest number of ecozones can be found, but unemployment remains at a high 9.5%, and 16.9%

36 36 Industrial Corridors In her State of the Nation Address in 2006, then President Gloria Macapagal- Arroyo outlined her program for the country s development. The Medium Term Public Investment Program of the Arroyo presidency identified five super regions, aiming to attract more foreign investments by setting up worldclass infrastructure and transport systems linking the entire archipelago. The five super regions include: the North Luzon Agribusiness Quadrangle, Metro Luzon Urban Beltway, Central Philippines, Mindanao Industrial Corridor and the Cyber Corridor. For the Metro Luzon Urban Beltway (LUB), there were 44 projects that included the construction of major roads and expressway extensions linking Northern and Central Luzon to Metro Manila and the Southern Luzon region, all the way up to Mindoro and Marinduque. These also covered projects for air and sea transport systems. The LUB will be implemented under a Private-Public Partnerships program. Funds will come from the private sector and international banks such as the Asian Development Bank and the World Bank. The project will cost a total of P180 billion. Among the major projects of the LUB are: Central Luzon Tarlac-Nueva Ecija-Aurora Dingalan Port Road Rehabilitation, Subic-Clark- Tarlac Expressway, Diosdado Macapagal International Airport, the Subic Bay Port Development Project, Tarlac-Pangasinan-La Union Toll Expressway (TPLEX) Project, Pampanga Interchanges Project, Panday Pira Access Road, Aurora Pacific Economic Zone (APECO) Facilities Development, Dingalan International Port Metro Manila Metro Manila Urban Rail Network (North and South Rail), MRT-LRT Loop, C3 NLEX-SLEX Connector Road Project, C5 Road, Edsa Rehabilitation, Naia Terminal 3, Manila North Road Widening Project, Feeder Airports Development (Baler and Iba) Southern Luzon Batangas Port Development Project ( Phase 2), STAR Tollway, Southern Tagalog Arterial Road, Marikina-Infanta Road Project, South Luzon Expressway Expansion Project, Manila-Cavite Toll Expressway Project, Lucena Port Terminal, Kawit Port, Marinduque Port, Northern Luzon Cagayan Valley Road (CVR) Widening and Upgrading Project

37 Ripples and Rising TIdes underemployment rates in January 2010, according to the DOLE itself. CALABARZON also has one of the highest numbers of Overseas Filipinos Workers (OFWs). Almost half of the country s OFWs come from the region, Central Luzon and the National Capital Region. It was not surprising, therefore, that when the US financial crisis occurred in 2008, the greatest number of OFWs who were displaced and who applied for the governments emergency 37 Figure 4. Total Capital Flight, (Million Dollars, 1995 Constant Prices) Source: National Statistics Coordination Board from Lim (2010) Figure 5. Total Foreign Debt (Million Dollars) Source: Bangko Sentral ng Pilipinas (2011)

38 38 Development or deterioration? Table 11. Share of Infrastructure Development in ODA Year Total ODA* Number of infrastructure debts Value* % % % % % % % Share in total *Billion dollars Source: NEDA, loan assistance program for displaced OFWs came from CALABARZON. Data from the National Statistics Coordination Board (NSCB) also reveal a rising poverty incidence in CALABARZON from 9.2% in 2003 to 10.3% in The October 2008 economic and financial crisis in the US and other capitalist countries, which caused a drop in demand for electronic products, garments, automotive spare parts, furniture, toys, etc, led to downsizing and closures of many factories inside SEZs, and thus, massive retrenchments affecting around 213,417 workers in the country. Massive Land Conversion The establishment of numerous special economic zones has also meant the massive conversion of agricultural lands into commercial or industrial use. Data from the Department of Agrarian Reform (DAR) show that 33,707 hectares of agricultural land have been converted from March 1988 to June In June 1997, converted land has reached 56,965 hectares since 1988, or an increase of 23,258 hectares in only two years. Most of the conversions occurred in Southern Tagalog, which has the greatest number of ecozones (Kelly, 1998). According to the Bureau of Agricultural Statistics, the country now only has 9.56 million hectares of agricultural land, of which only million hectares can be considered arable land in From being the number one exporter of rice in the 70 s, the Philippines has now become the world s biggest importer of rice in the world (Ibon, 2008). According to PEZA, there are required environmental clearances from the Department of Environment and Natural Resources in the establishment of ecozones and industrial waste disposal

39 39 Table 12. Number of Workers Affected by the Financial Crisis and Given Aid by DOLE (October 2008-December 2009) Region Total Affected Total provided with aid NCR 39,416 24, CAR 2,654 2, Ilocos (I) Cagayan Valley (II) Central Luzon (III) 32,302 10, CALABARZON (IV-A) 71,582 34, MIMAROPA (IV-B) 1,262 1, Bicol (V) Western Visayas (VI) Central Visayas/Cebu (VII) 53, Eastern Visayas (VIII) Zamboanga (IX) 1,843 1, Northern Mindanao (X) 1, Davao (XI) SOCSKSARGEN (XII) CARAGA 6,901 5, TOTAL 213,417 82, Source: DOLE Percent systems to ensure environmental protection. Ecozone developers are also required to secure a permit from the National Water Regulatory Board for the use of water, including the construction of water systems such as wells. The PEZA has also established its own environmental safety group, which is tasked to oversee private organizations contracted by enclave operators/owners to undertake tests on the waste disposal system. The private organizations are required to submit evaluation reports to the agency. Data is unclear, however, as to the effectiveness of government monitoring of ecozones adherence to these requirements due to the inadequacy of staff and operational resources. Moreover, the law imposes very little in the way of penalties for non-adherence: the violator is given a few days to correct the violation, and payment of a small fine of P500 for every day of violation.

40 40 Development or deterioration? Table 13. Converted Agricultural Land from March 1988 to June 1995 Region Approved Unapproved Exempted Total CAR Ilocos (I) Cagayan Valley (II) Central Luzon (III) 2, ,274 Southern Tagalog (IV) 7, ,022 20,358 Bicol (V) Western Visayas (VI) 1, ,984 Central Visayas/Cebu (VII) Eastern Visayas (VIII) Zamboanga (IX) Northern Mindanao (X) ,576 3,690 Davao (XI) 1, ,286 SOCSKSARGEN (XII) Philippines 14,738 1,620 17, Source:: Department of Agrarian Reform, from kay Kelly A 2003 survey conducted in 38 enclaves revealed that most of these ecozones utilize more than one way of delivering water supply to locators. Each ecozone supplying water to its locators usually has five (5) deepwells averaging anywhere between meters deep. But there are ecozones that directly construct their own deepwell without the necessary permit from PEZA or the National Water Regulatory Board. Many of those surveyed use 188,000 cubic meters per month on the average, but there was one (1) case of a water-intensive ecozone that uses one (1) million cubic meters per month (Bateman, 2003). Industrial wastes from ecozones, however, constitute the bigger problem. While the same study revealed that most of the ecozones claim to have water treatment facilities, it can be noted from the survey s results that the effluent waters eventually end up in nearby lakes, rivers or lagoons. In 2009, residents of Sta. Ana in Cagayan protested over the failure of officials of the Cagayan Special Economic Freeport Zone to solve the illegal disposal of garbage and effluents from two casinos operating inside the ecozone. The residents complained that the casinos dispose of their garbage into a lagoon in Barangay Tangatan, which used to be

41 41 Figure 6. Total Number of Poor Families in CALABARZON Source: National Statistics Coordination Board Figure 7. Poverty Incidence in CALABARZON Source: National Statistics Coordination Board

42 42 Development or deterioration? fishing grounds for around 100 families in the area (Gascon, 2009). Residents and indigenous peoples of Casiguran, Aurora on the other hand have threatened to file a case against the Aurora Pacific Economic Zone (APECO) due to alleged land-grabbing of around 13,000 hectares of agricultural land in the area (Silverio, 2011). Massive dislocation of communities not only happen in the countrysides. Many of the fragmented cases of demolition of urban poor communities occurring in the cities are also driven by the establishment of ecozones or support infrastructures for these. In Cebu, there is a case of an entire barangay or village being demolished when the Mactan Export Processing Zone I was established in 1986, and the establishment of MEPZ II likewise threatens surrounding communities in affected areas. In fact, even PEZA itself is not exempt from the issue of land-grabbing. A number of the lands it currently occupies remain untitled due to contesting claims from original owners or residents. In Baguio, a Commission on Audit report in 2008 revealed that titles to 29 lots have not been transferred yet to PEZA due to lack of papers and claims filed by other parties. Who Really Benefited? More than 40 years since the establishment of the first EPZs, widespread poverty and hunger remains. A recent survey done by the Social Weather Station revealed that there has been no change in Filipinos perception of poverty in the country for the past 26 years. Almost 53% of Filipino families still consider themselves poor. This is not much different from the results of the original survey done by the Development Academy of the Philippines in 1983, when almost 55% of families considered themselves poor. CALABARZON itself registers an increasing poverty incidence rate from 2003 to 2009, from 9.2% to 10.3% of the population, according to data from the National Census and Statistics Board. Forty years later, we see a picture of a country still tied to the problem of a seemingly insurmountable economic crisis where the people are mired in poverty, the economy remains largely agricultural, the country neck-deep in debt and relying only on labor export to keep the economy afloat. If anyone had benefited from the establishment of special economic zones, it is foreign capital, big local capitalists, big landowners and high officials in government. Foreign capital is able to operate at minimal infrastructural and labor costs, which enables them to maximize profits without fears of disruption in production due to worker protests. Immediate repatriation of capital likewise frees them of any worries during times of political crises. Government funding for infrastructure for EPZs, tax holidays for locators, the virtually unregulated repatriation of capital,

43 43 labor flexibilization and the nature of production that is essentially subcontracting of semi-processed and low-value added products all spelled out a formula that only benefited locators inside these enclaves. High government officials likewise benefited from the establishment of ecozones in the country, and in the virtually unbridled foreign borrowing to fund the setting up of infrastructure for these ecozones. Huge public funds from foreign borrowing became milking cows as government officials derive kickbacks or commissions from public biddings for infrastructural projects or when applications for ecozone status require their approval. Numerous scandals have been exposed involving top government officials since the time of Marcos up to the Arroyo presidency. In fact, the World bank halted the release of ODA for 11 infrastructural projects in 2008 due to issues of graft and corruption. For big landowners, land conversion became a golden opportunity to jack up the value of their land. An example is Hacienda Luisita, where land was valued at P44,000 per hectare in 1989, but now costs Php1million, based on the figures presented by management on September 2010, in its negotiations with peasant organizations fighting for agrarian reform. The increase was substantially brought on by the conversion of vast portions of the hacienda into industrial use. Instead of development, these special economic zones have only brought the country to a chronic crisis of underdevelopment, the country remaining backward and agrarian, export-oriented while import-dependent and with no hope for ever building a sustainable domestic industrial base.

44 44 Organizing Experiences in Economic Zones ORGANIZING EXPERIENCES IN SPECIAL ECONOMIC ZONES The history of organizing in special economic zones in the country began at the Bataan Export Processing Zone, during the iron fist rule of the US-backed Marcos dictatorship. Marcos military rule banned workers strikes and implemented General Order No. 5, which prohibited all forms of public gatherings. It established the National Labor Relations Commission (NLRC), which required that all labormanagement conflicts be subject to compulsory arbitration. This law likewise banned the collection of strike funds. The dictatorship next implemented Presidential Decree (PD) 143, which extended working hours and nullified the Blue Sunday Law. PD 148, on the other hand, reduced maternity benefits for women workers from 14 weeks to a mere six (6) weeks. On May 1, 1974, or less than two years after the declaration of Martial law, Marcos issued PD 442 or the Labor Code of the Philippines. The government set up the first few export processing zones and granted numerous privileges to multinational corporations. But these repressive laws failed to stymie labor unrest. Many workers staged strikes such as those at Mead Johnson, a multinational food and drug corporation. Stevedores in Navotas, on the Northern tip of Manila, and the urban poor alliance, Zone One Tondo Organization (ZOTO), launched a series of protest actions. Among the most well-known of this period was the strike at La Tondena, Inc., which pushed the dictatorship to issue PD 823 banning support for the strike. To assuage the simmering unrest, Marcos issued PD 851 in December 1975, which granted 13th month pay to workers and narrowed down the strike ban. In 1981 came the lifting of Martial Law. Marcos adopted BP 130, formerly known as Cabinet Bill 45 or the new labor relations law, which delimited strikeable issues to economic issues and unfair labor practices. This law was more repressive, however, as it gave the Minister of Labor the power of Assumption of Jurisdiction (AJ) over strikes that affect the national interest. It also required the filing of a Notice of Strike (NOS) and a mandatory day cooling-off period after the filing of NOS. It also imposed a 2/3 vote requirement

45 Ripples and Rising TIdes 45 for staging a strike. In essence, all these restrict the right to strike. The Anti-Scab and Picketing Law or BP 227 was signed into law on June 1, 1982 by then Minister of Labor Blas Ople. The law in effect granted freedom of ingress-egress to companies where workers are on strike. This law likewise prohibited strikes in public utilities, energy generation and distribution, banks, hospitals and export-oriented industries, which includes those in EPZs. Bataan Export Processing Zone: Organizing Under a Repressive Rule Opposition to the Bataan ecozone already began a few years even before the construction of BEPZ. In 1969, residents of Barrio NASSCO (National Shipyard and Steel Corporation) and Barrio Camaya were already protesting the demolition of their communities. It was only in 1972, however, after the declaration of Martial Law when the government was finally able to crush the opposition. The dictator issued Presidential Decree 66 which established the Export Processing Zone Authority (EPZA) and legalized the demolition of Barrios NASSCO and Camaya. Construction work on the ecozone then began. BEPZ was purportedly modeled after the Kaoshiung Export Processing Zone set up in Taiwan in Kaoshiung is said to have propelled Taiwan from a backward, agricultural country into an industrialized country in the early 70 s. With a total land area of 345 hectares, BEPZ was only 160 kilometers from Manila. It took advantage of the strategic location of the Bataan peninsula, which can be easily reached from the capital by land, sea and air transport. As part of the so-called decentralized industrialization program of the Marcos dictatorship, BEPZ was comprised by industrial facilities at the core of infrastructure, and tenement housing for workers that would partly constitute a viable industrial community. The Federation of Free Workers (FFW) and the National Federation of Labor Unions (NAFLU) led early efforts to organize unions inside the zone. Religious organizations, such as the Rural Missionaries of the Philippines, aided the effort by providing resources and venues for meetings. Since the dictatorship banned gatherings, the workers held meetings under the cover of prayer meetings and bible study sessions. Since union offices were also banned, organizers did their tasks by immersing in the tenement housing for workers, which became melting pots for the discussion of workers common issues and grievances. The meetings and discussion groups became venues as well for discussing the general situation of the country under Martial Rule. In the mid-70 s, the FFW set up the first union, but this was easily crushed when the government launched a crackdown against the labor movement.

46 46 Organizing Experiences in Economic Zones Despite the ban on strikes, workers at Ford Ensite, Ltd. staged the first strike at BEPZ on March 5, 1979 on issues of deadlock in CBA negotiations and management s suspension of the union president. Around 417 striking workers were arrested and detained for two days at the Provincial Command of the Philippine Constabulary in Balanga, Bataan. The strength of the union, however, and support from the nearby communities, pressed authorities to release the workers. Although half were not reinstated to their work, the company eventually gave in to their demand for a wage increase. The number of strikes inside BEPZ increased in the 80 s. Despite the ban, some began to set up union offices in the town of Mariveles. On June 7, 1982, came the first zonewide strike for export processing zones in the country, and anywhere else in the world. Prior to this, women workers at Inter-Asia Garments launched a strike that was brutally dispersed by police forces of the Marcos dictatorship. The assault against the women workers aroused the anger of workers from other companies. Around 10,000 workers staged walkouts and other forms of protests in 23 factories in support of the striking workers. Public attention on the zone-wide strike eventually forced management to grant the women workers demands. The action also Ii was in homes like these that the issues and concerns of workers of BEPZ in the 1970s met. The realization that their problems were united taught them the necessity of linking arms in advancing a single struggle.

47 Ripples and Rising TIdes 47 resulted in the formation of a zonewide alliance which was to be known as BEPZ-AMBA-BALA. What factors led to the successful zone-wide strike? According to Roy and Maria, both labor organizers at BEPZ in the 80 s, this was the result of years-long careful and clandestine organizing work in various factories inside the zone. At its peak, around 85% or workers inside the ecozones were organized into unions or other forms of worker organizations. Organizing work began in 1978 using various forms and methods. In some cases, they immediately set up a union, in others, religious associations. Union organizers also secretly worked within yellow or company-sponsored unions, with the objective of transforming these into genuine workers unions. These factors therefore ensured a broad influence among workers, which the more advanced section of the workers ranks was able to utilize at the right time, paving the way for the zone-wide strike despite the politicallyrepressive conditions of the time. Furthermore, the nationwide resistance and disgust of the Filipino people against the Marcos dictatorship softened the ground for soliciting the sympathy even of Filipinos working in management ranks inside the zone. In Bataan, for example, the Bataan Nuclear Power Plant, another flagship project of the dictatorship, galvanized the residents of the province in a broad resistance to the project. Filipinos in management ranks in the zone, therefore, saw the company-level fight of workers as part of the national struggle against the dictatorship and its political and economic policies that were wreaking havoc on the people s lives and the nation s future. Neoliberal Attack on Labor No genuine change ensued, however, after the downfall of the dictatorship. Corazon Aquino ascended to the presidency, and workers, especially in the Visayas and Southern Tagalog, continued to wage strong fights for their economic demands. The change in form of government, however, from an open dictatorship to one that professes to be liberal democratic challenged the capabilities of the labor movement to effectively discern and unite in their analysis of the basic character of the Aquino government. The resulting disunity occurred amidst the economic restructuring implemented by the Aquino government, essentially a shift toward the implementation of neoliberal policies in the country. Under the Aquino government, the legal framework for a more vicious attack against labor was completed. These changes confused and divided the ranks of organized labor, weakening its capacity to apply correct tactics in organizing. It failed as well to grasp the consequences of changes in labor laws and in national economic policies on workers legal and political battles.

48 48 Organizing Experiences in Economic Zones With the weakened militancy of the labor movement, yellow unionism saw an opportunity to benefit from the trilateralism promoted by the Aquino government, signing a covenant that guaranteed industrial harmony and peace. In the name of industrial peace, the Aquino government implemented the Herrera Law or Republic Act 6715 as an amendment to the repressive Labor Code of the Marcos dictatorship. Instead of abolishing the repressive features of the Code, however, RA 6715 further narrowed the legal bases for worker strikes and expanded requisites for the setting up of unions. This law likewise virtually legalized labor-only contracting, aiding what was then the growing practice of labor contractualization in the country. The government likewise abolished the national minimum wage through the Wage Rationalization Act, which decentralized the power to approve wage increases to regional wage boards. This more repressive Code and the Wage Rationalization Act had adverse consequences for the labor movement. It gave more teeth to worker repression as it granted a blanket of authority to the Secretary of Labor in the exercise of the power of Assumption of Jurisdiction (AJ), which may be issued even before the strike is staged. The succeeding Ramos presidency paved the way for the full implementation of neoliberalism, including the legal bases for the virtually unlimited land conversions for the establishment of economic zones in the country. Workers Organizing in Ecozones: A Rising Tide? The number of worker unions and strikes rapidly decreased from its peak during the Marcos dictatorship up to the early years of the Aquino presidency. From 371 strikes involving 111,265 workers in 1985 and 581 in 1986 involving 169,479, the number of strikes and lockouts was reduced to eight (8) in 2010, which are wildcat in nature or those which did not file notices of strike (Business World Online Edition, 2011). From , the number of unionized workers only increased by 23% compared to 43% during the period of (Bureau of Labor and Employment Statistics, 2002). The government has been quick to use these data to assert that workers are tired of fighting, and in fact are now setting up other types of organizations such as Labor Management Councils (LMCs) and cooperatives. According to the Institute of Labor Studies of DOLE, despite the rapid decrease in in the number of unions, registered workers associations have risen rapidly. From 267 in 2000 with a membership of 9,376, the figures have increased to 3,681 organizations in 2009 with an individual membership of 148,970 (Alcantara, 2010).

49 Ripples and Rising TIdes 49 But these statistics do not distinguish between cooperatives and associations truly set up by workers themselves and those which are actually subcontracting agencies, which became prevalent with the spread of contractualization in the country. Many of these agencies register as cooperatives in order to circumvent legal prohibitions against labor-only contracting such as the labor cooperatives that supply manpower to pineapple giant DOLEFIL. Continuing labor unrest is evident in the number of complaints filed with relevant government agencies from January to September 2010: Five (5) cases of work stoppage involving 2,234 workers 364 cases of preventive mediation filed with the National Conciliation and Mediation Board, 18 of which actually developed into filing of notices of strike/ lock out and/or actual strikes/lockout 37,511 cases of compulsory arbitration filed with various Regional Arbitration Branches of the National Labor Relations Commission Moreover, while the number of strikes remained insignificant, the number of workers involved doubled, from 1,510 in 4 strikes in 2009 to more than 3000 in From 2004 to 2009, according to PEZA, there were 195 complaints filed by workers, 160 cases of preventive mediation, 85 notices of strikes and seven (7) actual strikes. The numbers may seem insignificant compared to the total workforce employed by ecozones, but one must remember the constraints that workers inside zones have to overcome in order to air their protests. Interviews with union leaders conducted by the study point to a picture of workers inside ecozones trying to overcome the difficulties of union building in the face of a comprehensive attack on labor rights with the onslaught of neoliberal policies in the country. In various ways, workers are organizing inside the zones, from setting up informal groups for mutual aid, participation in management mechanisms while building their strength in order to set up unions, to organizing in surrounding communities and factories in order to unite the various struggles being staged by workers into a common bond. Initially, successful experiences in organizing contractuals are an important development in countering the divisiveness of this scheme on workers ranks and in the fight, as well, for higher wages. From isolated and fragmented organizing efforts, we can draw an important lesson that the successful organizing of workers inside ecozones requires a determined and coordinated effort not only at the local level but at the zone-level and beyond. Like the conditions workers faced during the Marcos dictatorship, workers are beginning to realize the need for creativity and flexibility in their organizing approaches, considering the repressive conditions inside the ecozones.

50 50 Organizing Experiences in Economic Zones It remains to be seen, however, if the ripples now forming inside these ecozones will create a rising tide in the immediate future. At the moment, workers will have to rely only on their wise judgment and determination, and on the lessons of history, in order to draw up a path that truly serves their interests.

