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Of Giants and Chains: Workers Woes in the Philippine Electronics Industry

6 September 2016   Samsung, Asus, Mac, Lenovo. Toshiba, Apple- Iphones, Oppo Camera, laptops, hard drives and more.  Who will not recognize these brands and products? They are omnipresent in our world today, that often, many people and businesses have grown dependent on them. Indeed, the world economy has never been so dependent on electronics and information-communication technology (ICT) products . From hard disk drives and microprocessors in our office computers to smart phones to fiber optics, semiconductors for satellites and remote systems for military facilities, electronic products proliferate and dominate productive (and destructive) industries in the world today. With the relentless development in ICT, the global electronics industry grows exponentially  as transnational and multinational corporate giants behind known electronics brands ruthlessly compete in research and development, innovation and productivity to earn maximum level of profits. The electronics industry is a perfect example of today’s global production chain with US dominating the industry through multinational and transnational giants controlling every stage of production: from research to design, to production and assembly of parts to sales. US-owned companies lead in the semiconductor manufacturing equipment sector accounting for 47 percent share of the world market. Meanwhile, over 80 percent of U.S. semiconductor sales do not take place in the U.S., and 84 percent of U.S. semiconductor manufacturing equipment sales takes place outside of the United States.[1] Indeed, there is no single country that produces and assembles electronics products from raw material to end products for the leading TNCs. Instead, developing countries and economies are structured to perform a seamless transnational production network taking into consideration the least production costs including labor, infrastructure, and tariffs. Electronics ICT industry in the Philippines The electronics industry in the Philippines is the leading industry in the country’s dwindling manufacturing sector (Mercurio, 2016).  Electronics exports account for 49 percent of country’s total exports and total investments in the industry hold around P81 billion. The Philippines produces 10 percent of world semiconductor manufacturing services and produces 50 percent of the world’s supply of 2.5” HDDs and 10 percent of 3.5” HDDs according to SEIPI.[2] The electronics industry estimates that by the end of the 2016, employment will reach 2.84 million, from this 355,000 are direct employment (Mercurio, 2016).

NXP electronic workers during their protest in 2014 against union busting (photo from Bulatlat.com)

Like other highly-traded products, electronics production plants are concentrated in special economic zones (SEZs) or industrial parks. In the Philippines these SEZs can be found in Central Luzon (Region III), CALABARZON (Region IVA), and Central Visayas (Region VII). Locating production sites in these zones is very strategic to the companies. One, it ensures a more efficient production chain with mid-level suppliers lumped together for greater ease in transaction. Two, it guarantees high cost-effectiveness with millions worth of tax incentives granted to SEZ locators. And three, companies spend as much as 40 percent less on labor as provincial wage rates much lower than Metro Manila wage rates apply . Relying on cheap labor The electronics industry relies heavily on Filipino cheap labor. Metro Manila’s daily minimum wage is pegged P481 a day, which only 44 percent of the family living wage. Wage rates in regions III, IV-A and VII, where electronics companies are found are much lower, between P315 to P355. Intense competition between and among electronics companies drive workers to heavier workload. No different from other manufacturing workers, electronic workers are required to work long hours for up to 12 hours daily, often without day off. A worker in an electronics company in Subic (Region III) attests, “We need to work overtime in order to earn at least P500. Imagine if there is no overtime work, we will only take home P350 a day. That is barely enough for our daily expenses.” As workers make do with poverty wages and endure long hours of work, companies such Samsung and Apple rake in profits. These two companies registered a combined global revenue of US$370 billion in 15. Their combined income is 27 percent more than the Philippines’ gross domestic product roughly at US$ 291 billion. These companies further earn profits from exploiting the huge reserve workforce from the unemployed and underemployed. Through manpower agencies, electronics companies repeatedly hire workers on contractual basis, sometimes as apprentice or on-the-job trainees (OJT) receiving only 75 percent of the minimum wage even if these apprentices or OJTs perform tasks similar to rank and file workers. In a Cebu-based company that produces parts for Iphone and Samsung, OJTs are reportedly hired from a technological university. These OJTs are in fact not students of the university, but in order to land in the job, they had to go through the university and be deployed as OJTs even if they earn a meager P264.00 a day, which is only two-thirds of the prescribed minimum wage of P355.00 in the region. Industry players boast of tested management and production systems such as Just-in-Time, total quality management, 5S, QPIC, among others to keep them competitive and efficient. This cut throat competition among and between suppliers and big electronics firms cascades to an endless demand for increased production that is made possible by excessively long and intensified work hours.  It is practically prohibited for electronics workers to refuse overtime work during lean season. One worker in a Laguna-based company that produces computer parts says that their company puts high premium on perfect attendance, and assembly workers work seven days a week. Another worker from another electronics company narrates: “It is required to work overtime especially when the quota is high.  We operate on a compressed workweek, normally 6AM to 4PM from Monday to Friday. Our extra day at work is considered overtime. It is almost prohibited to be absent from work. Many are forced to resign because they will be dismissed from their job if they don’t report to work.” Dangers and hazards Workers in electronics companies also face many health and occupational risks. In a study conducted by the Bureau of Labor and Employment Statistics (BLES), it was revealed that electronics workers commonly get injuries in the head, wrist and hands.  They also complain about dizziness, headache and urinary tract infection which they most probably acquired from limited bathroom breaks.  Women workers in the electronics sector have also been reported to be exposed to risks of reproductive health disorders and certain cancers. Apart from physical hazards at work, workers are also unaware of toxic effects of the chemicals they use like isopropanol (IPA), the common chemicals that workers used to clean components. IPA according to Reed Group MD