51 Ripples and Rising TIdes 51 IWS WU: effective leadership and union democracy at work How can a labor union resist the maneuverings of company management and threats from elements of the state s armed forces and still manage to stay militant and true to its avowed objective of upholding workers rights and interests? For fourteen years now, the Laban ng Demokratikong Manggagawa (LDM) has managed to win the workers trust and confidence as evidenced by their victory in union elections, and by their capacity to mobilize workers against management efforts to subvert their leadership. The LDM has held leadership of the International Wiring System workers union, leading the fight for better pay and working conditions, and painstakingly building the unity of both regular and non-regular workers inside the workplace and beyond. Not even the harassment campaign launched by elements of the Philippine military, over which the union has filed a complaint with the International Labor Organization (ILO) in 2008, has deterred the IWS WU from continuing to gain strength and scoring economic victories for the workers. Moreover, the IWS WU has not confined itself to the concerns of its members within its locality, it has also actively supported the fight of other oppressed sectors as well that of the farm workers of Hacienda Luisita who have long been fighting for ownership of the land they have been tilling for decades. Company Profile The International Wiring Systems (Phils.) Corporation is located inside the Luisita Industrial Park at Hacienda Luisita in San Miguel, Tarlac City. It is a subsidiary of Sumitomo Wiring Systems based in Japan and manufactures wiring harnesses for Japanese automakers (Honda, Mazda, Mitsubishi, Toyota) and Ford Motors. The Company was incorporated in July 1990 as a 100% Filipino-owned corporation, but later entered into a joint venture agreement, in October of the same year, with two leading Japanese Companies, Sumitomo Wiring Systems, Ltd. and Sakata Inx Corporation (now Siix Corporation). Average wage in IWS is anywhere between P13,000 to P18,000 per month, plus many other benefits that the union has won through collective bargaining

52 52 Organizing Experiences in Economic Zones iilang-ilang Quijano / PinoyWeekly.org agreements with management over the past several years. In fact, regular workers at IWS consider themselves as workers with higher status as they enjoy wage rates provided by law and work in much better conditions, compared to contractual workers or those from other companies inside the zone, or even that of Central Luzon. Women are given a maximum of 30 days maternity leave (60 days in case of caesarian births). The union has also managed to win a six-day paternity leave benefit for male workers. Workers also enjoy hospitalization benefits. The manufacturing of wire harnesses is a labor-intensive process. Product specifications vary as per customer needs. Despite the worldwide trend for automation, the manufacturing of wire harnesses is expected to remain largely a manual process in the foreseeable future due to the tedious labor necessary in many parts of the production process. These include, for example, routing wires through sleeves, taping with fabric tape, and crimping terminals onto wires, particularly those that require more than one wire into one terminal. These are tasks that will be difficult for machines to undertake, and the superiority of a dexterous human hand is therefore indispensable to the entire manufacturing process. Production Process The production process begins with the receiving section where component materials are inspected before being distributed to the different departments.

53 Ripples and Rising TIdes 53 The Luisita Industrial Park (LIP) The Luisita Industrial Park I was established in 1991 as a special economic zone. Comprised by around 120 hectares, its owners have described it as Hacienda Luisita growing into the 21st century. Designed as an integrated urban complex, it claims to combine the ease of operating business with the amenities of luxurious, modern living that serves not only Central Luzon, but intends to be an economic hub for Asian investors as well. The LIP was set up within the framework of the Central Luzon Development Program (CLDP), which aims to promote a triad growth center in Central Luzon for the provinces of Tarlac and Pampanga, and the City of Manila. LIP is divided into phases : a. Luisita Industrial Park (LIP) 1 is currently operational with the following major investors : i. Sumitomo Wiring Systems ii. International Electric Wires Phils. Corp. iii. Sanyo Semiconductor Manufacturing Philippines, Corp. iv. Phelps Dodge Philippines ; and v. Avantex Mill Smaller Filipino-owned companies such as Purefoods, Universal Robina Corporation (instant noodles and snack food), and Jollibee Foods can also be found within LIP. LIP alone contributes around 40% of Central Luzon s income, mainly from exports by these companies within the Park. b. The second phase is called Central Techno Park. It is comprised by 300 hectares but still has no major locator. LIP 2 is owned and operated by Luisita Industrial Park Corporation which is a joint venture among the Cojuangco family, the Yuchengco-owned Rizal Commercial Banking Corporation (RCBC), Agila Holdings and Itochu, a Japanese Corporation. As a special economic zone Luisita Industrial Park does not fall under the direct jurisdiction of the Philippine Export Zone Authority (PEZA). As an autonomous entity, LIP therefore, like other privately developed industrial estates, is free to formulate and carry out its own rules and policies, provided, according to PEZA regulations that these are not in conflict with prevailing labor laws and policies in the country.

54 54 Organizing Experiences in Economic Zones Next comes the Wire Processing Group, which cuts the wires in cutting machines into sizes or lengths depending on product specification. The wires then undergo middle inspection and later are issued to various assembly lines on conveyor belts. This is the more labor-intensive part of process where the wire harnesses are assembled using corrugated tubes, silicone, grommet, connectors and protectors according to product model specifications. Around 50% of the plant s workers are in the assembly lines. There are around 100 lines working on three shifts, with each line composed of workers. This also involves the use of chemicals until the wire harness is fully assembled. The harnesses will then undergo first visual inspection and will pass through circuit boards before being passed on for second or even third, inspections. Finally, a much smaller number of workers will pack the products for delivery or shipping. The production process for wire harnesses is fraught with health and safety hazards. Accidents have in fact happened inside the factory, causing workers fingers to be cut off as they try to cope with the speed by which the blades operate. There have also been cases where tiny parts such as terminals accidentally fly off and hit workers eyes. Allergies to hazardous chemicals have also happened. To prevent further accidents, the union demanded several improvements in the workplace and the provision of safety gadgets, which were granted by the company management. There is a joint union-management health and safety committee, which meets regularly to take up issues related to occupational safety. Kaizen The IWS management professes adhering to a philosophy of Kaizen incremental but constant improvements in the manufacturing process purportedly aiming to encourage worker participation in production improvement programs. If found useful, the worker would be paid around P20 for an idea. Ideas that get to be really implemented are paid higher amounts. Employee participation plays a very big role in the company's implementation of improvement programs. Employees contribute ideas through the KAIZEN program. These ideas were evaluated and implemented found useful and workable. Ideas can be prevention of accident, faster and surer execution of work, cost effectiveness, reduction of wastes, improvement of work and services, and many others related to the job and the work environment. - IWS Philippines website

55 Ripples and Rising TIdes 55 iilang-ilang Quijano / PinoyWeekly.org But kaizen ideas that get to be approved are those that mainly help the company cut costs. In many cases production is made more efficient but there is an accompanying reduction in manpower. Ideas that pertain to the improvement of worker conditions, on the other hand, such as how to make the load of pregnant women workers lighter, for example, are passed over. Forms of Employment In September 2008, IWS employed 6,048 workers, 3,116 of whom are union members, 2,442 are contractual and 497 are managerial and supervisory employees. The number of regular workers is currently down to around 3142, with around 1000 contractual workers, the latter number reduced after management implemented a series of retrenchment moves. Around 60% of the workforce is comprised by women. Aside from the contractuals however, are the other non-regulars: On-the-Job Trainees (OJTs), also called learners, number around 38. OJTs are students who have been recommended by Hacienda Luisita s Training Center. Though they perform the same tasks that workers at the assembly line do, OJTs only receive P68 daily transportation allowance; Apprentices who are paid P100 per day. These come from training centers run by the city government. After around five months, the company may opt to hire them and they become fixedterm employees who are then paid the minimum wage Project-based employees who are hired to work on specific product models. Project contracts may range from 2-5 years, after which their services are terminated. Such employees also receive minimum wage. The International Wiring System Workers Union (IWS WU) The IWS Workers Union (IWS WU) was for a long time affiliated with the Federation of Democratic Trade Unions (FDTU), which in turn was closely allied with the Trade Union Congress of the Philippines (TUCP), a known yellow labor center in the Philippines. It was then officially known as IWS WU-FDTU. There was not much union activity, however. While the workers did get wage increases, union officials rarely consulted them about CBA negotiations which were virtually an exclusive affair involving only the officials and management representatives.

56 56 Organizing Experiences in Economic Zones But worker dissatisfaction grew because of the known bad habits of the union president such as gambling and womanizing. Members were also fined P100 for not attending union meetings, amounts which were never accounted for by the officers. In 1996, a group of dissatisfied union members formed the Laban ng Demokratikong Manggagawa (LDM), identifying themselves as genuinely pro-worker, militant union leadership, and challenged the IWS WU-FDTU leadership in a local election. The LDM s full slate won a landslide victory over the incumbents. In the same year, the LDM-led union concluded a collective bargaining agreement with the company management where they won an increase in the workers minimum wage, other economic benefits, and companyrecognized fulltime union organizing status for two of its union officials, which greatly aided their union organizing efforts. Giving Birth to Other Workers Unions It was in 1996, too, when the newlyelected set of officers were put to the task of helping set up a separate union at their newly-established sister company. IWS management decided to spin off a section that produces wires and cables for Kawasaki Motors. The latter was to become a separate company under the name of International Electric Wires Corporation (IEW). Twenty rank-and-file and middlemanagement employees from IWS were transferred to the new company, even as the new management began recruiting and training new workers from around the villages of Hacienda Luisita. Instead of resisting the move, however, the IWS union saw it as a chance for expanding the ranks of organized labor. Aided by the newly-elected IWS union officials, the twenty transferred workers immediately filed an application with the Department of Labor and Employment (DOLE) for a separate union. The DOLE approved their application giving birth to the IEWP Employees Union. To immediately establish a center of leadership for their fledgling organization, the members agreed to just appoint a set of nine (9) union officers, with a resolution to hold elections later. In the same year, they went into their first negotiations for a Collective Bargaining Agreement (CBA) with the IEW management. Aware of their still inferior strength, the union decided to limit their demands to benefits they already enjoyed at IWS, which they knew their new company would be willing to give. The union won their demands and today continues to lead IEW workers fight for better pay and working conditions. Test of Leadership The first real test for the IWS WU leadership came five years later, in 2001 when, during the CBA negotiation

57 Ripples and Rising TIdes 57 Hacienda Luisita Hacienda Luisita is located within the province of Tarlac in Central Luzon. It was originally a sprawling sugarcane plantation, and today remains one of the biggest concentration of land ownership in the country. It is comprised by around 6,453 hectares. Owned by the Cojuangco family - which counts among its members the late Corazon Cojuangco Aquino, former president of the country and icon of the EDSA I revolution - the hacienda remains the lifeblood of the province s economy, and a source of immense wealth and political power for its owners. Located right in the center of the municipality of San Miguel, the Hacienda is well-secured by the presence of a major military camp a stone s throw away from the hacienda s main entrance Camp Sevillano Aquino. Comprised by eleven (11) barangays or villages with an estimated total population of around 33,000 in the 90 s, Hacienda Luisita employs around 5000 workers, who mostly come from these these surrounding villages. In fact, a manpower training center has been set up right in the heart of the hacienda to provide a ready source of skilled manpower for companies locating in the special ecozones of the said place. One of the prime business activities in the hacienda is the Central Azucarera de Tarlac (CAT), described by its owners as an integrated manufacturing plant that produces both raw sugar and sugarcane by-products such as molasses, alcohol and liquefied carbon dioxide. CAT used to be the prime revenue-generating activity at the hacienda prior to the conversion of around 3,000 hectares of the land into industrial and commercial use. The latter was implemented by the Cojuangco family in an effort to increase revenues from its landholdings and evade agrarian reform. Prior to EDSA I, Hacienda Lusista was already embroiled in a controversy as tenants campaigned for land reform. The peasant groups cited the basis for which the Cojuangco patriarch, Jose Cojuangco, Sr., was originally granted a loan in 1957 continued on p. 58 period, the IWS management ordered a one-hour work stoppage and organized a meeting inside the plant. Workers were asked to vote Yes or No on paper to the CBA provisions being negotiated on. The yes vote won overwhelmingly. To their surprise, however, unscrupulous management representatives later changed the heading of the signed papers to one of an impeachment procedure against the then union president. Management appointed a set of provisional officers. The FDTU also sent a letter to management a day after the meeting was held, stating that the provisional officers were the FDTU s recognized officials.

58 58 Organizing Experiences in Economic Zones continued from p. 57 by the Government Service Insurance System (GSIS). This was to buy Hacienda Luisita to pave the way for the sale to bona fide planters on a long-term basis, portions of the hacienda. In 1986, a regional trial court ordered that Luisita be distributed to the tillers, but the Cojuangco family filed an appeal, and instead implemented a stock distribution option (SDO) scheme as a way of sharing ownership with its tenant farmers. When Corazon Aquino became president, the government dismissed the case against the Cojuangcos on the ground that Hacienda Luisita was going to be covered by the new land reform program that the Aquino government was going to implement. Even prior to carrying out the SDO scheme, however, owners of Hacienda Luisista had already issued orders for farmer tenants to cease planting activities on around 400 hectares of Barrio Balete, where now the Luisita Industrial Park Phase I stands. Today, Hacienda Lusita has grown into the most important industrial and commercial center in Tarlac and surrounding provinces. It houses not only the CAT, but a host of other establishments such as Plaza Luisita Mall, two industrial parks, a deluxe hotel (Central Park Hotel), the Luisita Golf and Country Club and several high-end residential communities. The workers launched protest actions. They pinned ribbons and staged a noise barrage to force management to recognize the duly-elected leaders. They also later staged protest pickets in front of relevant regional and national government labor agencies. Company officials subsequently filed an interpleader case with the DOLE, asking the Department to rule on the legitimacy of the appointed, provisional leadership. Within a week s time after the plant meeting, management and the appointed provisional officers concluded and signed the CBA for the year July 1, 2001 to June 30, The impeached officers protested management s illegal action and filed a petition with the DOLE Regional Office in Central Luzon for a special election. They also filed a complaint with the Court of Appeals. While the cases were pending, the impeached workers continued to work on the members work-related grievances. To stop the IWS WU operations which the elected officers represent, management withheld the union dues deducted from the wages of union members and refused to pay the wages of two fulltime union officers as provided for by the CBA. The Director of the DOLE Regional Office intervened in the case, calling for a referendum to solve what he termed as a leadership crisis. The referendum was to call for a new election of officers. The Director s proposal, however, failed to get a majority vote from the workers. The workers likewise staged protest actions inside the company premises.

59 Ripples and Rising TIdes 59 Special elections were held August 2002, organized and facilitated by the DOLE. The impeached workers, except for the president, participated and won overwhelmingly over the managementbacked slate. The Hacienda Luisita Massacre But issues outside the company premises were also to confront the IWS union. In 2004, on orders of the owners of Hacienda Luisita, elements of the Philippine military and goons in civilian clothes massacred the striking farm workers of Hacienda Luisita. It was an issue that sparked national outrage and would be remembered in the country s recent history as one of the bloodiest incidents of peasant unrest. The workers of IWS were deeply affected, since many of them either came from the hacienda itself or were kin to the victims. They thus knew of the longstanding problems of agrarian unrest. The union called for a protest march to show the workers solidarity with victims. There was an outpouring of material and moral support from the IWS workers for the striking farm workers. The massacre may have achieved its owners agenda of immediately crushing the peasants strike for land reform and other improvements in their economic conditions. But it only fostered even deeper ties of solidarity among the working class families of the Hacienda, and between them and the workers of IWS as well. The workers support for the peasant strikers were to continue in the following years. In December 2007, the union donated two hand tractors and seeds to the farm workers who have since renewed their campaign for land reform. But then came the harassment campaign. It was around this period when elements of the Philippine military and men in civilian clothes began a campaign of harassment and witchhunting against officials of the IWS WU. Soldiers from the nearby military camp visited their homes, often in the wee hours of morning. The military also organized community fora invariably accusing the union officials as communists and discussing matters related to labormanagement relations in the company. The union officials stood firm, however, and even attended the community fora, asserting the fact that they were duly-elected officials of the union. The witch-hunting campaign failed to acquire teeth among the union members, community residents and local officials who continued to consult union officers about problems and issues confronting the community. Disaffiliation In February 2004, the court of Appeals issued a decision on the complaint filed by the impeached officers, reinstating them as the lawful officers of the IWS WU. On March 5, 2005, IWSWU disaffiliated from the Federation of Democratic Trade Union (FDTU) and applied for an independent union registration at the Department of Labor

60 60 Organizing Experiences in Economic Zones and Employment (DOLE). It remains independent and non-affiliated to the present. The FDTU did not take the disaffiliation easily. The Federation president sent a letter to the IWS management insisting on another worker leader as its recognized union official. Capitalizing on this letter, the IWS management filed another interpleader case with the DOLE, asking what it called as intra-union dispute between IWS WU-FDTU and the newly-independent IWS WU be resolved. Strengthening the Organization Even prior to the impeachment, however, the IWS WU had become aware of the growing need to consolidate its leadership and ensure greater worker participation in union affairs. This was particularly true for the task of strengthening the union organization; management moves of backing yellow leaders were increasingly becoming a threat to the genuine, pro-worker character of the union leadership. From a small set of nine (9) union officials, the union resolved to expand the number to fifty (50), all duly elected by the workers. The fifty officers are to constitute the Board of Directors and Executive Committee of the union, subject to the powers of the General Membership Assembly (GMA), which stands as the union s highest policymaking body. The GMA convenes once a year. The union likewise resolved to appoint 1-2 shop stewards per line in the production process (i.e., a ratio of about 1-2 stewards: 31 workers). The number of shop stewards currently reaches 200. Anyone from among the union members who is willing to set aside some time may be appointed. The shop stewards function as the eyes and ears, as well as arms of the union officials. They see to it that workers complaints and grievances, such as forced overtime or non-remittance of social benefits are brought to their supervisors or higher management s attention, or to a union officer. They also ensure that workers within their scope are informed of any major decision, undertaking or announcements by union officials in between union meetings. Sometimes they also initiate small, informal group discussions about labor or national political concerns. A Chief Shop Steward convenes his members as necessary. To further involve union members in various union concerns, several committees were likewise set up, where the chairmanship was usually taken up by a member of the Board or Executive Committee. Utilizing All Avenues for Worker Rights Despite the strength it has already mustered, the IWS WU still utilizes even the Labor Management Council, a body set up and controlled by management, to fight for workers demands.

61 Ripples and Rising TIdes 61 The union even demanded for its inclusion in one CBA negotiations, and was successful. It is now called Union- Management Council (UMC). There are so many concerns, you can t bring them all up during the CBA negotiations, says a union officer. It is therefore, to the workers advantage that a mechanism for continuous dialogue between the union and management be present. The UMC meets once a month. Admittedly, company policies take up most of the UMC s agenda. But there have been many cases in which we were able to stop the company from implementing what we deem to be antiworker schemes such as the random drug testing program, which we feel might be used as an excuse for illegal dismissals, said the officer. Resumption of CBA Negotiations As management filed for the interpleader case in 2005, the union officials led several protest actions within the company premises. One action was even witnessed by a representative of the DOLE. Union officials surmise that this prompted the National Conciliation and Mediation Board (NCMB), an attached agency of the DOLE, to initiate a conciliation meeting sometime in 2006, while the interpleader case was still pending. An agreement was reached between management and the IWS WU for proceeding with the CBA negotiations. Following a series of talks, a new CBA was signed by on October 25, Among the major achievements in the 2006 CBA negotiations are: 1. Integration of the cost-of-livingallowance and wage increment based on the Wage Orders issued by Regional Tripartite and Wages Productivity Commission (RTWPB) into the existing wages of IWS regular employees irrespective of their union membership; 2. Wage increase and several other economic benefits; 3. A Union-Management Grievance Panel composed of five (5) representatives; from the UNION and five (5) representatives from Management. The Grievance Panel shall function as the clearinghouse for all problems affecting union-management relations; 4. That in cases of retrenchments, the Last In First Out policy shall apply except for union officers down to the committee leaders who will always be the last to be fired; 5. Automatic union membership for all regular workers. The Fight Against Contractualization; One of the major achievements by the IWS WU concerns the fight against contractualization of labor. Driven by renewed market demand for its products, the IWS management rapidly expanded its workforce by hiring skilled workers on a contractual basis.

62 62 Organizing Experiences in Economic Zones From a mere 300 in 2001, the number of contractuals rapidly expanded to around 3000 during the last quarter of 2001 to first quarter of The union decided to take up the issue at the UMC as it was not CBA time then. Management argued the need for flexibility in production because of the fluctuations in demand. It was also, they say, one way of creating many jobs. The union on the other hand argued that contractualization was a threat to their job security, and that contractual workers were in fact working more than what was required by the Philippine Labor Code. They also argued that regularizing the contractuals was not going to hurt the company s finances. After all, the company s financial statement showed that the total value of workers wages and benefits took up only a small fraction of the company s earnings. The company s domestic sales to Honda Philippines alone already averaged a whopping P100 million a month in 2004 based on the volume of delivery, argued the union officials. While negotiations on the issue were going on, the union decided to reach out to the contractuals, organizing seminardiscussions on labor laws and genuine unionism. They knew how important it was to the union s strength that a certain level of unity be developed between the regular and non-regular workers; that fighting for the contractual workers regularization builds the contractual workers confidence to air grievances and support for union affairs, in turn broadening the union s base of support. Thus, during the CBA negotiations in 2006, the union triumphed in having many contractuals regularized. During the last CBA negotiations in 2009, the union successfully fought for the regularization of 325 contractuals, bringing the total number of union members to 3142 compared to around 800 in 1996 when the IWS WU first wrestled union leadership away from the FDTU. Combining Militance and Flexibility To what factors can the continued confidence of the workers in the IWS WU officials be attributed? Undoubtedly, our union leaders have integrity They are uncompromising when it comes to workers welfare. As long as we have leaders like them, the union remains strong, a shop steward said during a focused group discussion. But union officials see it in a more complex light. First, is the question of democratic leadership. The union is the worker s organization. This is where an ordinary develops the capacity and consciousness to fight for his or her own interests and later on, that of his/her co-workers. Union officials, to be able to lead effectively, should ensure members participation in every aspect, especially in the decision-making process, said a union officer.

63 Ripples and Rising TIdes 63 Another stated: We do not enter into fights that we know we cannot win. in our fourteen years of leadership, we have had not had any opportunity to stage a strike. This does not mean, however, that we are not ready to use it as a weapon when the situation calls for it. For example, during the 2001 CBA negotiations, our then union president impulsively declared a deadlock on the floor. It was not a collective decision, and other officials felt it was going to expose our weakness we were not ready at that time to stage a strike. We threatened to file a Notice of Strike but also privately criticized him. A third union official explained: We try to combine militance with flexibility in every possible way we can. We use a range of tactics for every major fight we get involved in. For example, we combine mass protest actions inside company premises with our legal battles. It is the same during CBA negotiations. While the union officers sit at the negotiating table, the members provide the muscle as they actively watch the negotiations, collectively expressing their approval or disapproval as the case may be. Sometimes both members and officers even wear red armbands, and seeing the massive support we get from the union members somehow forces management to accede to our demands. Then, we ensure assessments at all levels of the union after every fight in order to draw up lessons from our experiences. These assessments become valuable learning grounds for all union members and leaders. All leaders agree, however, that there is still much work to be done. We lag behind in education work, says one union official. So far, we have been able to lead the fights for better pay and benefits very well, but we are sure there will be greater fights ahead and there is no better way to prepare workers other than to raise their social consciousness and understanding of workers common interests, the official concluded.

64 64 Organizing Experiences in Economic Zones DAIHO WORKERS UNION: militance, flexibility and education - instruments for the defense of workers rights Of course we are aware of the risks to our health. We feel it in our bodies. But over time you just learn to ignore the fumes we have families to feed. Tonyo, a male worker from Daiho Daiho Philippines, Incorporated is a plastics company that specializes in the processing and manufacturing of plastic parts for computers. It is part of the Daiho international network of companies which was first set up in 1937 in Japan. Daiho has several factories in Asia and one in the Czech Republic in Europe. The company s plastic products are used in home electronics, office equipments, housing and the automobile industries. Its main bankers include Sumitomo Mitsui Banking Corp., Bank of Tokyo- Mitsubishi, Ltd., UFJ Bank Limited and Mizuho Bank, Ltd. A major supplier of Epson, Daiho Philippines also manufactures plastics products for local companies such as the International Wiring System Philippines. It also manufactures wiring harness for Nissan automobiles and plastic parts for the Fujitsu ATM machine, which is its most expensive product. Its first factory was set up in 1998 at the Binan area of the Laguna Technological Park. A second factory was later established at the Lima Techonological Park in Batangas province in Working Conditions Daiho Philippines currently employs around 350 regular and 52 contractual workers in its two factories in Laguna and Batangas. Around 75% of its workforce is women engaged primarily in the inspection and packing process. The remaining male workforce is assigned to so-called technical areas of production. Workers on regular status are generally paid the minimum wage. But as a result of the regionalization of wage standards, workers at the Laguna Park, including those of Daiho, receive a higher minimum wage (currently at P320 or roughly $6.50 per day) while those from the Batangas plant receive P298 for the same type of work. There are also apparent differences in wage rates for men and women: Operators, majority of whom are women, receive P320 a daily minimum wage; those in the technical areas of the production process, who are mostly men and on a monthly-paid

65 Ripples and Rising TIdes 65 status, receive a higher P365. Workers at the Batangas plant, however, receive P298 and are considered daily, regardless of the nature of their work. Like many other factories operating in EPZs, Daiho hires and fires contractuals and casuals according to production needs; so-called manpower agencies supply such workers as necessary. Most of them are assigned to the injection department but of late, they are also being assigned to the so-called technical department. There are three (3) work shifts, and while technically, the 8-hour work prevails, overtime work is also very common. Of late, the company has implemented a multi-skilling program where male workers called production support members are assigned to various tasks, depending on production requirements. At present there are twenty (20) so-called psm who are on regular status and five (5) on contractual status. Environmental Policy and Work Safety According to its website, Daiho is aware of the numerous environmental and occupational safety hazards associated with plastics manufacturing. Thus, the company professes to a policy of environmental management in compliance with the provisions of the International Organization for Standardization (ISO), promising to monitor and control their energy consumption and domestic waster emissions. They also pledge to conducting employee education and training on its environmental policy. But how the company seeks to implement this avowed policy may be gleamed from the conditions within which its workers labor within the company. The main method for producing plastic products in Daiho Philippines is injection molding where plastic pellets are fed into a hopper machine that melts the pellets and feeds it down into the injection machine. This in turn feeds the melted plastic into specified molds. Temperatures of the melting plastic can range from anywhere between Celsius degrees, raising temperatures within the production area to uncomfortably hot levels. The process also emits hazardous chemical fumes that only circulate within the production room since there is no exhaust system. This is contrary to internationally prescribed measures for controlling hazardous emissions in plastics manufacturing. This was what the company meant perhaps when it pledged not to contribute to environmental pollution: let the workers inhale the fumes. Next step in the process involves steaming the molded plastic products for cooling. These are then picked up by robotic machines which place the products onto a conveyor belt. Depending on the size of the molded product, cycle time may

66 66 Organizing Experiences in Economic Zones range from 8-12 seconds. This poses risks to the worker because of the speed and precision required in picking up the product for inspection and sealing in plastic bags. Once passed second inspection and quality control, the products are then ready for delivery. The use of PVC in plastics manufacturing is already banned in other parts of the world. While officially denied before inspection officials of the Department of Labor and Employment (DOLE), the company has actually retained production of this commodity because it commands a high price. To meet ISO requirements, the company organizes annual safety seminars for its workers and a safety committee regularly conducts patrols within the production area. The company also provides annual medical check-ups but only for workers on regular status. Most of the medical findings involve urinary tract infections (UTI) and respiratory problems. There are also cases of hernia among men, due perhaps to the lifting of heavy loads of up to 233 kilos per hour on the average. How do the workers cope with the health hazards? Although complaints related to muscle pain and over-fatigue are common, most workers, especially those on contractual status, do not report their physical or health problems for fear of losing of their jobs. There have been cases of miscarriage among the women workers but these have gone on undocumented and uninvestigated. Recently, management has also cut off the workers supply of bottled or mineral drinking water, supplying them with tap water instead, which management insisted was safe to drink. The workers have attempted to bring many of these issues for grievance procedures. While they were able to win concessions, such as the provision of seats for pregnant women, these victories have been limited compared to the many problems they are confronted with. Management acknowledges the issues that the workers raise, but there have been very little improvements in their working conditions. Early Attempts at Organizing Attempts to form a workers union in Daiho-LTI began in 2001 but it was not until 2003 when several illegallydismissed contractual workers solicited the assistance of the Center for Workers Education and leadership Development (CWELD), a Laguna-based labor institution. The institution assisted them in their legal battle and provided education seminars on union organizing. The dismissed workers, eventually reinstated by the company, were to renew efforts at educating workers through small, clandestine circles about the need for a workers union. The consciousness-raising efforts were to continue for 3-4 years more. All this

67 Ripples and Rising TIdes 67 time, the company would implement retrenchment programs. These, however, would not hinder the steady growth of the organizers influence among the workers. In 2007, perhaps sensing the workers simmering unrest, management initiated the formation of a Labor-Management Cooperation - which it said would be a mechanism for dialogue and by which labor problems can be addressed. Management refused to call it a council, however, as labor-management councils were more often associated with union formations. This move by management threw the workers into a quandary: should they totally reject it and denounce it as management s attempt to diffuse their organizing efforts? Or should they take the more pragmatic stance of accepting it and turning it around to their advantage? The small group of organizers held intense discussions. On one side were those who believed that the scheme posed dangers, as it can be used by management as a justification that a union was no longer needed. Most LMCs were also chaired by management representatives with only one or a handful of representatives from labor. They were also aware of the dangers of worker leaders eventually being coopted as so many yellow union leaders are when dialogues are held within the confines of small, managementcontrolled bodies. On the other were those who urged for a more pragmatic stance. They, too, believed the dangers it posed, but they were just not ready yet to openly declare the union. There were still legal requirements to fulfill, and more importantly, there was still the need to gauge their effectiveness at mobilizing the majority or at least a significant section of the workforce. The group eventually decided to participate in the LMC. But their participation will be hinged on management accepting their terms. They agreed to use it as a launching pad for fighting for their demands and for getting all the workers to join the various actions that would be necessary in the course of their participation. They would use it as a venue for raising workers consciousness until such a time that they have mustered enough strength to openly declare their union. Discussions among the workers were secretly held in small circles to convince them of the objectives and tactics for participating in the LMC. They also determined their demands and chose their representatives. The workers presented their terms to the company management. First of their key demands was the setting up of a structure that would facilitate broader worker participation and representation in the LMC. These included: A. Equal number of seats between management and labor representatives; B. Leadership positions at all levels of the LMC were to be equitably

68 68 Organizing Experiences in Economic Zones shared between labor and management representatives; C. A steering (or executive) committee composed of a chairman, vice-chairman, secretary and treasurer. Each position would be held by a worker with a corresponding representative from management who sits in an advisory position; D. A labor representative from each department in the production process; E. Committees to address the specific concerns of workers. These included: wage and benefits committee, family welfare, cooperative, health, ethics, canteen, and women. Second, the workers refused to include the question of quality production knowing that it will only serve management s objective. Instead they insisted on bringing up workers issues during LMC meetings. Third, the worker leaders also insisted on relaxing the qualifications for the labor representatives. Management insisted that the labor representative should have a record of perfect work attendance; the workers insisted that workers with two days absence should be acceptable. Management insisted that the representative should have had no record of any disciplinary action; the workers rejected this. The workers prevailed on both counts. The LMC became fully functional in 2008, after a year of negotiations and discussions between the worker leaders and management representatives. By this time, however, organizing work at the Laguna plant was nearing a peak. There were also unplanned, spontaneous actions by workers who were finding conditions inside the plant increasingly unbearable. Women workers were particularly exhibiting a growing militance. There were instances of chanting and sloganeering within the production line when conflicts with their supervisors arose. Management organized an official launching of the LMC. The workers used this as an opportunity to press for their demands for a wage increase. Prior to the formal opening, they read a prayer leaflet that contained workers pleas for better pay and better working conditions. Management representatives however were incensed, calling the workers actions a sacrilege. They filed a case of insubordination against the union leaders who refused to stop reading the leaflet even as management representatives were ordering them to do so. This did not stop the workers from launching further silent protest actions. They brought the issue to grievance procedures. Management later decided not to issue a written reprimand. As part of their campaign for a wage increase, they launched blackribbon wearing campaigns. During the 2007 Christmas party organized by the company, the workers wore black

69 Ripples and Rising TIdes 69 My name is Mercy, a graduate of a twoyear office management course. I am the eldest in a brood of four. I first applied for work in this company in It was my first job, and I was only 18 years old. I was hired on casual status as a mchine operator. After a month I was transferred to the soaking department (now the steaming department). Management said my heavy physical build was more suitable to my new assignment. At the soaking department, I realized what suitable meant. At that time, the soaking process involved putting the products into hot water, after which I lift them out of the water using a strainer. The weight of the products would be much heavier after being submerged in water. At one time, I sprained my wrist from lifting what must have been a total of 100 kilos. I was transferred to the material control department until I completed the required length of service for those on probationary status. My contract ended, however, and I was out of work for nine months. In 2007, I was recalled by the company. I was assigned to the material control department, again on casual status. It was on a night shift when one of the worker leaders began talking to me about a workers union. I did not understand much, however. Then I overheard some workers talking about joining a May 1 rally. I decided to join, but since it was my first time, I was surprised to hear my co-workers chanting slogans about the liberation of workers from exploitation. Later on, an issue arose at the Batangas plant. I joined the workers who organized a picket protest at the plant gates. When I returned to work, however, I sensed some displeasure from our supervisors. I thought of resigning and asked the help of a coworker in drafting a resignation letter but he discouraged me from doing so. I stayed home for three days without informing my supervisor. Our worker leaders must have interceded with management on my behalf. They visited me at my house. My parents were there, and it was then when I learned that I come from a family of union members : my grandmother, it turned out, was a union leader during her time; so was my father. I decided to return to work. My supervisor spoke to me and asked if I was indeed planning to resign. I said I decided to stay. He did not file any case against me, and only asked me to submit a written explanation. Once a supervisor shouted at a female worker inside the production area for no clear reason. The worker cried. We urged her to write an incident report but the supervisor heard us. The following day, he came out with an NG or No Good evaluation of one of our products and asked us to submit a written explanation. continued on p. 70

70 70 Organizing Experiences in Economic Zones continued from p. 68 We refused. The next day, while working in my line, I saw the supervisor. I felt a gnawing resentment within me I could not contain. As he passed by, I couldn t resist shouting slogans about workers liberation, and that women should also learn to fight and be militant. To my surprise, another female worker responded. When I looked, I saw that my co-workers were smiling, and another worker who happened to pass by nodded and smiled at me. Now I realize how important it is for workers to bond together. I have decided to join the union and have even volunteered to help our leaders especially in attending hearings about our complaints. I used to think that workers should love their work no matter what, but now I realize how far more important it is to be steadfast and committed to the fight for workers rights.# shirts and remained silent throughout the speeches delivered by management representatives. These silent protests, and the leafletreading tactic, were designed to get the attention of the company president whom the workers wanted to directly negotiate with. They eventually succeeded. Union officials also surmise that these actions eventually pushed management into holding regular monthly meetings of the LMC. Management saw how widespread the workers support for their leaders was and this was something that had to be pre-empted. The worker leaders on their part were only too aware of this. Their initial actions provided a breakthrough, and workers were now less afraid to come out openly. Their organizing efforts intensified. Aware of the greater fight ahead, the leaders also put a premium on workers education. With the help of labor institutions they conducted education sessions on genuine trade unionism and other issues related to labor. Around 80-90% of the workforce attended the discussions, and these contributed invaluably to raising the workers confidence and enthusiasm in fighting for their rights. Meetings of the LMC were held once a month. The workers initially demanded a P125 wage increase. They also launched a silent campaign by wearing t-shirts during company outings and social

71 Ripples and Rising TIdes 71 events that bore slogans for a wage increase. However, this demand was eventually rejected by management, citing financial limitations. Their other demands were eventually granted. These included: - correction of wage distortions. Government-issued wage increase orders were now to cover both daily and monthly-paid workers - granting liberty to the union president to shuttle between the two factories which aided their organizing work at the second factory - other benefits such as: a threemonth salary loan, 14th month bonus, additional 2 days vacation leave for those with tenures of five years up and - an increase in the bonus for perfect work attendance for the year (from P2,500t to P3000T ) Management s refusal to grant their basic demand for a wage increase caused widespread disillusionment among the workers. They began to realize the limitations of their powers in a body that was still essentially controlled by management that of the LMC. This, on the other hand, sped up efforts at organizing. Their experiences with the LMC taught them even more the need for an organization that was totally controlled and led by workers, setting the stage for the establishment of the Workers Union of Daiho (Phils.), Inc. Independent (WUDPI-IND). Birth Pangs In January 2009, the workers filed for a certificate of union registration with the Department of Labor and Employment (DOLE). They resolved to have one union for the Laguna and Batangas plants, opting to just set up a task force that would coordinate and jointly plan actions at the two factories. The union succeeded, but management representatives questioned the legality of the union registration, citing a technical flaw: the union registration did not state the address of the Batangas plant. The union s registration was canceled by the Bureau of Labor Relations. This was contested by the union. But just the same, the workers prepared to register under a new name should management insist on non-recognition. Nip in the Bud Mid-January 2009, the company implemented a Voluntary Resignation Program (VRP) and submitted an establishment termination report to the DOLE, citing financial reasons. Very few workers availed of the VRP however. The termination report also provided an excuse for another round of retrenchment. It was clearly a case of illegal dismissal since management did not observe the one month termination notice. The worker leaders did some research on the company s finances. Financial

72 72 Organizing Experiences in Economic Zones statements it submitted to government agencies reflected a continuing profitability despite the global crisis. Thus they knew that the company measures were designed to pre-empt the formation of the union. Earlier, the workers noticed the presence of an increasing number of security guards watching their gatherings and taking pictures of union leaders. The workers also felt the tightening watch of management representatives: a worker who fell asleep during working hours was given 30 days suspension; several workers who have been doing overtime work for two consecutive weeks refused a further two-hour overtime work being required by management. They were charged with illegal mass action and were all fired, including the secretary of the union. In February 2009, more than a hundred workers were dismissed by management. A phalanx of company and PEZA security guards herded the workers in batches into a room where the latter were given termination notices. The second batch of workers, which included top union officials, protested. They were locked up inside the room for several hours without food, and their IDs punctured which meant they can no longer enter the zone premises either for transactions with Daiho, or to apply for a job in another factory. The dismissed workers filed a case of illegal dismissal. On the same month, the union filed a case of preventive mediation with the National Conciliation and Mediation Board (NCMB). But the retrenchment measures continued.the union filed a notice of strike sometime in March of the same year. In October, the union received a favorable decision on a Petition for Certification Election they had filed earlier with the Office of the Secretary of the DOLE. But the union was saddled with a problem: many of its active officials and members have fallen victim to the company s retrenchment measures. They bided their time despite the favorable decision, choosing instead to test their remaining strength by calling for a local election. It was a no-contest. Union officials considered it a success as more than 70% of the workers renewed their confidence in the union s leadership by participating in the elections. In January 2010, the certification elections were held. The union won despite management attempts to obstruct their victory.it was a time for renewing efforts at organizing; for replacing the leaders they have lost and for another round of vigorous education work among their co-workers. Soon after, however, the union would face what would perhaps be their biggest challenge: rumors of an impending factory closure. Whether the union will be able to hurdle this test remains to be seen. As one union official, however, puts it: We might not always win in our economic struggles, in our fight to defend our jobs but wherever we may find ourselves in, you can be sure we will be there to organize workers, help them cast off their fears and open up their minds to the need for unity

73 Ripples and Rising TIdes 73 WAC: experiences in organizing at the cavite economic zone 1995 was a different year. The Philippine government was then setting up the CALABARZON industrial corridor as a model for industrial development in Southern Tagalog. The government set up economic and industrial zones to attract foreign investments to the region. Among the first to be set up was the Cavite Export Processing Zone (CEPZ, now officially called Cavite Economic Zone or CEZ) in Rosario, Cavite. In the zone s initial years, activism and protests were but silent whispers inside the zone. On November 30, 1995, Fr. Joe Dizon, an activist priest and labor rights advocate, established the Workers Assistance Center (WAC) in response to calls for aid from workers inside CEPZ for a just and decent working conditions. Fr. Joe had chosen this date, as it was also the birth date of Andres Bonifacio, a national hero who was of working class origins. Fr. Joe, as he is fondly called, established WAC as a socio-pastoral program of the Most Holy Rosary Parish in Rosario, Cavite, where he was parish priest. WAC s objective was to provide services and aid for the protection and advancement of workers rights and welfare as human beings and forces in society. Fr. Joe derived guidance and inspiration from the social teachings and doctrine of the Catholic church which upheld human dignity over capital. WAC s establishment was a bold and timely step because workers were silently suffering from violations in basic labor rights inside the economic and industrial zones. They were unaware of their rights, and thus were completely at the mercy of capital. The No Union, No Strike policy of the previous local government led by Juanito Remulla had instilled fear among workers over their safety and job security. The said administration, together with the Philippine Economic Zone Authority (PEZA) and capitalists inside the ecozones had inculcated the idea among workers that complaints and unionizing will only result in company closures, unemployment, the blacklisting of workers, and red scare. Thus, workers had no institution to run to for help. They were hesitant to turn to the Department of Labor and Employment (DOLE), fearing that their jobs will be compromised once the DOLE summons the company. There were also instances when the DOLE simply advises

74 74 Organizing Experiences in Economic Zones google earth Sattelite view of the Cavite Export Processing Zone where the WAC operates to help workers organize. them to just accept the company s offers of settlement, as filing labor complaints is an arduous process. On the other hand, the local government has no power nor jurisdiction over workers issues inside the economic zone. WAC was besieged by complaints when it started operations. The complaints were primarily about illegal dismissals or suspensions, substandard wages, non-remittance of Social Security System payments, restrictive and unjust provisions in company rules and regulations, which in some cases virtually deny workers time to even urinate or smile during working hours; inadequate ventilation which forces workers to bring their own electric fans, various forms of sexual harassment and verbal abuse by managers, supervisors or company owners, non-payment of overtime work, and the prevalence of apprenticeship and fire-and-rehire after five (5) monthly contracts. WAC s first service was a legal assistance program. This linked WAC staff with many workers and raised the workers consciousness about their basic rights and ways to defend these rights. WAC, however, saw that it was not enough to provide aid and services to resolve or stop cases of violations of labor rights. A more urgent task was consolidating the collective strength of workers inside the factories so they can defend and uphold their rights and welfare. A study conducted by WAC in 1996 at the CEPZ found that all sectors who are unavoidably adverse to labor s interests were organized, but workers themselves were not. Capitalists were organized under the Cavite Economic

75 Ripples and Rising TIdes 75 Zone Investors Association (CEZIA) and other associations. THE DOLE, PEZA, the provincial government and security forces the PEZA police, PEZA guards and the Philippine National Police also cooperated with one another in an organized way. Thus, WAC saw at an early stage the need to place organizing at the core of its work. All other services and programs served this central program. The setting up of unions became the primary objective of WAC s organizing work. Workers who were not yet prepared were aided in setting up associations, which they are ready to uphold as an initial expression of their collective unity. WAC upheld and promoted the slogan Collective Work, Collective Defense among the workers it served. In its 15 years of existence, WAC has already set up 50 unions and provided services to more than 30,000 workers. It was also able to establish two subcenters in strategic industrial places of Cavite in Carmona in 1997 and General Trias in 1998 in response to requests for assistance to workers in other economic zones in the province. In 1999, WAC likewise established a subcenter in the nearby province of Batangas where economic zones were rapidly increasing. Despite the successful servicing of workers, the number of workers reached and assisted was still limited. Nevertheless, this was already a big step from the few unions under the Federation of Free Workers, Alyansa ng Manggagawang Obrero and the local Kristo Manggagawa when WAC started in Workers Situation at the CEPZ WAC s choice of programs and services were based on a solid understanding of the objective conditions of workers inside the zone. From June to November 1996, a team of researchers carried out data-gathering activities among workers from the zone. The group also interviewed officials of government agencies and representatives of investors from the enclaves. The results of the study strengthened earlier investigations done by WAC from April to May 1996 and by the Urban Missionaries Foundation in It gave a broader and deeper picture of the situation of workers at the CEPZ. The conclusions and analysis of the study gave body and soul to the individual complaints previously received by the Church and WAC from workers. The study showed that complaints regarding substandard wages, unpaid and forced overtime work, illegal dismissals, restrictive company rules and regulations or CRRs, non-payment of benefits and unreasonable production quotas were only some of the grave forms of abuses experienced by workers inside the economic zone. Capitalists were unhindered in their exploitation of workers due to the lack or inadequacy of workers understanding about labor rights. This was made

76 76 Organizing Experiences in Economic Zones worse by the lack of protection from government agencies and conflicting labor laws and regulation. This is aside from the black propaganda against unionism waged by authorities and their instilling of fear among workers that complaints will lead to joblessness and being tagged as communists. Job insecurity inside the ecozones was also one of the findings of the study. A regular status was not an assurance of work. The retrenchment of workers whenever management chooses to do so, the character of production which was dependent on orders from foreign brands and distributors, the general orientation of industries toward export, the general situation of unemployment in the country, the special incentives granted investors inside the economic zone and the lack of genuine workers organizations were conditions which promote job insecurity. The study likewise encountered cases of labor contractualization which has since become prevalent. WAC published the results of the study in 1996 in a pamphlet entitled The Situation of Workers inside the Cavite Export Processing Zone. It was simply called AKMC in Pilipino. The AKMC served as a first step in a study program that WAC organized to help workers understand their working conditions in the entire zone and link these to the general conditions of workers in the country. The AKMC quickly paved the way for union-building as it raised workers consciousness on the varying forms of abuse and exploitation inside the factory and broke up their fear of unionism. It also opened their minds to the issues and adverse consequences of globalization on the labor sector. Organizing Tactics There were 36,000 workers and 166 operational establishments when WAC started services for workers at the CEPZ. No more than five percent (5%) was organized in 10 chartered unions under the Trade Union Congress of the Philippines (TUCP) and AMO. This small percentage quietly prevailed without the knowledge of what they called their mass membership. Although some purportedly had CBAs, most were inactive. Workers do not know the officers since most of these were only assigned by the federation. Management often and widely used anti-kmu propaganda at CEPZ during that period although majority of the workers do not have concepts of red and yellow unionism, and there was no KMU-affiliated union existing then. There was also a strong undercurrent in campaigns conducted by management that unions were banned. PEZA also frequently advised workers to avoid unionism in order not to lose their jobs. In general, workers had a negative concept of unions it meant repression, joblessness, factory closures, and union leaders selling out workers interests.

77 Ripples and Rising TIdes 77 Along with fostering a better understanding of unionism and collective action, WAC likewise exerted efforts to break workers silence and any fear sowed by long periods of repression and name-calling against unionism. WAC recognizes that for workers to realize their collective strength, they will have to gather, discuss and derive strength from one another. WAC promoted its services by distributing leaflets in front of CEPZ and workers boarding houses in nearby communities. The leaflets explained WAC s services and programs for workers. Since it was a church program, it quickly and easily attracted many workers especially among the religious. It was also not a problem for church organizations, politicians, parents and other workers to air their complaints to WAC because of its reputation as a religious institution. WAC continued to promote its programs and services inside and outside CEPZ and at the boarding houses. Walkin workers started to pour in. From these and other workers whom organizers had come in contact with, and workers being provided legal assistance by WAC, sprang unionists who would expose the oppressive working conditions in the biggest economic zone in the country. At an early stage, WAC promoted the social teachings of the church through bible study, prayer meetings, retreats, recollections, and holy masses. Through these activities, workers realized the importance of the dignity of human beings and the need for action and struggle to uphold this. Most of all, these gatherings served to link a big number of workers. WAC consciously took note of workers birthdays, and held simple celebrations at the WAC office. These became effective methods for initially gathering workers, and holding initial discussions and investigations into workers conditions. Along with these, WAC also organized picnics, regular visits to boarding houses, research interviews, workshops, discussion fora, concerts and cultural programs in order to reach the biggest number of workers. In all gatherings, workers exchanged views and experiences, discussed various issues in the workplace, and came up with moves they can undertake. Solidarity of Cavite Workers One problem in the initial stage of organizing was the form of organization to be taken due largely to the fact that workers minds were not yet prepared for unionizing. Although not yet widespread, contractualization was already prevailing in many companies inside the zone through five-month contracts, particularly in the garments and electronics industries. Aside from this, is the prevalence of hiring apprentice, learners, probationary and pakyaw (usually home-based subcontracting arrangement), which conflicts with the employment of regulars. Labor Management Councils also existed which hindered the development of unions among regular workers.

78 78 Organizing Experiences in Economic Zones From such conditions arose the Solidarity of Christian Workers or SCW. It served as a tactical formation for the early stage of organizing in the workplaces when workers were not yet prepared for unions. Because SCW was not a union, but an association organized by the church, workers readily took to it. Even managements were not averse to it, until the Arroyo government came into power in The first chapters of SCW were established at the Philips Export Industries and Horei Philippines in Workers from 26 factories attended its first assembly in April In a special convention held in April 1998, SCW was renamed Solidarity of Cavite Workers, as the term Christian in its original name discriminated against non-christian workers such as Muslims. It was also in this convention when SCW was affirmed as a provincial alliance of workers to be composed of individual workers, SCW chapters in factories, unions of any political color, and other worker associations. It was in 1998 when SCW broke the silence and fear of workers when the SCW chapter at Samma Corporation, with a membership of 100, held a protest march in front of the PEZA office at CEPZ to oppose massive suspension and retrenchments due to the workers refusal to do overtime work. Through the SCW chapter, workers were given opportunities and experiences in running their own organization inside the workplace, lead and manage its membership, plan and implement activities, launch non-production related actions, negotiate with management representatives, and work on the requisites for setting up a union. More than 90% of unions established by WAC started out as SCW chapters. SCW chapters are established when there are already 25 members. Employment status in the workplace is not a hindrance contractuals, apprentice, casuals, pakyaw are all accepted as members. Even when the union has been established, the SCW chapter is allowed to exist in the same factory as an organization of non-regular workers and those not yet prepared to join unions. SCW chapters main task is to recruit members, join and encourage others to attend education seminars and activities, help in the conduct of social investigation and contact-building in other factories. SCW implemented the slogan Cooperation, collective defense in advancing their legitimate demands. The fight of one is the fight of all became a concrete call in all local fights involving the union and SCW chapter. SCW chapters gave birth to unions inside CEPZ and other ecozones in Cavite, and from these unions and chapters rose fulltime organizers. From , WAC was able to organize 30 independent unions and SCW chapters. Other Important Support Work for Organizing WAC s proximity to CEPZ proved advantageous to organizing. WAC s

79 Ripples and Rising TIdes 79 office became an alternative place for workers while they while away their time before going home. They were able to easily consult organizers regarding issues in the workplace. Immersion programs became a regular activity for the institution. In a few cases, WAC opened its dormitory, which was also located inside its office, to selected active worker leaders from far places in order to help organizers train them as instructors and ask their support in conducting worker education seminars. Through this, fulltime organizers, propagandists and instructors rose from among SCW members. Individuals who had been aided by the Legal and Paralegal Assistance Program of WAC also helped in organizing. In exchange for the free services rendered for their cases, they helped link WAC with their co-workers. From their efforts, WAC was able to set up unions in some factories. On the other hand, WAC s newsletter, Manggagawa Manlilikha (literally Workers, Creators) linked workers from different factories. It not only brought news, stories, information and analysis on workers issues. Organizers and SCW chapters also used it to establish contacts and broaden their links in more factories. The support of other sectors and institutions for WAC s objectives also helped a lot in building workers strength. This inspired and strengthened workers resolve whenever they came into conflict with company management over their rights and welfare. They knew they were not alone in their fight. Along with the organizing of unions and SCW chapters, WAC also established support mechanisms for workers from among the professionals sector, sympathetic politicians and personalities from the different churches in Cavite and religious groups. In August 1997, WAC and SCW established the Friends of Workers (FOW), and followed this up with the establishment in 1999 of the Cavite Workers-Church People s Conference (CWPC). The two organizations played an important role in all the succeeding union struggles of workers, even during the period of strikes in These groups solicited financial and material support, worked for the release of arrested and imprisoned unionists, mobilized church people for picketlines and strikes and held negotiations with the local PEZA administration and capitalists, alongside the unions. The support of FOW and CW-CPC members continued even in their personal capacity. Among the exceptional cases were Atty. Jose Ricafrente, current Mayor of Cavite; Atty. Ernesto Andico who, until his death in 2010 provided free notary services from 1996 to workers serviced by WAC, and Vice-Mayor Jingjing Hernandez of Rosario. International linkages likewise provided support for WAC s work in organizing workers and helping them defend their rights to unionize. Some SCW chapters were quickly transformed

80 80 Organizing Experiences in Economic Zones into unions, and several unions triumphed in their local fights due to the support of international NGOs, laborrelated institutions and unions from overseas, and WAC s funding partners. Almost all of the workers and union fights serviced by WAC in CEPZ from 1996 had an international component. Among these were petition-signing in the form of action alert, sending of letters to owners of fashion brands, a Canadian Trade Mission in 2007, up to launching of campaigns and mobilizations to parent companies of local firms who are the subject of workers complaints. An exceptional case of support lent by international campaigns were for the simultaneous strikes at Phils Jeon Inc and Chong Won Fashion Inc, a Wallmart supplier, which experienced a series of harsh attacks and dispersals by PEZA police and the PNP under the orders of PEZA from September 2006 until August The PEZA police filed criminal charges against 31 strikers and two (2) WAC organizers. These two cases were presented by the Korean Confederation of Trade Unions (KCTU) to the ILO Convention of The KCTU and WAC likewise filed complaints at the Korean Contact Point of the Organization for Economic Cooperation and Development (OECD) in August The international campaign over the two strikes were supported by various NGOs, consumer organizations and unions from the US, Canada, Europe and Asia. Eight of the major fashion brands in the US who were asked to assume responsibility over the violence at the Chong Won strike, and even giant retail store Walmart through its Code of Conduct, sent letters to then President Arroyo expressing their concern over the violent dispersals of the strikes. While the two strikes failed, the international campaign succeeded in exposing to the international public the oppressed situation of workers and the brutal repression of the right to organize at CEPZ. The campaign also succeeded in dismissing the criminal charges files against the strikers. It also helped expose the repressive and anti-worker character of the Arroyo government. Decisive Role of PEZA It was WAC s policy in the defense and upholding of workers rights, and in resolving conflicts, to keep the doors of dialogues open and reach out to different parties involved in, or are exerting influence over, the issue. Inside CEPZ, it was PEZA, rather than DOLE, which played a decisive role in many cases related to the jobs and rights of workers because it exercises administrative supervision over the zone s locators. Dialogues and negotiations with PEZA s intervention, combined with workers protest actions became more effective and provided quick resolutions to unionized workers problems. Even workers from non-unionized factories are able to air their complaints, as long as they do so collectively. On the other hand, PEZA s decisive role is also more dangerous than that

81 Ripples and Rising TIdes 81 of DOLE. It can easily mobilize its own security forces the PEZA police and security guards aside from the Philippine National Police in order to intervene in protest actions and strikes. The experience in the two strikes at Chong Won Fashion Inc and at Phils Jeon Inc in 2006 and the union strikes at JRA Philippines (Jordache) and Kosiphi International in 2003 were decisively and brutally ended by the armed PEZA forces and not by the contradictions between the workers and the capitalists. In strikes, protests and vigils held in front of runaway shops, and even on occasions when workers filed charges against the PEZA administrator in CEPZ and two chiefs from its Industrial Relations Division, WAC maintained its professional relations with PEZA, and never severed lines of communication with the said agency. Except for strikes which are under the jurisdiction of DOLE, WAC seeks PEZA s intervention in resolving conflict between workers and capitalists. As long as it does not compromise the union and workers rights and welfare, WAC accepts PEZA s initiatives as solutions for the resolution of the case. Nevertheless, if PEZA is indecisive and seems to favor the capitalists side, WAC does not stop workers from launching their own protest actions against PEZA. Through PEZA s decisive intervention and the union s collective action, even non-unionized workers were able to achieve their demand against the companies non-payment of 13th month pay and PAG-IBIG fund, non-issuance of separation pay or incorrect payment of by capitalists who attempt to evade this responsibility, non-payment of SSS premium and refund, delayed payment of wages, recovery of machinery which runaway shops tried to sneak out, a stop to long and forced overtime, and in some cases, the reinstatement of dismissed workers. For cases filed by individuals or a small group of workers, WAC writes to companies regarding the complaints and also puts forward recommendations for the resolution of the case. It was WAC s standard procedure to furnish the CEPZ administrator a copy. When companies do not act on the complaints, WAC writes to the CEPZ administrator for his intervention. In cases involving many workers or which concern the union s interest, WAC advises workers to petition PEZA regarding their complaints and request that the agency facilitate a dialogue with the capitalist. They address the letter to the CEPZ administrator, with a copy furnished to the director-general based at PEZA s national office. But when the PEZA national office does not respond, WAC supports the workers protest action. The non-confrontational and professional manner by which WAC deals with PEZA is but using PEZA s mandate to ensure industrial peace and a challenge to the frequent statements of PEZA to WAC that workers rights are non-negotiable. Likewise, by keeping communication lines open with PEZA, workers are able to exhaust possibilities

82 82 Organizing Experiences in Economic Zones rather than immediately file the case with DOLE which takes years to resolve cases. Victories and Limitations WAC s first gains in organizing workers at CEPZ were at the Japan Mufflers Corporation in The union was made up only of 23 members from 35 rank and file workers. It was during a CBA negotiation when the Japanese capitalist decided to shut down the company and render separation payments to workers to avoid continued losses. WAC used this first union as an example to encourage other workers not to fear unionism because it is a right. SCW as a tactical formation was a successful tactic which gave rise to unions which broke the fear, and later on, strict capitalist control over workers. WAC was able to utilize this as well in factories to unite contractual and regular workers against capitalist abuses. The first protest march staged by an SCW chapter at CEPZ in Cavite was the first signal that workers silence at CEPZ had been broken. This taught many workers it was not enough to complain, they have to act in unison and protest so that government will act on their complaints. By bringing WAC s advocacy to church people, professionals and sympathetic politicians, it was able to garner more support and services for workers. While FOW and CW-CPC did not last long, these organizations greatly aided workers in overcoming their fear of unionism during the first stage of organizing at CEPZ. International campaigns also effectively helped solve workers complaints. It exposed to the international public workers oppressed conditions inside the biggest economic zone in the country and the anti-worker policies of the government to keep workers silent, and labor cheap. It gave striking workers hope during times when the strike takes on a difficult turn, and workers morale is low. The assumption of Ireneo Ayong Maliksi in 2001of the province s governorship re-started the implementation of an anti-worker and anti-communist No Union No Strike or NUNS policy against the then advancing union struggles at CEPZ. The NUNS policy served as the counter-insurgency program of the Maliksi administration against the militant trade union movement. It was implemented within the frame of OPLAN BANTAY LAYA, the counter-insurgency program of the Arroyo government which was primarily repressive and also had the objective of publicly demonizing militant unionism. Governor Maliksi created the Cavite Industrial Peace Advisory Group (CIPAG) which was tasked with conducting red scare campaigns against unions; threaten union or worker leaders; disperse strikes, harass protest actions, crush unions or connive with capitalists in setting up yellow unions; connive with corrupt DOLE officials, and destroy WAC s prestige among workers. The Office of the Provincial Governor Office (OPG) used its entire machinery and the services of paid goons to implement CIPAG.

83 Ripples and Rising TIdes 83 As a concomitant move, PEZA implemented a zone pass requirement which closed the doors to the formerly free entry to CEPZ of SCW organizers. The PEZA-DOLE-OPG-capitalist connivance has been effective since 2001, which made it difficult for the advance of existing unions and restricted the formerly relatively freer conditions for unionizing inside CEPZ. This connivance succeeded in crushing the unions under SCW leadership from 2001 until 2006 since the strength established by the unions were not yet strong, and the number of unionized workers were still small compared to the zone s 50,000 workforce then. Aside from this, all these unions were forced to focus on their local fights to withstand capitalist repression. This was a big setback for the trade union movement and organizing work which WAC started in This was only temporary, however. Even the combined strength of the PEZA-DOLE- OPG-capitalist connivance could no longer contain workers dissent. The seed of genuine unionism and militant forms of struggle for workers rights and welfare are quickly re-emerging due to the continued prevalence of exploitation and abuse of worker rights inside the biggest ecozone in the country

84 84 Organizing Experiences in Economic Zones GOLDEN WILL FASHION: organizing contractual workers Golden Will Fashion Philippines, Inc (GWFPI) is located inside the First Cavite Industrial Estate (FCIE) in Dasmarinas, Cavite. The company manufactures fashion apparel such as trousers, skirts and blazers for well-known US signature brands Ralph Lauren and Ann Taylor. It is owned by Tungtex Holdings Ltd which is based in HongKong. It started operations at the FCIE in From a mere 350 in 1999, the company s workforce grew to 1,400 in 2003, where around 800 are contractuals. From 2000 until June 2008, there were three (3) agencies supplying manpower to Golden Will : RN Manpower, Recto Cantimbuhan Veronica Jarata Agency (RCVJ) and Value Jobplacement Corp. (VJC). Newhires have to meet a 78% efficiency level in 15 days. Otherwise, they are terminated from the company. Those who meet this requirement are asked to sign a five-month contract. After five months, the workers are transferred to the three agencies to circumvent the law on the regularization of workers. The workers are transferred to the three agencies every five (5) months, or are retained by a particular agency but are made to sign contracts every five (5) months. For each new contract, the worker is required to submit new medical clearances by the agency to assure Golden Will that they are undoubtedly still fit to work. Prior to the setting up of the union, there were cases of workers reaching six years of service but are still on contractual status. Aside from the contractuals, there are also temporary workers and apprentices who receive only 75% of the legally mandated wage rates. They are employed for only two months. This is usually the case when production is at its peak. They are usually assigned to trimming, manual sewing for fixing jobs, and marking. There are around such workers. Organizing in GWFPI started in 2002 due to basic issues such as low wages, forced overtime and unreasonably high quotas. Workers at GWFPI were organized by workers from EMI-Yazaki. However, management got wind of these efforts. The company threatened to close shop once the union was formed. It also bribed some of the leaders and promoted them to supervisory levels. This scheme obliterated the workers efforts. In 2002, the Workers Assistance Center (WAC) assisted three workers

85 Ripples and Rising TIdes 85 at GWFPI who were illegally dismissed by the company. The case was filed by the workers with the National Labor Relations Commission (NLRC). The workers, with the support of WAC, asserted their right to job security and successfully proved that the company violated Article 279 of the Labor Code. In 2004, the workers were paid backwages by the company at were resintated as regulars, except for one who has decided to work abroad. In the illegal dismissal case filed in 1995 by Rosemarie, who was dismissed after seven (7) months of working at the company. WAC asserted that her dismissal was illegal based on the provisions of Art. 280 of the Code which states that workers are considered regulars when they perform work that is usually necessary or desirable in the usual trade or business of the employer. Rosemarie won the case but the company appealed the case until it received a favorable judgement from the Supreme Court in September 2010 reversing the lower court s ruling. The illegal dismissal case filed by Bonifacia, also in 2005, revealed that the agencies named in her employment contracts were labor-only contracting agencies since they to do not have sufficient capital nor machinery and also do not have immediate control nor supervision over her work. Her case clarified that the employer-employee relations exist between the worker and the employing company, and not between the worker and a labor agency. The Court of Appeals affirmed the April 2011 decision of the labor arbiter that Bonifacia s dismissal from work as a regular worker was illegal. Three more workers won a case of illegal dismissal they filed against the company when the NLRC issued an order for the company to reinstate the three to work while the case is being heard by the courts. In 2004, the Solidarity of Cavite Workers (SCW) began to organize the workers with the help of WAC. WAC helped three (3) striking workers from JRA Philippines, Inc (Jordache) work with Golden Will and enlisted the help of the reinstated workers. Together, they formed the first organizing committee at Golden Will. Using their successes on the illegal dismissal cases, the organizing committee launched a strong campaign among workers of Golden Will who have been considered contractuals despite years of service and encouraged others who have been illegally dismissed to similarly file cases against the company. SCW likewise distributed copies of the favorable decisions among the workers and encouraged them to attend discussions on worker rights. The campaign resulted in amore cases of illegal dismissal filed by workers until the company was forced to terminate the services of RN Manpower Agency and VJC, retaining RCVJA, which by end 2007 had 400 contractual workers in its name. Of this number, 173 workers were made regulars by the agency, but not Golden Will.

86 86 Organizing Experiences in Economic Zones Art Security of tenure. In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. (As amended by Section 34, Republic Act No. 6715, March 21, 1989) Art Regular and casual employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists. -Labor Code of the Philippines From 2004 until the setting up of the union, management was unaware of the organizing efforts although it was rightly suspecting a former SCW unionist because of the respect that workers were giving him. At a time when organizing was just being started, organizers first set up organizing teams (OT-SCW) in production lines such as cutting, sewing and finishing. One OT-SCW was composed of three (3) to seven (7) workers and served as study cricles in the early stages of organizing. This was later transformed into SCW chapters at Golden will. OT-SCWs served as venues for continuous education and consciousnessraising on labor laws and worker rights. Recruitment also became a regular activity. Workers were grouped according to their residences. On June 17, 2007 the SCW chapter at Golden Will was established composed of 334 members ( 203 regulars and 131 contractuals) out of the 1,280 rank and file workers of the company. According to SCW organizers, they used the tactic of setting up SCW chapters at a time when workers were still preparing themselves for the setting

87 Ripples and Rising TIdes 87 up of a union. This was also a tactic they used to reach not only the regular but contractual workers as well who normally constitute the bigger number of the company s workforce. SCW chapter served as their organization as long as the workers were not yet prepared for a union. When the union for regular workers is set up, the SCW chapters remain as an organization of contractual workers. As a regular formation, SCW is a provincial alliance composed of unions, SCW chapters in factories and individual members. From 2006 until 2007, both regular and contractual workers became actively involved in recuritment of members to the SCW chapter and in the secret solicitation of signatures for union membership. By mid-2007, around 40% of regular workers who are considered by law as part of the Appropriate Bargaining Unit (ABU), including 200 contractual workers. Around 900 workers may be considered part of the ABE during this period. The Golden Will Fashion Philippines, Inc Workers Organization-Independent (GWFPWO) was established on August 5, 2007 through a general assmebly attended by 265 members from 419 individuals who signed up for membership. The union immediately filed a Petition for Certification Elections (PCE) on September 28, The experience at Golden Will Fashion broke the prevailing practice of including only workers on regular status in union membership. GWFPWO s constitution states that union members include all daily paid rank-and-file workers. This category includes both regulars and contractuals who, under Art. 280 of the Labor Code, are considered regulars. With such a membership composition and using the provisions of Art. 280, the establishment of the union became a most concrete expression of the fight against contractualization by the workers at Golden Will. The establishment of the union and filing of a PCE was suceeded by restrictions, harrassment and acts of bribery by company officials on active union members. Representatives of then provincial governor likewise interfered, in connivance with management and gathered workers for meetings aimed at forming a Labor-Management Council (LMC) where all the selected officials were from supervisory levels. Workers protested the setting up of a Labor-Management Council which management used against the union. According to WAC, workers may use LMCs as a tactic at a time when workers are still gathering strength, but not when they are already in an advantaged position and are ready for a union. From September to December 2007, management became more threatening and deceptive in connivance with the Office of the Provincial Governor (OPG). On one hand, workers were threatened with dismissals. On the other hand, it offered additional wages to workers who will resign from the union.

88 88 Organizing Experiences in Economic Zones Failing to convince the workers, management then called workers one by one to a room where they were made to sign papers withdrawing their membership from the union. Those who refused to sign were obliged to work overtime or go on forced vacation without pay. Those who signed were offered incentives by management. Management representatives also visited workers residences, warning them to disengage from the union. Management likewise offered the union president a promotion, but the latter refused. The union came out with leaflets airing their calls against the harrassment and for the defense of the union. It also launched a boycott overtime protest action. Management retatliated by transferring all active members and leaders into a single building to separate them from the rest of the workforce. Other unionists were transferred to different production lines. These moves by management made workers organized actions difficult. In January 2008, the DOLE came out with a decision on GWFPI s petition for certification elections. The company reacted by supporting the formation of a yellow union through the Alyansa ng Malayang Obrero (AMO, or Alliance of Free Workers) which acted as a forced intervenor in the PCE. With the support of mamagement, AMO questioned the decision of the labor arbiter allowing the participation of contractual workers in the preliminary election conference. The arbiter, however, affirmed his decision since the ABU includes the contractual workers as provided for by Art. 280 of the Labor Code. Nevertheless, the contractual workers were relegated to being challenge voters. They constituted 178 votes, including 45 AMO members. The certification elections were held on May 5, GWFPWO overwhelmingly won the elections despite the five-day vacation leave imposed by management until the day of the elections. Out of a total of 654 registered voters, GWFPWO garnered 292 votes, AMO won 16 while the no-union vote totaled 102 votes. There were three (3) spoiled votes and the 223 challenge votes were no longer opened due to the huge gap between the votes for GWFPWO and AMO. The company s workforce had been reduced to only 800 workers during this period, including the more than 200 contractual workers. Management retaliated by dismissing 166 union members from the labor contracting agency RCVJ. It also terminated the latter s services. The workers organized protest actions in front of the company and the ecozone. They also launched a series of delegations to mamangement, ribbon and placard wearing as forms of protest. The dismissed workers also filed cases of illegal dismissal with the NCMB and the NLRC. CBA negotiations began in June Management however, refused to respond significantly to worker demands even after 20 meetings. It aslo continued to harrass members and leaders even during the negotiations. Halfway through the negotiations, management came up with trumped-up charges

89 Ripples and Rising TIdes 89 of theft of product jackets and vests against 25 union leaders and members. Management used this as an excuse to unilaterally stop negotiations and dismiss the workers in February From January-February 2009, the company implemented forced leaves for 400 workers. About 71 union members accepted separation pays. The company likewise dismissed more than 200 contractual workers. From March to August 2009, management declared a temporary shutdown and offered separation pays which many workers availed of. By September 2009, Golden Will Fashion declared a permanent cease of operations due purportedly to losses and the lack of work orders due to the global financial crisis. By this time, only 140 of the original union members had been left. The final CBA negotiation session was held on March 13, 2009 attended by officials from the mother company in HongKong. The union no longer considered staging a strike since production was intermittent, and workers incomes had already suffered due to the series of forced vacation leaves. Many applied for work as contractuals in other companies while others, unable to find work, returned to their provinces. Golden Will, however, did not totally close down. The workers learned that the company only transferred to Noveleta, Cavite on May 2009 under the name Jhenton Fashion Apparel but still using the same business address of Golden Will Fashion at FCIE. The workers staged a picket protest infront of the company in Noveleta. Due to the protest, the town mayor refused to issue a business permit to Jhenton. The company again moved to Victoria, Laguna. Despite the closure, union members who refused to accept their separation pays staged a series of protest actions infront of PEZA-FCIE and the PEZA national office demanding that the company return their machinery and resume operations at FCIE. While the machinery was returned, PEZA however did not compel the company to return, instead issuing a clearance for Golden Will to close down. On the other hand, the company deposited the separation pay of those who refused to accept payment, which they may withdraw anytime through the DOLE. In May 2010, the provincial fiscal threw out the case filed by the company against the 25 workers who were charged earlier with theft, due to lack of evidence and after a series of protest-actions at delegations organized by the workers to the Office of the Provincial Governor. In June 2010, the remaining unions decided to accept their separation pay. Ten years of Golden Will s operation and six years of workers determined struggles showed that it was possible to organize and mobilize both regular and contractual workers in a single union. By challenging and using the law itself, exposing contractualization as an antiworker scheme and sustained worker

90 90 Organizing Experiences in Economic Zones unity, management was put on the defensive and the workers triumphed in their efforts to set up a union. The successes of the Golden Will workers union in organizing contractuals is a big lesson for the labor movement. On the other hand, it remains a big challenge for the labor movement to come up with a national fight for laws that will put a stop to contractualization and other schemes inimical to workers interest, such as those experienced by workers at Golden Will.

91 Ripples and Rising TIdes 91 NXP WORKERS UNION: union-building amidst corporate restructuring It is seldom that unions are formed inside economic zones, and rarer still for one to exist for over two decades. However, such is the experience of the NXP Semiconductors Cabuyao Incorporated Workers Union currently based at the Light Industry and Science Park I (LISP I) based in Cabuyao, Laguna in Southern Luzon. As in the case of other genuine workers unions, it has never been smooth sailing for the union s membership. Changes in company ownership, management clampdown, and weaknesses in leadership, among other issues, have all posed serious challenges to the union. What kept it afloat, however was the wise use of union democracy and unitybuilding efforts to save the union from compromise and eventual ruin. The Birth of NXP Semi- Conductors Philippines In September 2006, Royal Philps Electronics considered for decades as a cutting-edge technology company announced that it has signed an agreement with Kohlberg Kravis Roberts & Co. (KKR), Silver Lake Partners and AlpInvest Partners NV (together referred to as the consortium ) through which the consortium will acquire an 80.1% stake in Philips semiconductors business, with Philips retaining a 19.9% stake. The decision was spurred by losses being incurred by the company in its semi-conductor business, in turn the result of decreased market demand due to the global crisis of overproduction in the information technology business. For more than a decade, Philips underwent a series of global corporate restructuring which focused on the streamlining of its operations, including the sale of more than 100 subsidiaries, changes in top-level corporate management, and cutting costs, which meant massive job cuts. In 1996, Philips decided to sell its semiconductor business. The result was NXP ( Next Experience After Phillips ) Semiconductors. NXP manufactures silicon system solutions for mobile communications, consumer electronics, digital displays, contactless payment and connectivity, and in-car entertainment and networking, employing approximately 37,000 employees worldwide.

92 92 Organizing Experiences in Economic Zones Table 14. Wage Increases for Workers in NXP Year Wage Increase (CBA) % % % % % % % % % % % % % 1996 P % % 1999 P % % 2002 P % % 2005 P % % Its integrated front-end facilities are located in the Netherlands, Singapore, China, USA, and Germany. Its facility in France had been sold in 2009, its German facility reorganized, and two of its Dutch facilities are scheduled to close in 2010 and Its back-end facilities, on the other hand, can be found in Thailand, Taiwan, Hong Kong, China, Malaysia and the Philippines. Their products are then marketed and sold worldwide to a variety of original equipment manufacturers, original design manufacturers, contract design manufacturers and distributors. For 2009, the company reported global sales amounting to $3.843 billion. NXP Cabuyao The operations of Phillips in the Philippines began as early as During the 60s, Phillips founded a lamp and glass bulbs factory in the city of Las Pinas. In the years to follow, the company diversified its operations in the said city, including the setting up of a plant for its semiconductor business. To avail of the tax privileges offered by the Philippine government to ecozone locators, its semiconductor operations transferred in 1995 to the Light Industry and Science Park I (LISP I) in Cabuyao, Laguna. Its facilities are housed within two buildings inside a 12-hectare compound which is one of the largest inside LISP, second only to that of Procter & Gamble. The factory currently employs a total of 1,685 individuals, 301 of whom

93 Ripples and Rising TIdes 93 belong to management and supervisory positions. Women comprise around 56% of the company s workforce. Around 605 individuals (36%) do not enjoy regular status. Around 136 were hired through subcontracting agencies while 469 are contractual workers. Most of its employees have been working in the company for almost 15 years, even before the transfer to LISP 1. The Birth of the Union The first union of the workers of NXP (then Philips) was founded on December 1, 1982 at the original plant in Las Pinas. It was originally named Philips Components Philippines, Inc. Workers Union. Table 15. Average wages among NXP Workers in 2008 Department Monthly Rate Headcount BCBS 15, GA 12, POWER 14, SIPS 12, SUPPORT 14, TOTAL 13, ,128 The union aligned itself immediately after registration with the National Federation of Labor Unions (NAFLU), which is in turn part of the Kilusang Mayo Uno, a militant labor center in the country. The company s technicians and quality inspectors were the pioneers of union organizing in the company. Figure 8. Distribution of NXP Workers According to Lenght of Service

94 94 Organizing Experiences in Economic Zones When the company transferred to LISP 1 in Laguna, the union s name became the Philips Semiconductors Workers Union NAFLU-KMU. Its current name NXP Semiconductors Cabuyao Incorporated Workers Union is the result of the 2006 change in company. In its 27 year history, the union and the management has been able to conclude a total of 10 Collective Bargaining Agreements (CBA). Other than the increase in wages (see table), the union has also been able to secure a number of economic benefits for the company s workers. These include a daily meal subsidy, rice subsidy, education subsidy, and out-patient subsidy. The union has also been able to secure free shuttle service for LISP 1 for workers who live in Manila and other nearby provinces. Its members are also secured with Personal Protective Equipment (PPE), which is regularly monitored by the Health and Safety Committee of the union. A grievance desk also ensures that workers can turn to the union leaders when they are given disciplinary actions by the company. Corporate Restructuring and its impact on workers Corporate restructuring would have several repercussions on workers situation, however. First impact on the union was the increased difficulty of organizing activities for the workers when the company transferred to LISP 1. They now had to contend with layers of security forces from the local police units operating within and around the zone, to ecozone security forces and down to the company security guards who all kept constant watch on worker movements within the perimeters of the zone and adjacent areas. It is the recent buy-out however that would have a more comprehensive repercussion on workers situation. Private equity firms view the companies they target for takeover as merely a bundle of assets, not as a service-provider or manufacturer of goods, or as a place of employment. Management focus is on manipulating this bundle of assets through financial re-engineering to generate maximum, short-term cash outflow and this is what drives management decisions on restructuring. In this equation, workers figure primarily as expenses as assets are unbundled, sold, mortgaged and resold. -International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers Association

95 Ripples and Rising TIdes 95 A quick look at corporate buy-outs In 2006 private equity funds spent over USD 725 billion buying out companies - an amount equivalent to buying the national economy of the Netherlands, or the economies of Argentina, Poland and South Africa combined - with billions of dollars to spare. These are generally conducted by private partnerships that involve three main actors: 1) investors, 2) private equity firms and 3) the companies they purchase, known as portfolio companies. KKR, one of the main companies that bought Philips semiconductors is among the world s top five private equity buy-out firms along with Bain Capital (Bain), the Blackstone Group (Blackstone), the and TPG (formerly Texas Pacific Group) in terms of both size and influence. Private equity is a broad term that encompasses a range of strategies for investing in industrial and service companies whose common stock is not traded on public stock exchanges. In order to ensure the quick return of investments, private equities impose labor flexibility and contractualization, as well as workforce downsizing by shutting down plants and departments in the companies that they buy. Unlike publicly traded companies that are subject to federal securities laws and regulations, private equity buyout firms operate virtually free of oversight and public accountability, their profits and practices largely hidden from view. Like in many other multinational corporations which were bought and now is at the mercy of private equities, the workers of NXP face contractualization, diminishing regular workforce through voluntary retirement programs (VRP), and closure of company departments. When Philips semiconductors became NXP, the new management closed two divisions of the plant which caused many workers to lose their jobs. They also offered early retirement packages in order to reduce their workforce that still has security of tenure. This became a very tempting offer for many, and even for union leaders who have been working at the company for many years. It would, in fact, become a contentious issue that the union would eventually face. The company has also stopped the granting of regular status to its workers and is now hiring employees either through subcontracting agencies and or through contractual arrangements. The increased contractualization of its workforce has had the effect of decreasing the number of union membership as only regular employees can become union members. At the start of this year for example, management announced that they would not be increasing workers wages as a result of decreasing global sales.

96 96 Organizing Experiences in Economic Zones Pigura 9. Distribusyon ng mga Manggagawa batay sa Sahod The union membership, however did not accept the proposal because (1) they knew that NXP Philippines was still earning huge profits despite the economic downturn and (2) it was actually they, the ordinary workers, who carry the heaviest burden resulting from the crisis, as prices of basic commodities spiral and standards of living deteriorate rapidly. To counter the proposal, the workers waged a series of concerted efforts that showed their united strength. The union called for a general meeting where the workers discussed their plan of action. They decided to stage a series of protest actions inside the company. The union members staged noise barrages during break-times inside the company cafeteria. They also organized pickets inside company grounds, using placards that bore their calls and wore protest pins inside company premises to show their defiance. Visits and inspections by representatives of the company s foreign offices were also taken as special events for protest actions and a display of militancy and union unity. Ultimately, the concerted actions paid-off, with the company promising to honor the wage increase as provided for in the CBA. Using union Democracy to Counter Opportunism and Compromise All throughout this period, however, the union was battling ills that have

97 Ripples and Rising TIdes 97 permeated the ranks of the leadership, and which was ultimately only defeated by the vigilance of its own members which in turn gave rise to a new set of leaders. One of its major weaknesses lay in the fact that no local elections were held throughout the 28 years of the union s existence, such that it only had one set of union leadership for the entire period. In 2006, management implemented a Management-Determined Separation Program (MDSP). Some of the union members called on the leaders to oppose the plan as this is to them, a form of union-busting, and tried to dissuade other workers from availing of this program. However, some of the union officials themselves availed of the program. In May 2009, management refused to grant a wage increase as provided for by their CBA on grounds of financial losses. The union staged protest actions on the insistence of members. Around 80-90% of the workers in one shift participated, but the union president and other members of the Executive Board where nowhere to be found. In August, there was a call from some of the members to hold a local election. The incumbent officers, however, instead called for an extension of their term until 2011, citing their achievements during their 28-year term. The members held a general assembly and approved the call for a local election. Later on, a petition-signing campaign for a term extension of the incumbent officers came up, but this was signed by less than half of the union members. Those who called for a local election also countered that this was a defiance of the democratic vote agreed upon during the assembly. Management issued a position agreeing to the term extension, but the federation to which the union was affiliated rejected the officers move. The local elections were finally held. An anonymous petition paper called for a boycott of the elections, but by 3pm in the afternoon, more than half of the union members had already voted. A new set of officers roundly defeated the incumbents. Thus, the union members, through their vigilance and adherence to the principle of union democracy had saved their organization from compromise and restored vitality in the union s leadership. Conclusion The NXP workers experience is a testament to the importance of vigilance, collective action, and the wise use of democratic processes. These ultimately were the instruments that helped the union meet the many challenges it faced. These will also be the union s instruments as it forges ahead. The new union officers foresee that the workers are yet to experience the harsher consequences of NXP s corporate restructuring. When that time comes, they say, they will hopefully be wellprepared to meet the challenges head on.

98 98 Organizing Experiences in Economic Zones In the meantime, they have set their sight on consolidating their ranks, drawing lessons from their weaknesses, and renewing efforts at building the workers understanding of the global economic crisis in order to raise their will to fight. In 2006 private equity funds spent over USD 725 billion buying out companies an amount equivalent to buying the national economy of the Netherlands, or the economies of Argentina, Poland and South Africa combined with billions of dollars to spare. These are generally conducted by private partnerships that involve three main actors: 1) investors, 2) private equity firms and 3) the companies they purchase, known as portfolio companies. KKR, one of the main companies that bought Philips semiconductors, is among the world s top five private equity buy-out firms along with Bain Capital (Bain), the Blackstone Group (Blackstone), the and TPG (formerly Texas Pacific Group) in terms of both size and influence. Private equity is a broad term that encompasses a range of strategies for investing in industrial and service companies whose common stock is not traded on public stock exchanges. In order to ensure the quick return of investments, private equities impose labor flexibility and contractualization, as well as workforce downsizing by shutting down plants and departments in the companies that they buy. Unlike publicly traded companies that are subject to federal securities laws and regulations, private equity buyout firms operate virtually free of oversight and public accountability, their profits and practices largely hidden from view.

99 Ripples and Rising TIdes 99 AURORA SPECIAL ECONOMIC ZONE: community opposition to the establishment of an ecozone The province of Aurora can be found on the eastern side of Luzon, along the Pacific Ocean. It is comprised by eight (8) towns, with Baler as the capital. Among the provinces surrounding Aurora are Quezon, Bulacan, Nueva Ecija, Nueva Vizcaya, Quirino and Isabela. Aurora is controlled by the Angaras, a known political dynasty in the country. This includes Senator Eduardo Angara; his sister, Bellaflor Angara-Castillo, provincial governor, and their brother, Arthur Angara, mayor of the town of Baler. The province is rich in natural resources. Aside from its aquatic resoruces, it is also rich in mineral resources because of its proximity to the Sierra Madre mountains. It is also one of few remaining provinces where 75% of its forests is still considered virgin, untouched by human hands (The Philippine Star,2010). Production of rice, corn, coconuts and fishing are the main sources of livelihood for the residents. In 2008, rice production is estimated to cover 11,280 hectares (Orejas,2008). In fact, Aurora also supplies rice to nearby provinces. Aurora is also home to indigenous peoples such as the Dumagats, Agtas and Igorots. Despite its natural wealth, however, Aurora remains as one of the 20 poorest provinces of the country. Setting up a Special Economic Zone The Special Economic Zone Act of 1995 (RA 7196) RA 7196 designated parts of Baler, Dinalungan and Casiguran including its waters, islets and nearby environment as areas for the establishment of ecozones. Two years after, or on December 10, 1997, Bella Angara, then congresswoman of Aurora, and Senator Edwardo Angara, respectively filed House Bill (HB) 5309 and Senate Bill (SB) 1978 proposing the estabishment of the Aurora Special Economic Zone. The two bills aimed at declaring the entire province as a special economic zone. Congress railroaded approval for the the proposed law but then President Fidel V. Ramos was forced to veto the approval due to opposition from the Department of Trade and Investment and the Department of Finance who believed

100 100 Organizing Experiences in Economic Zones The coastlines and forests of Aurora are at a risk due to the construction of the economic zone. that the country cannot afford more tax exemptions, and that the proposed zone would pave the way for the proliferation of smuggling in Aurora. The residents also opposed the proposed zone. The Multisectoral Action Group of Aurora (MSAG) and the local chapter of the Bagong Alyansang Makabayan (BAYAN) were among the leading organizations in the protest. While the two bills proposed by the Angaras did not push through, the succeeding President, Joseph Estrada signed Presidential Proclamation 233 in January 2000 converting 28,000 hectares of land, owned by Atty. Romeo Roxas of Green Circle Properties Corporation, into a special economic and tourism zone the Pacific Coast City Ecozone. According to an article published by the Philippine Center for Investigative Journalism or PCIJ in 2005, said land constitute the biggest privately-owned land in the country. On the other hand, Green Circle is one of only five companies in the province which was able to secure a Private Land Timber License (PLTC) which allowed the owner to undertake logging in private lands, forests, alienable and disposable land. The same article quotes Roxas as denying that he was carrying out loggind

101 Ripples and Rising TIdes 101 Ang Pamilya Angara The Angaras are among the richest and most powerful families in the province of Aurora. Currently, four members of the family occupy key seats in the province's local and the country's national government. First from the family to occupy a position in the government are the brothers Juan Angara who became Lieutenant Governor of Aurora in and Mayor of Baler in and ; and Jose Angara who became the province's representative in the First Assembly of the 10th Congress of the country in The current Senator, Edgardo Angara, the Mayor of Baler, Arthur Angara, and the province's Governor, Bellaflor Angara- Castillo are children of Juan Angara. Meanwhile, the current representative of the lone district of Aurora in the House of Representatives, Cong. Juan Edgardo Angara is a son of Senator Angara. According to his Statement of Assets and Liabilities (SALN), Sen. Angara is the tenth richest Senator with a total net worth of P70 Million. He was Senate President from Under the Estrada Regime, Angara was the Secretary of Agriculture from until he was appointed Executive Secretary by the President. However, he was able to hold this office for a mere 14 days after the successful overthrow of the Estrada government in Edsa Dos. The family has consistently been dragged in issues of illegal logging. Paulit-ulit na nadadawit ang pamilya Angara sa usapin ng iligal na pagtotroso. In 2004, Rogelio Rosal, then spokesperson of the New People's Army said the Angaras benifitted from nine logging companies in the province. Meanwhile, Fr. Edwin Aglipay said the family received contributions from loggers for the family's campaign funds during the elections of the said year. Another priest, Fr. Antonio Evangelio made the same accusation. All have been denied by the family (Diaz, 2004). According to former Department of Environment and Natural Resources Secretary Heherson Alvarez, while the family are not direct operators of illegal logging, they are patrons of illegal loggers. He added that Sen. Alvarez is a close friend of Romeo Roxas, the owner of Green Circle Properties and Resources Inc, a known big logger in the province (Cervantez, 2004).

102 102 Organizing Experiences in Economic Zones operations in his land, but that he was clearing his land. RA 9490 : Aurora Special Economic Zone Act In 2006, Cong. Juan Eduardo Angara re-filed HB 5309 as HB or the Aurora Special Economic Zone and Freeport Act. His brother, Sen. Edgardo Angara, simultaneously filed a counterpart bill, SB The two proposed laws would later be consolidated into one in a joint session of Congress. The bills were amended after the The Department of Finance and the Bureau of Customs reiterated their cocerns about smuggling that harms the local economy. Among the requisites for the establishment of an ecozone is an official endorsement by the provincial government to prove public support for the project. In a letter on January 27, 2007, Gov. Bellaflor Angara submitted a letter to the Provicinal Council of Aurora requesting the said body to endorse the project. In a special session on January 29, the Council expressed its approval through Sanggunian Panlalawigan (SP) Resolution No. 11. The resolution was signed by the Governor herself, and was quickly submitted to Senate and Congress, completing the requirements for the bill s adoption. The proposed bills (HB 5309) and SB 2603 were consolidated and approved on February 19-20, It was signed by then President Gloria Macapagal-Arroyo in June 2007 as RA 9490 or the Aurora Special Economic Zone Authority Act (ASEZA) o f According to advocates of ASEZA, the zone will solve the problem of poverty in the province by attracting ofreign investments that would create jobs and livelihood for the residents. RA 9490 purportedly aims to transform Aurora into a self-sustaining industrial, commercial, financial, investment and tourism/recreational center and suitable retirement/residential area. In the planned land conversion designed by well-known architect and real estate developer Felino Palafox, Jr. who also acted as chief architect for ASEZA, vast agricultural lands will be transformed into an industrial, institutional, residential and tourism area with its own seaport and airport facilities. The zone will cover 500 hectares of Barangays Esteves and Dibet and the town of Casiguran and may still include up to 2000 hectares of public land. It will be managed by a Board of Directors to be composed of one (1) administrator, the provincial governor, the congressional representative of the province, Casiguran Mayor and respresentatives of residents and foreign investors from each company and two (2) labor representatives. Capital stock is estimated to reach no less than P10 billion, 40% of which will come from the private sector and 60% from government. The ecozone will be autonomous from the local provincial government and in

103 Ripples and Rising TIdes 103 cases of conflicts, the decision of the zone authority will prevail. From ASEZA to APECO : Expansion of the Ecozone Two years after the adoption of RA 9490, and while construction of facilities for the zone was still ongoing, the Angaras already exhibited interest in expanding the zone s coverage. Congressman Angara filed HB 6213 while his father Senator Angara, together with Sen. Miriam Defensor Santiago, filed SB The two proposals were consolidated and approved by the legislature. It was signed by then President Gloria Macapagal-Arroyo into RA or the Aurora Pacific Economic Zone and Freeport Act (APECO) in April APECO is divided into two phases : Parcel I- comprised by 496 hectares from the original ASEZA and Parcel II comprised by 12,427 hectares covering the towns of San Ildefonso, Culat and Cozo. In sume, the ecozone would cover around 12,923 hectares. Parcel I will serve as a business center inclduing industrial, institutional and commercial centers. Parcel II will be devoted to eco-tourism. The following facilities will be set up in the zone : Agricultural industries such as coconut, wood, wine and food industries Seaport facilities such as warehousing, container terminals, seafood and meat processing; Facilities for light industries such as boatbuilding, electronics, shoes and other manufacturing industries; Financial commercial facilities for banks, indusrance firms, business establishments and condominiums; Commercial industrial districts that will house IT parks, electronic hubs, eateries, parlors and souvenirs shops. At present, a 1,300 meter airport is being constructed. A seaport with a Roll-On-Roll-Off facility is also being constructed through the expansion of the local pier at Barangay Dibacong, Casiguran. APECO has also opened an office for foreign investors. Satellite offices were also set up in Clark, Pampanga. Around P15 million was spent for the zone s perimeter fencing while P157 million was spent for the runway, a 4,800 sqm taxiway, terminal building, administration building, fire station and parking space. Funds came from the Department of Transportation and Communications. A total of P1 billion, on the other hand, has been alloted for the construction of a Furniture Village, which will be managed by the Industries Development Corporation. The project is touted to generate 6,700 jobs and an annual income of PhP3.1 billion. The ecozone authority and foreign investors have so far signed 10 Memoranda of Agreement : 1. Promised 100 scholarship grants of the UCPB-CIIF Foundation for children of coconut farmers in Aurora

104 104 Organizing Experiences in Economic Zones For the fisherfolk from Brgy. San Ildefonso, the APECO spells the loss of their livelihood. 2. Hiring of new graduates from various schools in Aurora by the Asiapro Multipurpose Cooperatives, a manpower agency 3. Setting up of value-adding linkages between local fishing porducts and the international market by PHILFOODEX, an organization in the food industry 4. Setting up of value-adding linkages between the local wood indsutry of Aurora and the internatinal market by IDC, a company that exports wood products 5. Expansion of the use of gyroplanes in Aurora by the Source Asia Business 6. Sale of products from Aurora by Fundacion Santiago 7. Invesments by Genius Billion Development Ltd. in wind power generation, buildings and trainings in Aurora 8. Facilitating the sale of local agricultural products in Aurora in the international market by the East-West Seed company 9. Distribution of equipment for the local tilapia industry by TGA Farms 10. Establishment of Ro-Ro facililties in Aurora by the NDC Maritime Leasing Corporation

105 Ripples and Rising TIdes 105 Storms in Auroroa Because of its geographic location, the province of Aurora has constantly been a victim of natural calamities. This is made worse by continuous illegal logging operations in the province that is seen as the cause of flash flooding which has taken the lives of many residents. In fact, the province has been threatened by many of the largest storms that has entered the Philippine area of responsibility. In 2004, almost 1,000 individuals died because of flash floods and landslides in the province after it was battered by storms Violeta and Winnie. In December 2005, ten barangays were flooded by knee-deep waters in the town of Casiguran. A year after, two died and 170,000 lost their homes because of flash flooding in the towns of Dingalan, Dipaculao and Baler. In July 2010, 111 familes were forced to evacuated because of flash flooding as a result of continuous downpour brought by storm Caloy. In the middle of 2011, the province was battered by storms Bebeng and Falcon which resulted in the displacement of hundreds of families in the province. The massive storms in the province, according to the residents, is one of the reasons why the construction of an economic zone is unfavorable, even for investors. Adverse Consequences For the residents, the construction of APECO has meant landgrabbing, and therefore the loss of their livelihood and displacement from their residences. It also threatens food security as lands to be converted are prime agricultural lands devoted to rice and coconuts. The freeport will cover the coasts of Aurora which is projected to displace hundreds of fisherfolk. According to Alejandro Barcel, former Barangay Captain of San Ildefonso, many fishermen are now being displaced by the fencing off of Aurora s coasts by APECO authorities. Even titled lots aren t safe. All documents are useless, such as Certificates of Land Transfers (CLTs), Emancipation Patents (EPs), Certificates of Land Ownership Awards (CLOA) and Certificates of Ancestral Domain (CADT) in the possession of indigenous tribes, according to a representative of the Panlalawigang Alyansa ng mga Magbubukid sa Aurora (PAMANA), a provincial peasant alliance. Elmer, a resident of sitio Reservation in Barangay Esteves, cites the case of 105 hectares of land which APECO has appropriated. The site, according to APECO representatives, will be used for the construction of the Aurora State

106 106 Organizing Experiences in Economic Zones college of Technology (ASCOT) which is part of the APECO project, citing a proclamation for such use of the site that was issued at the time of the American occupation of the counry in the early 1900s. Elmer further explained, the said site is part of forest lands which residents have been tilling since the 60 s. Tillers are able to harvest as much as 100 cavans of rice per hectare from the land grabbed by ASCOT. Income from the harvest is what they use to provide for their family s food and other basic needs. The land has also been declared a beneficiary of a water project by the National Irrigation Authority (NIA), which makes it ineligible for land conversion as provided for by the Comprehensive Agrarian Reform Program. Even the Department of Agrarian Reform (DAR) allegedly agrees to the distribution of the land to the tillers, according to residents who held dialogues with the DAR. At present, the DAR is only awaiting the opinion of the Department of Justice (DOJ) before finalizing its decision to distribute the land to the tillers. APECO is alo appropriating lands in Bgy. San Ildefonso which have long been tilled by the residents of the area. The land is under the Integrated Social Forestry Program of the Department of Natural Resources and Environment. The land is also ancestral domain to the indigenous Dumagat peoples,a nd therfore, based on the IPRA law, are owned by them at are protected by law against landgrabbing. In the meantime, the APECO administration does not offer any viable relocation for those who will be affected by the project. The 34 hectares promised to 480 families are agricultural lands with irrigation systems run by the National Irrigation Administration. It is also a riverine area and is thus, flood-prone. In Bgy. Dibet, the APECO project has caused the clearing of mangrove areas which are breeding grounds for fish. While the local government is railroading the zone s construction, it has not conducted consultations among the affected residents. According to PAMANA, even the town mayor of Casiguran was not priorly informed of the local provincial council resolution endorsing the project. A fact-finding mission led by the Kilusang Magbubukid ng Pilipinas (KMP), Alyansa ng mga Magbubukid sa Gitnang Luzon (AMGL) and PAMANA found out that APECO purchases the land from residents in the amount of P60,000 per hectare. Thus, the local government has, in effect, upheld the interest of foreign investors to the detriment of the peoples of Aurora. According to Barcel, they are now being called squatters on the very land they have grown up on and been tilling for decades.

107 Ripples and Rising TIdes 107 Anomalous Project According to Palafox, who was originally approached by Senator Angara himself to design the project, APECO reeks of anomalies in the use of public funds. He disclosed the information in a hearing conducted by the Senate in 2010 over budgetary allocations for the ecozone. (Geronimo, 2011) Palafox revealed that the Commision on Audit has not examined the Angaras use of public funds for the project. According to him, he was forced to revise his original design for the ecozone on flimsy reasons, until he had come to five different designs research. Instead of utilizing existing infrastructure to lessen costs, the local government insisted on constructing the zone in an area which necessitated the construction of new roads, thereby causing additional and unnecessary government expense. Palafox also stated that the province is prone to disasters. The quality of the land is unsuitable for ecozones because it is prone to liquification which may cause destruction to buildings and other heavy infrastructure. No background study, feasibility study, business planning study, engineering and hydrologic surveys, airport planning survey and seaport study were conducted, according to Palafox. Broad Alliance Against APECO A broad multisectoral alliance called the Task Force Against ASEZA currently exists opposing the project. The Task Force includes the clergy from the Infanta Prelature, Justice and Peace Action Group of Aurora, Bataris Formation Center and the Multisectoral Action Group. In late 2009, around 1000 residents of Aurora expressed their opposition by placing placards infront of the Aurora municipal hall. But on June 26, 2010, an anticommunist group fired upon and lobbed a grenade at a local church in Bianoan where Fr. Jose Francisco Talaban stayed. The priest has actively participated in the opposition campaign against the project. The perpetrators belonged to Aniban ng mga Ayaw sa Komunista, which is supported by the 48th Infantry Battalion (IB) of the Philippine Army. Other members of task Force ASEZA also experienced various forms of harrassment. Some towns, according to residents, have since been virtually under martial law. Aside from the 48th IB, the government has also deployed the 70th, 71st and 56th IB to the province since the start of the project. Officers of the 48th IB have reportedly admitted that they are in the province to protect the zone s construction. Instead of cowing the people into silence, however, popular support grew even stronger, with the Catholic Bishops Conference of the Philippines- National Secretariat for Social Action (CBCP- NASSA) issuing a statement condemning the attacks and attempted murder of the priest.

108 108 Organizing Experiences in Economic Zones On January 2011, residents and some local officials filed a complaint with the Department of Justice against the building of the ecozone, accompanied by the erstwhile architect of the ecozone himself, Felino Palafox, Jr. PAMANA likewise plans to file a case against Sen. Eduardo Angara, Rep. Sonny Angara, Gov. Bellaflor Angara- Castillo and officials of APECO due to the lack of public consultations which is in violation of the Local Government Code, the Comprehensive Agrarian Reform Program Extension and Reform, the Fisheries Code and the Indigenous Peoples Rights Act. The Angaras membership in the APECO Board of Directors was also clearly in conflict with their responsibilities as public officials. To date, the alliance has already expanded to include several churchbased organizations such as the National Council of Churches in the Philippines (NCCP), the Promotion of Church Peoples Response (PCPR), Discernment Groups of the Roman Catholic Church, Parish Pastoral Council- Nuestra Senora de Salvacion, the Kapatirang Simbahan para sa Bayan (Kasimbayan), Ecu Voice convenors, the Kalipunan ng Kristiyanong Kabataan sa Pilipinas (KKKP); HARIBON Foundation, an environmental group, and the human rights group, KARAPATAN. The alliance expects the fight against APECO to be more intense in the coming days. In the face of increasing brutalities by the local powers-that-be, the people of Aurora have only their strong unity and determined fight to rely on.

109 Ripples and Rising TIdes 109 HANJIN WORKERS: bonding for mutual aid Along the western coast of Zambales province in Luzon, thousands of modernday slaves labor at a frenzied pace, building ships touted to be among the largest in the world. They are men at the prime of their youth, coming from far-flung impoverished provinces of the country. They are willing to work for slave wages and with little protective gear, making the most out of their uncertain, and often short chance to earn, all the while enduring harsh treatment from their superiors who speak in a foreign tongue. This is along the coast of Subic Bay where Hanjin Heavy Industries and Construction-Philippines (HHIC-Phil), is located. Subic Bay was a former site of a major US naval facility called the US Naval Base Subic Bay, and is now the location of an industrial zone known as the Subic Bay Freeport Zone, managed by the Subic Bay Metropolitan Authority (SBMA). World's Fourth Largest Hanjin Heavy Industries and Construction-Philippines (HHIC-Phil), the world's fourth largest shipbuilding facility, is owned by South Korean's shipbuilding company Hanjin Heavy Industries and Construction Co. Ltd. (HHIC Co. Ltd.). The facility is located at Mt. Redondo Peninsula in Sitio Agusuhin, Barangay Cawag, Subic, Zambales. HHIC Co., Ltd. is a multinational company which originated from the Chosun Heavy Industries Co., Ltd. in 1937 and was incorporated into the Hanjin Group conglomerate in ( Hanjin s entry into the Philippines is part of the company s strategic manuever to catch up with its Korean rivals Hyundai Heavy Industries Co. and Daewoo Shipbuilding and Marine Engineering Corporation which have expanded operations to China and Vietnam. In February 2005, Hanjin and the Philippine government signed a lease agreement covering a 30-hectare land (covering four towns of Zambales) where Hanjin was to set up shipyard facilities. Hanjin then became the single biggest foreign investor to date in the Philippines with a $1.6 billion investment commitment for the next 10 years. The shipyard, scheduled to be finished by 2016, will be leased by Hanjin

110 110 Organizing Experiences in Economic Zones newscentralsite.com Once a Paradise Sitio Agusuhin in Barangay Cawag, Subic, Zambales, was home to some 300 families of farmers and fishermen before Hanjin Heavy Industries and Construction Co., Ltd started operation in Some of these families have already settled in the area as early as 1950, even before the US military forces stationed at Subic military base came to this coastal area. Through bayanihan or mutual support, this small community was able to build a school, health clinic, church and recreational facilities. Even without the help of the local government, the residents were able to improve their community which to them is a paradise. Their simple lives were ruffled when consultants of the Subic Bay Metropolitan Authority (SBMA) came to Sitio Agusuhin in 2005 to conduct ocular inspections. Through their organization-- Samahan ng Malaya at Nagkakaisang Residente ng Agusuhin (SAMANRA), the residents registered their protest against the anticipated eviction. Shortly after the visit, however, a rival organization was formed-- Agusuhin Neighborhood Association (ANA) which in November 2005 conducted community consultations and presented the Hanjin project. SBMA forces started to harass residents and threatened to bulldoze the houses of those who refused the payments they were offering. There was no clear relocation site for the entire community. Residents were only given P274,000 for their houses and trees. Residents claimed that those who failed to collect their cheque within seven days had 30% deducted from the amount. In the end, the residents were forced to move out of their community, uncertain that their lives will never be as it was in Sitio Agusuhin.

111 Ripples and Rising TIdes 111 Year Table 16. Total Workforce in Hanjin Construction of Port Construction of Ships 2006 wd wd wd wd June Peb 2009 nd nd Peb Source: Workers Alliance in Region III (WAR3) Workforc for 50 years, of which 8 years are free of corporate taxes. Hanjin Philippines builds liquefied natural gas (LNG) carriers and very large container carriers (VLCC) for different customers around the world. In July 2008, two years after Hanjin Philippines operated, it has built the MV Argolikos, a $70- million worth 41,000-ton container carrier. This was the first of the six ships worth $1.2 billion ordered by Dioryx Maritime, a Greek firm. (www. timawa.net) Hanjin Philippines reportedly has orders from French-based global container shipping company, Compagnie Maritime d'affrètement-compagnie Générale Maritime (CMA CGM), to build 4 container ships of 4,300 TEU (twenty foot equivalent units), with a combined worth of $250 million. Thirty other vessels including the world's wouldbe biggest ship worth $150 million are expected to be manufactured by Hanjin Philippines. ( President Gloria Macapagal-Arroyo, believed to be Hanjin's top endorser, could only applaud the Filipino workers whom she said are not only skilled but also hardworking and caring. However, she has not talked about workers issues such as their meager wages, hazardous workplaces and the inhuman treatment they receive from the foreign managers. ( Total Workforce For former President Arroyo, the entry of Hanjin in the Philippines fulfills her administration's objective of creating jobs for Filipinos as Hanjin envisioned to create 40,000 jobs by (www. subicbay.com) In 2008, a 349-hectare skills development and training center was established at the Subic Freeport. Through this training center, skills of prospective workers in the province and even from different provinces were upgraded to meet the demands of Hanjin Philippines. At the start, Hanjin Philippines employed no less than 7,000 workers to construct the two dry-docks for shipbuilding.

112 112 Organizing Experiences in Economic Zones With the first dry-dock finished, Hanjin Philippines commenced its ship-building operation. The number of workers grew throughout Hanjin s fiveyear existence. Hanjin Philippines now has a total workforce of 17,000 of which 2,000 workers are in the construction of the Hanjin shipyard while 15,000 are distributed among the different departments such as fabrication, cutting, assembly, blasting, painting and erection.. Almost 80% of Hanjin s laborers are men aged 18 to 50 years old, many of whom are also fishermen and farmers. The shipbuilding process goes through several stages. First, metals are fabricated to suit the forms required for the ship. Parts of the carrier ship are then asssembled in blocks, after which different types of blasting techniques are used to smoothen, shape and clean hard metal surface. Blasted ship blocks and hulls are then painted. Then the final stage before the ship is tested is the erection where ship blocks and hulls are connected. Pipes and equipment are also installed. The workers in Hanjin come from different provinces not only in Luzon but also from the Visayas and Mindanao. Most come from the province of Pangasinan, however, while Zambales, Tarlac and Pampanga also have a significant share in the workforce composition. In the provinces, the Technical Education and Skills Development Authority (TESDA) offer trainings to prospective workers. Qualified workers then undergo training at the Hanjin Training Center before they are employed by one of the 100 plus subcontractors that provide manpower to Hanjin. Pepe (not his real name), a painter from Zambales who has been under Hanjin s employ for almost a year now, directly applied at Hanjin's training center where he underwent a one-week training before being hired. He later saw in his contract that his employer was Green Beach, a Korean subcontractor of Hanjin Philippines. He found out later that most of Hanjin s workers are listed as employed, not by Hanjin but by its labor contractors. Dole Regional Director Nathaniel Lacambra has disclosed that a big number of Hanjin's subcontractors are not registered with DOLE, however. They found out that among the 101 firms, of which 17 are in shipbuilding and 84 are in construction, only 21 are registered with DOLE in (www. inquirer.net) Perilous Working Conditions Ship construction usually takes six (6) months. However, Hanjin management accelerated the pace of production to just three (3) months, requiring workers to work from 12 hours to 48 hours to meet the deadline. Thus, while the shipyard was still in construction, workers were already building ship in the unfinished

113 Ripples and Rising TIdes 113 Highlights of Accidents and Health Risks in Hanjin April Rotten pork with maggots as big as rice grains in free lunches were served to 300 workers of the assembly and painting department of Hanjin. This was only the first of several cases where workers were served rotten food. June 2007, HHIC shipyard and surrounding areas workers and residents were afflicted with malaria causing three deaths. According to the report released by the Department of Health Epidemiology Center on January 2008, workers living just outside Hanjin do not have decent shelter. Some workers have no choice but to sleep on the road in the construction area because they were not provided even with temporary barracks. The report stated that the contractors complied poorly with ensuring workers welfare and lacked a surveillance system which could have prevented the outbreak of the disease. Dec 24, The first death, which happened on Dec. 24, 2006, involved a worker who died after falling off a truck driven by a Korean engineer. January 18, At 11am, in drydock no. 5, Jeremias Adamos and Mario Laxamana died while Jonathan Martinez, Gilbert Suva and Donard Elija were injured by a traumatizing explosion caused by spills of a volatile liquid coming from the cleaning operation being done on a propeller. Adamos was scheduled to wed in March while Laxaman was set to fly to the Middle East in February January 23, year old Raldon del Rosario was crushed to death when an 800- kilo metal door fell on him. His co-worker, Camalio Bouchie, suffered serious injuries. Korean foremen barred their co-workers from helping the victims. January 25, 2009 A Korean supervisor, Choi Dond Baek, died instantly when he was run over by a forklift truck. February A service bus full of workers on their way to the workplace, fell off a cliff near the shipyard. At least 51 workers suffered different injuries. June 23, Arceo Malit, a 26-year old pipe welder and foreman, was attacked by a Korean foreman, Lee Cheon Sik. Malit suffered multiple lacerations and abrasions as a result of the attack. Greenbeach, subcontractor of HHIC Phils Inc suspended Lee for 30 days. dry-docks. The absence of safety nets and other gears made the workplace accident-prone, especially as shipbuilding and shipyard construction are simultaneously done in one area, with some working on scaffoldings and others working at the base. The use of toxic and flammable materials by those who work in confined and closed spaces, as well as those working on scaffoldings at the base and decks of the ships, expose workers to great health risks.

114 114 Organizing Experiences in Economic Zones inquirer.net According to Task Force Hanjin, a joint NGO-local government initiative to monitor workers' conditions, there have been more than 5,000 work-related injuries and 40 deaths from due to different industrial accidents at the Hanjin shipyard. However, Hanjin management admits to only 19 deaths, still a disastrous record considering it only recently started operations. According to Hanjin management, they have six (6) nurses and a full-time doctor at the shipyard. But workers complain that the doctor is only available from 7am to 5pm. Hanjin also has no emergency hospital, workers claimed. An investigation conducted by SBMA after a tragic explosion in 2008 revealed that Hanjin had inadequate safeguards and that the company committed seven (7) safety lapses that led to the explosion. According to the SBMA report, Hanjin lacked emergency response procedures, safety officers to oversee operations and proper inspection procedures to ensure soundness of equipment and materials. The report also noted that the degree of burns on the victims indicated that Hanjin had inadequate precautionary measures in handling hazardous materials and inadequate provision of appropriate fire extinguishers. It also stated that Hanjin lacked safety warning signs and had no daily safety meetings to help remind workers on the hazards of their operations. Investigationst also confirmed that no nurse attended to the

115 Ripples and Rising TIdes 115 Table 17. Average Wage and Deductions in Hanjin Item Average Monthly Pay Amount (PhP) 8, Withholding tax ( ) Death Insurance 600 Fortune Life Insurance 325 SSS 450 Philhealth 75 Pag-ibig 100 Total Deductions victims immediately after the accident. ( After the labor inspections were done at Hanjin Philippines in 2008, Lacambra disclosed the occupational safety and health violations committed by Hanjin and its subcontractors : late issuance and inappropriate use of personal protective equipment ; absence of protective gears, accredited safety practitioner, night shift health physician, a drug-free workplace policy; nonsubmission to the DOLE of annual accident and illness reports; absence of an organized Safety Committee; non-registration under Rule 1020 and Department Order no. 1802; no certificate of testing for newly acquired heavy equipment; poor housekeeping; lack of safety signages; and improperly covered ditches. The series of accidents in Hanjin prompted not only local officials but also members of the Senate and the Commission on Human Rights (CHR) to conduct investigations regarding Hanjin's compliance in terms of safety measures, environmental concerns and other labor issues. In a senate hearing in January 2009, officials from DOLE stated that they themselves had difficulty entering the shipyard to investigate conditions. According to Brenda Villafuerte, director of the Bureau of Working conditions of DOLE, she has been sending her requests for inspection to Hanjin Philippines since 2007, but her request was only heeded in March 2008 after the accident came to public attention. According to Lacambra there had been no labor inspection in Subic for nine years before they had managed to enter its premises in Even Task Force Hanjin was unable to conduct inspections. When Senator Jinggoy Estrada, chairperson of the Senate Committee investigating Hanjin, made an on-site inspection, he found out that workers were afraid to talk about the unsafe and unhealthy conditions in Hanjin. He also saw Korean supervisors waving at workers to stay away from the investigating team. While investigations were being held in Senate, the South Korean Ambassador Choi Joong Kyung wrote to Senate President Juan Ponce Enrile and threatened that the Philippines will face dire consequences if the investigations are pursued. The ambassador stated in his letter that investigations could lead to suspension or even termination of Hanjin's operations which could

116 116 Organizing Experiences in Economic Zones have deep and far-reaching effects within and beyond the boundaries of the Philippines. Labor groups such as Kilusang Mayo Uno sees this as a clear attempt to subvert Philippine sovereignty. Meanwhile, instead of helping the Senate resolve the issues confronted by workers in Hanjin Philippines and making sure the Korean company follows the country's labor code, Arroyo asked the legislators not to over-react to the accidents because this might adversely affect the country's economy. (Feb 28, 2009, Other Violations of Labor Standards Workers in Hanjin Philippines receive a minimum daily wage of Php 306, a few pesos higher than the region's declared minimum wage. But this is measly compared to industry standards and compared to the cost of living for a family of six which already reaches Php900. Workers only take home an overtime pay of Php47/hour. The mandatory 13th month pay is only given to workers who have complete attendance. Allowable aanual leave with pay is only for five (5) days. But the monthly transportation allowance of P500 is withheld by management once workers avail of this leave. However, workers are only made to sign forms but have never received any allowance. Pepe has filled up his form thrice but has not received his boarding allowance to this day. Workers do not receive holiday pay and their employment records are not shown to them. Workers also complain of the huge amounts of deduction every payday, leaving them with an amount hardly enough for their monthly expenses. According to Hanjin management, retirement pay for workers who have served for a minimum of 10 years will only amount to Php150,000. Hanjin has formed a cooperative to provide loans to workers up to Php10,000. But the company immediately deducts an interest payment of 15% from the released loan amount leaving workers with only Php8,500. Payments for the loan are deducted from their wages. Because of low pay and huge debts, workers are forced to pawn their automated teller machine (ATM) cards to individuals willing to lend them money so that they can feed their families. Should they fail to pay back their loans, the lenders will have full acess to the worker s regular wage as payment. Workers who are on the lookout for other high paying jobs cannot just resign because they have to pay for their loans in the cooperatives. In their contract, workers are supposed to receive boarding allowance.

117 Ripples and Rising TIdes 117 Hanjin in Mindanao Barely two years after HHIC started construction in Subic Bay, another shipyard project worth $2 billion with a project site size of hectares was on the way in Misamis Oriental in Mindanao island. A contract was signed on January 10, 2008 between HHIC South Korea and the Phividec Industrial Authority which manages a 3,000-hectare industrial estate. This shipyard project extends from the towns of Tagoloan to Villanueva. Hanjin Korea decided to build the facility in Misamis Oriental after the government granted an ecozone status to Phividec Industrial Estate, allowing Hanjin to import duty-free equipment and enjoy tax holidays. According to Hanjin General Manager Jeong Sup Shim, at least P4.6 billion per year in salaries and wages will be injected into the local economy. When completed in 2017, this shipyard which has a capacity of 830,000 tons per year will be the biggest in the country, even larger than the Hanjin shipyard in Subic. This is expected to employ about 40,000 workers. ( However, only after a few months of operation, HHIC suspended its operations in Misamis in April President Gloria Arroyo who was reportedly furious at the incident ordered an investigation of the alleged extortion attempt on Hanjin Heavy Industries Inc. ( Tagoloan Mayor Paulino Emano denied Hanjin's accusation that he attempted to extort money from Hanjin. He clarified that it was Hanjin that offered him a P400- million bribe when Hanjin saw Emano's reluctance to divert the Tagaloan river. The mayors claimed that they ordered the stoppage of Hanjin's bulldozing activities because Hanjin still had no environmental clearance certificate and a municipal building permit. The Department of Interior and Local Government announced later, however, the lifting of the work stoppage order. Environmental Degradation Reports that Hanjin Philippines has caused serious damage to the environment surfaced as early as There were reports that mountains were demolished and parts of the sea were reclaimed. But even the governor of Zambales who was supposed to conduct an on-site inspection to verify reports was not allowed to enter the company s premises. In April 2008, environmental groups registered their protest against Hanjin Philippines plan to construct a condominium project within the Subic forest reserve area. While SBMA Administrator Areza claimed that there are no grounds to stop the project, Kalikasan People's Network cited reasons for scrapping the project. The Subic Forest Reserve Area, one of the few remaining forest reserves in

118 118 Organizing Experiences in Economic Zones the country, will face serious ecological destruction if the project pushes through, according to Kalikasan. The area which has a high level of biodiversity, contains about 15 percent of the bird species in Luzon, 10,000 fruit bat colonies and 27 endemic vertebrate species. Disturbances to the Subic forest ecosystem will affect 157 hectares of mangrove areas (www. bulatlat.com) located in the 9,800 hectare forest reserve. It also houses 745 different plant species of which seven (7) are considered endangered or threatened. It also serves as home to the country's rarest hardwood trees and varieties of bats, bugs, snakes, deer, lizards and insects. ( There have been no consultations with members of the affected communities in Subic especially the Aetas, a forestdwelling indigenous group who have been living in the area since time immemorial. In the midst of the forest reserve, two $20 million condominiums comprised by 22 and 12 stories, respectively, are now housing Hanjin s 182 Korean staff members and their families. Bonding Together The frenzied pace of work combined with the repressive atmosphere makes organizing very difficult at Hanjin. The rate of turnover is likewise high, as most workers are usually employed only on a project basis, ( which usually lasts from six months to a year), and the unbearable working conditions compel most workers to search for other jobs. The Manggagawa para sa Kalayaan ng Bayan (Makabayan) first organized employees at the administrative level while construction of the shipyard was still going on in But Hanjin management relieved the office-based employees when it learned of these efforts. The second wave of organizing efforts came in June Makabayan was able to gather hundreds of workers signatures for a petition to form a union. However, while still at the early stage of organizing, Hanjin management retrenched almost 300 workers, including many of the signatories. Prior to this, the workers have been very active in meetings and educational discussions. The retrenchment move, however, discouraged them for fear of losing their jobs. The lack of a viable union or workers association at Hanjin has driven many to form their own ethnocentric groupings for mutual aid and self-help. It is not uncommon, for instance, to find workers from the same province cramped into a small, rented room or boarding house to save up on rent money. Members of the group support one another in case of sickness or other emergencies. It is these groupings that oganizers from War3 (Workers Alliance in Region III) are trying to reach. Organizers go to nearby communities where they hold small group discussions on trade union

119 Ripples and Rising TIdes 119 and national issues to raise the workers awareness. On March 2010, Hanjin Philippines filed a petition with DOLE for the cancellation of the registration of the Samahan ng mga Manggagawa sa Hanjin Shipyard (Samahan) which obtained their registration only in February Composed only of 120 members, the DOLE denied union status to Samahan and was instead granted an association status. According to their president Alfie Alipio, Samahan members experienced harassment from the management such as dismissal, suspension, reassignment to harder tasks and charges of theft when they were forming their organization. Meanwhile workers are forced to sign waivers stating that they are not members of Samahan. Outside the shipyard, protests have been mounted against Hanjin. In 2008, drivers and operators of 50 minibuses that provide services to Hanjin Philippines staged a strike to protest the company's decision to replace members of the Zambales Operators Drivers Cooperative Association (ZAMODCA) with Korean-backed bus firms. Thousands of Hanjin workers were prevented from reaching their work places causing disruption in the shipyard's operations. Hanjin management has not also formed any Labor Management Council (LMC) to address the workers plight. Workers simply forward their complaints to the Human Resources Department of Hanjin or do not complain at all for fear of losing their jobs. Even the Task Force Hanjin formed in 2006 was dissolved in 2009 by the local government. If there are any gains in the struggle of workers in Hanjin, these are the reduction in cases of accidents due to some improvements done by management after the public outcry over the series of deaths and accidents at the workplace. Public attention and mounting restlessness among the workers also forced Korean supervisors to treat the workers better. As of today, workers are quietly organizing themselves until such time that they already have enough strength to mount collective actions to be able to assert their labor rights.

120 120 Organizing Experiences in Economic Zones AMADO KADENA WORKERS UNION: sour taste of dole pineapples Boasting a yearly production of no less than 25 million cases of processed pineapples, Dole Philippines (Dolefil) claims to have the largest integrated pineapple plantation, cannery and packaging complex in the world. ( om) Almost all varieties of pineapples are produced by Dolefil. Dolefil s plantation is comprised by 24,000 hectares covering the provinces of South Cotabato, North Cotabato, Saranggani, Davao Del Norte, Bukidnon and Compostela Valley in Southern Mindanao. Around 22,000 has. or 90% is devoted to pineapple production alone. Its main plantations covering 12,000 hectares are located in Polomolok and Tupi in South Cotabato. Dolefil also produces bananas, asparagus and cut flowers. Dolefil's pineapple production is far greater than the combined output of Dole Foods subsidiaries in United States, Costa Rica, Honduras and Ecuador. Its exports reach the United States, North America, Europe, Asia, Australia, New Zealand and Middle East. Undeniably, Dolefil is the centerpiece of Dole Food Company, an Americanbased agricultural multinational corporation owned by Murdock Holding Amado Kadena-NAFLU-KMU

121 Ripples and Rising TIdes 121 From Hawaii to Philippines Founded in 1901 by James Dole, the Hawaiin Pineapple Company operated in the central plateau of Oahu, an island in Hawaii, immediately after the overthrow of Hawaii's last Queen Liliuokalani, and the rise of Sanford Dole as president of the Republic of Hawii when the US gained territory in The Hawaiin Pineapple Company was later acquired by Castle & Cooke. It was renamed in 1991 as Dole Food Company, Inc. After World War I, millions of dollars of pineapple plantations were destroyed when a plant disease and insect infestation outbreak occurred in Hawaii. Workers' unrest started to brew, prompting a US decision to transfer its operation elsewhere. The Philippines, at that time also a US colony, suited the needs of the company. A series of tests were done on Philippine soil by agriculture experts from which showed that the Mindanao region's soil would be best for growing pineapples. In 1963, Dole Foods started operations in the Philippines and established Dolefil. This was facilitated by government policies allowing US companies to own and operate businesses in the country even after the 1946 granting of Philippine independence by the US. Starting with a 500-hectare plantation, Dolefil's plantations have grown after having acquired 17,000 hectares of land from a formerly government-owned corporation. This caused the displacement of hundreds of indigenous peoples and peasant families in Mindanao. Dolefil also offered farm management contracts to landowners and farmers to be able to increase its production output. About 5,600 hectares of land are under farm management contracts. Company, the world's 23rd largest private conglomerate. Dole Food Company is the world's largest producer of fruits and vegetables which account for over 200 fresh, frozen and ready- to-eat products distributed in 90 countries. A total of 75,800 full-time and seasonal agricultural workers are hired for production (3 Wikipedia). Its annual revenue reaches US$6 billion. In 2008, it reached a total of US$ billion worth of revenues. (4 Wikipedia) Meanwhile, Dolefil is the single biggest contributor to Region XII's Gross Domestic Product (GDP). Its contribution reached 8 to 12 percent from In terms of total fruit and vegetable exports, Dolefil contributed 30 to 40 percent of the country's exports. For every hectare of Dolefil plantation, there are about 72,600 plants of pineapples which can produce up to three ratoons in 18 months with the aid of sprayed chemicals and fertilizers. Except for its roots, all parts of the pineapple are

122 122 Organizing Experiences in Economic Zones utilized to produce huge profits for the company. Pineapple crowns are sold to produce the elegant and expensive pinya cloth while pineapple peels are used for commercial cattle feeds. Total Workforce Dolefil has a total workforce of 22,000, only 6,000 of which are on regular status. Of the latter figure, 4,251 are rank and file workers. The rest are workers from labor cooperatives, fixed term/project based workers and belong to the reliever pool and are considered to be contractual workers. About 73 percent or 16,000 of the total workforce are contractual workers. Women workers comprise 60 percent of the total workforce. Of the total regular rank and file workers, 4039 are union members. These workers work in 2 shifts generally, except during periods of high density production (or high export demands) which require 3 shifts. There are about 8 major cooperatives that supply workers for Dolefil. A total of 8,000 or 40% of the total workforce are from these cooperatives. These cooperatives were established by former officials and management employees of the company. Workers apply to become a member of a cooperative. They are deployed to work side by side with regular workers and do the same jobs under the same Dole supervisors, but are paid less than the wages of the regular workers. They do not enjoy any other benefits from the company. They receive their work pay through the cooperative managers. Under Philippine labor laws, third parties who merely supply labor are considered illegitimate (labor-onlycontractors) while third parties who supply services are considered legitimate (job contractors). According to a labor cooperative member, they usually do the laborintensive and hazardous jobs. They are exposed to chemicals and are not provided free personal protective equipment by the company. In some departments, Dolefil imposes quota in daily productions. For labor cooperative workers, reaching the quota is needed to receive the minimum wage. Thus, workers need to work at an accelerated pace, which causes overfatigue and increases the chances of workplace accidents from the sharp tools they use in skinning the pineapples. Fixed term workers or project-based workers are contractuals directly hired by Dolefil. Fixed term contract lasts for 3 to 6 months while project-based contract usually lasts for 1 year. Fixed term and project-based workers are about 2,000 in number and comprise 10% of the company's total workforce. Relievers are workers hired from the thousands of individuals waiting to be hired by the company. They are hired by the day to do work in the industrial section and/or replace absent workers. The local union estimates that there are

123 Ripples and Rising TIdes 123 Low Pay, Too Many Deductions German, Ricardo and Arman are members of CAMPCO and are working as contractual workers in the canning department of DoleFil. German has been working under campco for the past nine years while Ricardo and Arman for six years. All have their own families. They recalled how much they have sacrificed just to enter CAMPCO as members, queing in long lines for days when they were applying for membership. German has literally slept in front of CAMPCO's office just to be the first in line the following morning. They were hired after eight months of waiting. They paid P100 each for membership fee, and were deployed to the canning section. They soon found out that their daily wage amounted to only P245, which is P65 below the region's minimum wage. During payday, they do not take home all of the wages due to them because the cooperative has to deduct P125 for healthcare, P100 for capital break-up (CBU), and average of P100 for savings and retirement and other deductions for PhilHealth, SSS and Pag-Ibig. Once, German had expected to take home P2,900 for two weeks of work but found out that only P700 was left in his wage after all the deductions. He complained to the manager and officials of the cooperative. His complaint was not entertained by the officials, however, who stated that complaints can only be made during the yearly general assembly. Ricardo applied for a loan when he was in dire need of money. According to the cooperative's rules, he can only borrow the amount equivalent to his total savings. Since he had already been qorking for quite a long time, he knew he had saved much. But during payday, he had to pay the high interest of his loan, which to begin with, was in fact, his savings to the cooperative. Arman, meanwhile was surprised when his deductions doubled during payday. The cooperative explained thay he has to pay double since during the last payday, he only had a small wage and was not able to pay for health care, savings and CBU. Meanwhile their cooperative's officials who are former employees of DoleFil get a monthly honorarium of P10,000 to P15,000. They get their honorarium none other than from the wages that the workers have worked hard for. The utilities of their cooperative's office and the salary of their office staff are also paid for by the workers. The three workers have realized how much cooperative workers are exploited by managers of cooperatives. They though that they own and run the cooperatives but their experiences have shown that this not truly the case. They only have one wish, and that is to become regular workers whose conditions are better than that of cooperative workers.

124 124 Organizing Experiences in Economic Zones Continuing contractualization Labor flexibization was first implemented in Dolefil in This has reduced the number of the regular workforce to 5,000 from 8,000 while correspondingly increasing the number of temporary emplotees from zero to more than 15,000 by At first, management eliminated a bif number of regular workers. The company offered a 4-day special voluntary retirement package which was availed by almost 4,000 workers. It was onlun in 1991 that the management stopped this practice due to protests from the union. The company utilizes bothe external and internal flexibization schemes. External forms include direct-hiring of workers without security of tenure for core production such as casuals, trainees, parttimers, adn relievers, while outsourcing labor from numerous labor and grower cooperatives. Internal forms include flexible work hours, multi-tasking, work sharing, team work and flexible wages. Dolefil has implemented contractualization, contract growership and labor outsourcing as flexible labor schemes. Contractual workers in 1985 was 20% of the total workforce. By 2001, contractual workers reached 79% of the total workforce. (EILER). Labor contractualization increases profits tremendously by intensifying the amount of unpaid labor that the company extracts from contractual workers. The company forces contractual workers to perform labor that is more intensive by imposing production production quotas - popularly called "pakyawan" - which are way above the average capacity of a common worker to perform in eight hours. The government even bestowed dubious legality to this oppresive scheme by issuing "Piece Rate Determination Order No. XII-03 for DOLE Philippines Inc.," that defined the high volume of work and its corresponding trifling amount of wage that the company and its per "cooperatives" can impose on their contractual workers. (EILER) about 1,000 relievers daily working for the company. Aside from the labor cooperative members, fixed termers, project based workers and relievers, Dolefil also benefit from the workers hired by landowners contracted by the company to produce part of its production requirements. A total of 5,200 hectares are covered by contract growing. There are about 2,600 workers hired by landowners or contract growers. One (1) worker usually works on two (2) hectares of land. Workers hired by contract growers do quota work and receive an average daily wage of P40, far lower than the wages received by agricultural workers in Dolefil plantations. Contract grower workers comprise 13 percent of the total workforce.

125 Ripples and Rising TIdes 125 Working Conditions Wages for regular workers is a little higher (at Php310 per day) than the minimum standard set by the Regional Wage Board. Through the workers consistent struggle, regular workers enjoy benefits such as a paid vacation leave of 26 days per year and an annual 20- day sick leave. Regular workers also have a monthly rice subsidy of Php400 and receive a 13- month pay together with a productivity bonus. Around 60 days after, workers receive a bottom-line bonus which amounts to as much as Php20,000 per year. Regular workers also receive hospitalization and social security system benefits. They can also apply for housing and loan programs. Workers also receive yearly family education allowance for their children and maternity assistance. While regular workers enjoy these benefits won through CBA negotiations, contractual workers have to strive hard to be able to feed their families. They have to reach their quota to receive the minimum wage. Other contractual workers are given a substandard minimum wage of Php245. On the other hand, an average of P500 (approx. US$ 10) is deducted from the already meager wages of Labor Cooperative members every payday. The deduction becomes higher when workers have loans to pay. Workers handling chemicals usually suffer from skin, heart and lung diseases. Osang has been working for Tibud Cooperative for nine years aready. She has been a piece-rate worker who only gets P0.22 for every pineapple plant she works on. She works with a "gang," a team of about eight workers, who have to fill-up for trucks with 16,000 plants or seedlings in a week. Each of them would then receive a daily pay of P440 for a week. After a week's work, she and her gang were able to fill in 10,000 seedlings in the truck. However, when payday came, they found out that only 1,000 seedlings were paid. They complained about this to their manager but were only shrugged off. They also have to pay for their safety equipment such as gloves and masks. The union secretary exposed the odorous waste basin of Dolefil which does not only harm the workers health but also the nearby communities. This issue was attended to by Dolefil management but the worker was eventually dismissed by the company from work. Early Organizing Experiences The first attempt at organizing in Dolefil was by the Associated Labor Union (ALU). They organized the monthly-paid employees of Dolefil and established the Dole Employees Union. ALU believed that first organizing the supervisors and other management level employees would facilitate the organizing of the whole workforce since the supervisors are influential among the workers. This wasn't the case, however.

126 126 Organizing Experiences in Economic Zones Hermie started working at DOLEFIL in He actively worked for her co-workers rights and welfare since the beginning. When a supervisor abuses or chides a worker, Hermie intervenes and defends the worker. Because of his efforts, his supervisor transferred him to more difficult work. In August 2006, Hermie was dismissed from work on charges that he was sabotaging the company s operations. He was accused of urging his co-workers not to swipe their ID s during lunch breaks. In the past, agricultural workers of DOLEFIL were required by the company to swipe their ID cards only when they report for, or leave, work and not during lunch breaks. This was due to the fact that there were only 1000 machines for the workers, which then numbered by the thousands. Those who swipe their cards last due to the long queues at the swiping machines experienced pay cuts as they unavoidably came late for the afternoon work. Thus, workers refused to swipe their ID cards during lunch breaks. Management used this against Hermie since he was an active union officer. Since he lost his job, Hermie has found it difficult to sustain his family. He became deeply indebted. His children lost their scholarship, and thus were forced to stop schooling. After four years, his case remained pending with the fifth division of the National Labor Relations Commission (NLRC). The General Santos Federation (GESAFED) started organizing the workers in the Engineering Department in GESAFED campaigned for a wage increase and payment of standby time, the time workers usually do not have work to do in their production line. They staged a picket protest, but the campaign was clipped short by a return-to-work order issued by the then Ministry of Labor. The first certification elections were held in Three unions participated GESAFED, ALU, and the Philippine Association of this became a strategic factory for organizing for many labor groups. Soon other labor groups were formed in Dolefil such as the Philippine Association of Federated Labor Unions (PAFLU). Since none of the three got the majority vote, a run-off elections was held between GESAFED and PAFLU. The two unions however chose to simply divide the union dues. GESAFED represented the agricultural workers while PAFLU represented the industrial workers of the company. In 1970, the number of workers at DOLEFIL reached 8,000. It became a strategic factory for organizing by many labor groups. The CE held in was participated in by several unions

127 Ripples and Rising TIdes 127 GESAFED, PAFLU, ALU and new ones like DPEA, DPEA, Saranggani Marine General Workers Union (SAMAGEWU), Polomolok Labor Union (PLU), Dole Employee Labor Union (DELU), and the Saranggani Federation of Labor (SAFELA). DPEA won in the said election but ALU and PLU protested. Due to the pending cases, no election was held from By 1974, another certification election was held where DPEA won. DPEA was able to negotiate a small wage increase. They likewise successfully demanded for the abolition of the company s practice of rain out for agricultural workers where workers are not paid when work is halted by the rain. They were also able to demand free safety devices and equipment for workers. In 1978, PLU won the certification election and was able to demand transportation allowance in the form of coupons for workers in the industrial department. Workers still enjoy this benefit up to the present. The workers' demands were however not heard from when ALU filed a protest against DPEA which won in the 1980 certification election. From 1963 to 1980, systematic and no consistent workers' education and trainings were organized by the union. During negotiations, only leaders of the union who won the certification elections participated. The workers therefore had the tendency to be dependent on their leaders. There may have been gains for workers, but according to a worker who has witnessed and joined the different campaigns led by different labor groups, the workers will have more to fight for and gain if the members, and not only their leaders, join the negotiations and conduct collective actions. Raising Workers' Consciousness and Unity IN 1980, the Polomolok Catholic parish priests started organizing workers through education and training programs. The church established a labor apostolate, which served as a labor center which took up the workers plight and guided them in their efforts. The labor apostolate then formed the Alyansa ng mga Mamumuo (AMADO KADENA), an organization that gathered workers and conducted education work. At the same time, organizers of the National Federation of Labor (NFL) started organizing in DOLEFIL and formed PAMAO. In a certification election in the same year, PAMAO-NFL joined forces with Amado Kadena (AK) and won over other seven labor groups. However, ALU protested. Knowing that no negotiation would take place if the issue is not resolved, the workers who supported PAMAO-NFL held mass actions. More than 5,000 workers participated in the mass actions in the form of pickets. The management was forced to recognize PAMAO-NFL and started to open negotiations ignoring ALU's protest.

128 128 Organizing Experiences in Economic Zones The workers, under PAMAO-NFL leadership, scored these victories: 10% wage increase (compared to previous increases of only centavos) Reinstatement of 2 terminated workers from the agricultural division Reinstatement of 27 terminated workers in the cobox in Calumpang through a boycott of overtime work Free meals for workers working overtime through a dialogue with management conducted by leaders from the preparation and processing department Release of three workers detained by the 31st Infantry Batallion of the Philippine army by pressuring the management through work stoppage in the preparation and processing departments Support for the strike of workers in Stanfilco, an affiliate company of Dolefil and for the farm workers in Salkak Maligo, Polomolok It was also during this time that workers were awakened to a militant and systematic way of organizing. Workers have realized not only their rights as workers but also their role in the society According to Boy, a former union leader, the workers became actively involved in discussions about their working conditions. These discussions gave them hope for their struggles. They actively encouraged other workers to join the study groups. Workers have also helped in organizing community groups in Polomolok where barangays are generally working class communities Conflict of Ideas The workers struggle was sustained until 1988 when differences in ideas started to divide the leaders of PAMAO- NFL and AK. The differences started with the issue of disaffiliation from the Kilusang Mayo Uno which leaders of NFL demanded. Local union officials, however, disagreed. Other contentious issues arose with the election of the union president as vice-mayor of the town in 1986 and president of the Board of Directors of the workers cooperative. He refused to give up any of his positions. In 1990, AK decided to apply for a separate registration. In 1991, AK won majority of positions in the certification election. NFL remained affiliated with KMU. In 1994, local elections were held where AK won. They decided to resign later, however, upon learning that NFL officials were planning to impeach them for refusing to disaffiliate from KMU. In 1996, AK lost in the elections. Nevertheless, AK continued with its education program, raising its membership to 1,300 by The workers realized which union really gave importance to their interests. At this time, a former union president fell ill and needed to be transferred to better hospital facilities in Metro

129 Ripples and Rising TIdes 129 Manila. However, the hospital demanded a Php100,000 down payment for admission. Management was not inclined to provide assistance despite a picket staged by 300 workers in front of the Human Resource Office. AK leaders then solicited signatures of workers willing to give Php1000 from their salary to raise the needed amount. Within just 2 hours, 1200 workers signed to help their fellow worker. Leaders took this to the management who was embarrassed by the show of unity of the workers. Management later decided to provide the medical assistance without deducting the amount from the workers wages. AK gained the respect of both management and workers. Recovering Workers Confidence AK, which later affiliated with NAFLU-KMU, won the 2001 certification election. Protests were filed by ALU and NFL. The workers, however, showed their support for AK. More than 3500 workers came out and staged a picket. The following day, the management immediately called for the start of CBA negotiations. The workers wore ribbons and t-shirts which expressed their demands that including abolition of the lunchtime swiping requirement. The workers succeeded and won a monthly rice subsidy of 30 kilos, a wage increase of more than 10% and company recognition for fulltime union officers. They also succeeded in reinstating dismissed workers. Fight against Contractualization In 2005, Amado Kadena successfully campaigned for the regularization of about 1600 contractual workers in This accounts for about 10% of the total contractual workers in Dolefil. Many of these workers have worked for Dolefil for 10 years. This was the result of a painstaking study that AK leaders conducted from March They would daily get the number of contractual workers working in the day and night shifts in four departments (preparation, cookroom/processing, tfc, pcfp) of the industrial section of Dolefil. Data showed that the average number of contractual workers needed daily is Leaders brought this issue to the negotiations in Management officials argued that these workers were just relievers who have to replace absent regular workers. But AK s records showed that only 50 to 100 regular workers are usually absent on any single day. With sufficient data, union leaders were able to justify that these contractual workers are actually part of core manpower in Dolefil and demanded that they be regularized immediately. Management was compelled to accede to the workers demand. Efforts to organize contractual workers were also done by AK. Leaders organized meetings of contractual workers and conducted education sessions. Soon enough, leaders were able to form groups and build contacts in the different labor cooperatives.

130 130 Organizing Experiences in Economic Zones Amado Kadena-NAFLU-KMU the local protest actions but those which fought against corruption in national government and those that called for justice and social change. Attacks on the Union In 2005, management began to pressure union officers into disaffiliating from NAFLU-KMU. The union built on the success of this fight against contractualization to strengthen its organization. From , workers education continued with an average of workers joining discussion groups. Monthly meetings of board members of the union were conducted. There were also regular meetings for the 21 department level organizations and 400 shop stewards. Department level organizations are composed of officers similar to the structure of the union, which helps the union implement plans, gather ideas from workers and provide immediate support and help for workers in need. The union also had functioning committees for education, organizing, health, women, finance, alliance work and campaigns which help the union officers in their different responsibilities. With a systematic union organization, active members reached 85% of the total membership. Participants in mobilizations outside the company reached Workers joined not only In 2006, workers again showed their solid support for AK in the certification elections, despite management s attempts to bribe workers by distributing t-shirts and payment for not voting AK. However, the new management of Dolefil, which was more adversarial than the former was not ready to negotiate with AK. The Labor Code of the Philippines states that management has to implement the previous CBA in the absence of a new agreement. However, the new management has been violating provisions of the previous CBA and continuously pressured union officers. Two officers of the union were terminated for being absent without permission. They were the fulltime union officers recognized in the 2001 CBA negotiations. This was management s first move in order to sow fear among the workers. Management began questioning all union activities. Management started not to honor union leaves, making education sessions and meetings of workers more

131 Ripples and Rising TIdes 131 difficult. The management also filed various cases against the union president. In 2006, management officials organized a demonstration against the union, mobilizing labor contractors and growers cooperatives. Management also labeled the union as communist terrorists. Elements of the military conducted surveillance of union activities and movements by union leaders. They also organized house-to-house campaigns demonizing the union and its leaders in nearby communities. The union filed a complaint with the Commission on Human Rights but military officials asserted that they have jurisdiction over terrorism and insurgency, which they claim the union leaders are guilty of. The union president also claimed to have knowledge of management s plans to abduct him. He learned this from an operative that management was supposed to hire who eventually backed out of the operation. Other active union members were illegally terminated from work on fabricated charges. One case involved the planting of knives in the lockers of about 20 active union members from the preparation department and charging them with theft. CBA negotiations failed in 2006 and the workers planned to stage a strike but had to withdraw upon learning that Department of Labor and Employment (DOLE) was issuing Assumption of Jurisdiction and return-to-work orders on the day of the strike. The labor Secretary then brokered a compromise for the two parties which demanded the Dolefil management to grant the workers the following: wage increase of not more than 6%, increase in the monthly rice subsidy to Php400 from the previous amount of Php390. But management s continued with its schemes. While recognizing AK as the workers sole bargaining unit, it also supported the setting up of another union, by bribing some workers. The company-sponsored union then challenged AK and filed cases against AK officers. As early as 2007, the management has been recruiting workers to UR- Dole. At first, URDole virtually acted as mouthpiece of management by staging campaigns for the encashment of rice subsidies and lowering union dues. URDole also sent workers to seminars conducted by elements of the military where AK leaders were branded communists and should therefore not be trusted by the workers. Workers were paid three-days worth of salary just to attend the seminars. Workers who refuse to attend these seminars were blacklisted. In May 2009, workers voted on the issue of encashment of rice subsidies. With the help of management, UR- DOLE won in the referendum. While

132 132 Organizing Experiences in Economic Zones DOLE ruled that AK oversee the cash distribution, management forwarded the checks to UR-DOLE. Beginning January 2010, management likewise forwarded union dues to UR- DOLE instead of AK. In February 13, 2010, members of UR- Dole conducted an assembly purportedly to discuss the rice subsidy issue. But the meeting was actually used to impeach the union officers of AK and to elect a new set of union officers under UR-Dole. AK filed a case stating that the assembly was patently illegal, has not followed due process and is a clear violation by UR-Dole of union rules on impeachment and election of officers. The DOLE consequently released a status quo order, i.e., that management should recognize and deal with AK while the labor dispute is being settled. But management refused to recognize AK. Instead of filing an interpleader case, management pressured the DOLE into recognizing UR-Dole. This was a clear act of interference by management in union affairs which violates labor laws. Union meetings have become irregular since then. Department-level organizations have also since become inactive due to restrictions imposed by management on the workers movements. Management filed several cases against the union leaders which prevented them from effectively performing their functions. Due to the various management attacks on their union, active members has dropped to only 25% of the total regular workforce. Union officials realized their weakness in propaganda as compared with the propaganda done by management. With a few active union members left, leaders are continuing the fight against the management's schemes of union busting. They are renewing the education drives among the workers, in an effort to raise the workers confidence and militance in opposing management attacks against their right to free association. It is clear in the experience of AK how management used divide and rule tactics in order to weaken the resolve of the workers to fight. Amado Kadena leaders have not totally lost hope, knowing that they are on the right side and are genuinely fighting for workers rights. With repressive conditions prevailing inside the company, they have shifted their work to the communities where they hold discussions and education sessions among workers. Non-Conformity with SA 8000 At present, DOLEFIL risks losing its Social Accountability (SA) certification because of the company s non-conformity with SA requirements on freedom of association and collective bargaining rights of workers. This was revealed in the recent audit report of the Societe Generalle de Surveillance (SGS) from March 23-27, 2010.

133 Ripples and Rising TIdes 133 SA8000 is an internationally-accepted set of social standards developed by SA International (SAI) to measure the performance and responsibility of multinational companies. SA8000 is based on the International Labour Organization (ILO) and United Nations Convention on human rights. According to the International Labor Rights Forum (ILRF), an international non-government organization based in Washington, Dolefil management has violated the workers' rights to free association. SGS has issued Corrective Action Requests (CARs), giving Dolefil management 90 days to respond. Otherwise, the company's SA8000 certification will be revoked, exposing DOLEFIL as a human rights violator, an image that will adversely affect DOLEFIL S international standing.

134 134 Organizing Experiences in Economic Zones MACTAN EXPORT PROCESSING ZONE: forging alliances, community organizing Cebu is strategically located in the Visayas, and serves as a gateway for Central and Southern Philippines. Its ideal location has made it a center for foreign direct investments in the Visayas and serves as a base to over 80% of the inter-island shipping capacity in the country. It boasts of having more air and sea linkages than the country s capital, Manila. It has a sheltered deepwater port and an international airport, which provides easy access for the import and export of goods. To date, there are a total of 25 operating economic zones in the region, the biggest of which are the seven (7) manufacturing ecozones the PEZAoperated Mactan Export Processing Zone (MEPZ) I, and the privately operated MEPZ II, Cebu Light Industrial Park, New Cebu Township, West Cebu Industrial Park, Cebu South Road Properties (operated by the local City Government) and the MRI Ecozone which serve a total of 246 firms and employ over 100,000 workers. MEPZ II is reputed to be the second largest export processing zone in terms of number of locators, next to the Cavite Export Processing Zone (CEPZ). In the first half of 2009, these ecozones have exported $1,777,921,000 and imported $1,535,580,000 worth of goods. These ecozones hosts some of the world s biggest corporations such as TMX, which is engaged in watch assembly, Lexmark, which manufactures inkjets for laser printers, and Fairchild Semi-Conductors Philippines. Workers conditions More than location however, a very cheap and non-unionized labor force serves as the primary magnets for foreign capital. These zones take advantage of the high poverty incidence in neighboring regions in the Philippines, with some of its workers coming from as far as Mindanao Table 18. Summary of SEZs in Cebu Classification of EPZ Manufacturing 7 Agro-Industrial 0 IT 17 Tourism 11 Medical 0 TOTAL 25 Source: PEZA, 2010 Number

135 Ripples and Rising TIdes 135 Table 19. Number of Manufacturing Companies in Cebu EPZ MEPZ I 146 MEPZ II 50 Cebu Light Industrial Park 22 New Cebu Township 7 West Cebu Industrial Park 3 MRI Ecozone 17 Cebu South Road Properties 1 Kabuuan 246 Source: PEZA, 2010 Bilang where employment opportunities are rare. The Regional Wage Board of Cebu has pegged the minimum wage at P267, a far cry from the P725 Daily Cost of Living, according to the National Wage and Productivity Commission (NWPC). Many of the companies inside these ecozones employ a predominantly women workforce. For instance, 75% of the workforce at MEPZ I are women. As in other economic zones, the hiring of contractual workers is common, whether direct-hired or through agency. There are even cases of open contracts or those that last for ten months to one year. As is common to export-oriented companies, production is highly dependent on market demand which also determines the size of the workforce. Forced overtime that sometimes even extends to three days uninterrupted work is common during peak periods. Forced leaves, compressed workweeks, temporary shutdowns or lay-offs are common during lean periods. Workers commonly reside in boarding houses in barrios (villages) surrounding these ecozones. In communities surrounding MEPZ I, rental varies according to the type of housing and facilities available. Average number of workers per boarding house is anywhere between 10 and18. Rent may range from 300 to1,500 per month, exclusive of payments for water, electricity and use of household appliances. This sharply contrasts with the dirt cheap rentals that locators inside the ecozones enjoy. Locators paid a measly monthly rental of only about $ per square meter in Companies operating within MEPZ are organized into the MEPZCEM (Mactan Export Processing Zone-Chamber of Exporters and Manufacturers). There is also the MEPZ-HRA (MEPZ Human Resource Association), composed of human resource managers from the different locators inside the ecozone, and which has been very vocal in supporting company moves against workers demands. In August 2007, for instance, MEPZCEM and MEPZ HRA filed a joint resolution with the Regional Tripartite Wages and Productivity Board asking the Board to deny two labor groups petition

136 136 Organizing Experiences in Economic Zones for a wage increase. The management groups cited economic difficulties. Yet, a month prior to this, the same associations held a sports fest aimed at uniting exporters and manufacturers at MEPZ, celebrating the ceremony with a lavish display of color and sportsmanship. (Aboitiz Land, 2007) While industrialists and human resource managers enjoy such perks unhampered, conditions inside the zones are not so favorable to the setting up of workers organizations, much less workers unions. There have been many attempts since the early 80 s to establish workers unions inside these ecozones, but none have lasted as company managements were quick to bust such efforts even as workers rights are supposedly guaranteed by the Philippine labor Code. This, management is able to do with the help of PEZA Security forces, the local police and elements of the Armed Forces of the Philippines from the two military camps in Mactan Island the Mactan Benito Ebuen Air Base and Naval Forces Central that operates in the Visayas and Mindanao. Early Attempts at Organizing Workers organizing efforts started way back in the early 80 s, only a year or two after the establishment of MEPZ I in This could be attributed to the fact that Cebu has had a long history of struggles against these economic zones when entire urban poor communities were demolished to pave the way for the construction of these ecozones in various parts of the island. At MEPZ I, the Young Christian Workers, a church-backed workers organization that was very active in the 80 s in several parts of the country, started organizing work at Fairchild, TMX and Mactan Apparel. In 1985, NAMALAP (United Workers of Lapu-lapu) was established. The first strike inside the zone occurred. But organizing took a downturn, and it was only in 2000 when union organizing efforts were revived by different labor federations at Fairchild, Timex, Maitland, Cebu Mitsumi and Fedder Apparels and Mactan Apparel. These efforts were always cut short, however, when worker leaders were illegally dismissed by company management. Such was the case at Mactan Apparel. The workers organized discussionmeetings in nearby communities. Management however, soon learned of these activities and launched a retrenchment program that included all who attended the activities. The workers staged a picket but were dispersed by company security forces. In 2002, the LAWA (Lapu-lapu Workers Alliance) was established as a mutual aid organization of contractual workers. It did not last long, however, as the organizers attention was soon diverted to the demolition campaigns being launched by government against urban poor communities.

137 Ripples and Rising TIdes 137 CBBRC 2010 Workers from PANWO who were illegally dsimissed from work because of forming an organization. As a means of circumventing the prevailing, albeit unwritten, antiunion policy prevalent inside the zones - workers have found other ways of bonding together in order to fight for their interests. These centers on reaching and organizing workers in the various communities surrounding the ecozones. These include communitybased contractual workers councils or associations. It also includes the setting up of U4WR or Unity for Workers Rights, a city-wide alliance of workers. The PanPhil Workers Organization (PANWO): A nonunion workers organization PanPhil Sportwear Incorporated is a garments factory owned by Larry Chin from Taiwan. Its factory is located at MEPZ 2 and employs 293 workers. Around 252 of these workers are on regular status while the rest are categorized by the company as on call contractual workers. The company manufactures shorts, jackets and jogging pants for international brands Tommy Hilfiger, Callway, Missy and Alex Canon, among others, which are exported to Europe and the USA.

138 138 Organizing Experiences in Economic Zones The company started operations on January 6, 1999, with workers coming from Jo & Larry Garments, which also belonged to Larry Chin. The latter company closed shop after workers staged a picket rally in protest of the company s refusal to pay its workers the minimum wage as set by the regional wage board of Cebu. Company shutdowns, retrenchment, illegal and unjustified suspension and forced overtime work are the primary issues that the workers of PanPhil contend with. The shutdowns began as early as 2001, two years after the company started operations. Until 2005, it was no longer uncommon for management to declare a shutdown, which usually lasted for three days. Workers are usually only given one day s notice for the shutdown, and are left with but promises of re-hiring once the company resumes operations. Workers estimate that these shutdowns occur at least thrice a year. The company cites the lack of raw materials to be used for production as the primary reason. Beginning 2006 until 2008, the threeday shutdowns began to last a week. Moreover, 16 regular employees were retrenched in September 2008, weeks before the global financial crisis reached its peak. On February 8, 2009, the company declared a two-month shutdown which lasted until April 3, This alarmed the workers since it meant that they would not receive their wages for a month. The company had earlier promised to pay the workers for one (1) month and provide them with rice subsidy. The workers were then asked to sign a piece of paper. According to company representatives, they will be notified by mail when the company resumes operations. The workers even paid P21 each for postage. Workers found out later that their signatures were used by PanPhil as proof to the Department of Labor and Industrial Relations that the workers agreed to the shutdown. In February 23, 2009, six workers from PanPhil filed a complaint with PEZA, asking them for details of the shutdowns and if the latter has the authority to reduce the length of the shutdowns. They insisted that they should at least receive a subsidy for the months that they do not have work. The PEZA Administration answered that the shutdowns and the resumption of operations was company prerogative and that subsidies were privileges only the management has the right to decide. Company management responded by giving the workers their due wage along with a 15-kilo rice subsidy, except for the six workers who filed the complaint. The DOLE is yet to decide on the case. Pan Phil resumed operations. The company imposed forced overtime among its workers beginning May 11 until June 29, The workers had to work for an additional three hours besides the regular eight. Permission to be exempt from overtime was never given

139 Ripples and Rising TIdes 139 to the workers and those who disobeyed were suspended for as many as five days. After over a month of forced overtime work, the workers were stunned when management suddenly announced another weeklong shutdown from July 1-8, Management reasoned out that there was a shortage of orders from the brands they supplied to. The workers believed it was unfounded, considering that the company was imposing forced overtime only a few days before. Based on interviews with the workers, there were at least five instances of forced shutdowns of varying lengths for The company took advantage of DOLE Advisory #2 which allows companies to impose cost-reduction schemes. But the worst was yet to come for the workers. On 2010, PanPhil management announced that, beginning January 4 until March 30, workers can only work for three days a week as a result of reduced orders. Management cited the global financial crisis as the reason. On February 2, 2010, 31 workers received a retrenchment notice, effective February 28. According to the notice, the company had to reduce its workforce to prevent bankruptcy. The retrenched workers did not believe it; a week before their dismissal, the company had re-hired on-call contractual workers. At the same time, the company hired new contractual workers the day after their dismissal. The workers, including those who were not dismissed, believed that the real reason behind the dismissal was to eliminate the threat of union organizing among the workers. The dismissed workers included the six who earlier filed a complaint regarding the rice subsidy. They also feared that Panphil was laying the grounds for becoming a subcontractor for another garments company. They fear that this will result in more cases of retrenchments. However, the workers of PanPhil took these shutdowns as opportunities to organize themselves. They attended discussion fora sponsored by the Center for Trade Union and Human Rights (CTUHR), the Unity for Workers Rights (U4WR) and the Missionaries of the Sacred Heart Center for Women, Children and Labor (MSC-CWCL). The six worker leaders invited friends who then invited others; the invitations snowballed into a recruitment drive that led to the rapid formation of their own organization. Instead of immediately organizing a union, however, the workers, in consultation with members of the CTUHR and U4WR, decided to form an organization the PanPhil Workers Organization (PANWO) with the objective of expanding their ranks first. The workers believed that even if they succeeded in establishing a union, it would be short-lived considering their current level of organizational strength vis-à-vis PEZA s and MEPZ locators history of union-busting.

140 140 Organizing Experiences in Economic Zones Even birthday celebrations turned into opportunities for inviting others to join PANWO or to attend educational discussions on union organizing. Later on, it was the new members themselves who recruited for PANWO. The recruitment of new members was done entirely in secret. Even their activities were held in urban poor communities, away from the factories, and more accessible to the workers who lived there. Workers who were afraid to air their grievances to company management turned to PANWO. However, management eventually noticed PANWO s efforts, as the leaders of the organization gained respect from their fellow workers. Identified leaders became the victim of harassment from supervisors and managers. Their actions inside the factory were constantly monitored and they were reprimanded whenever they are seen talking to their fellow workers. The managers branded the first chairperson of PANWO as a founder. Even her trips to the restroom was timed and monitored. There were even times when the leaders and workers were followed home and visited by managers who offered them bribes if they would stop their organizing work. These moves by management however proved futile as the workers were determined to strengthen PANWO. They explained that it was the issues they faced shutdowns, forced overtime and even the harassment itself that solidified their bond. CBBRC 2010 Workers from PanPhil who are also members of PANWO and MSC-CWCL.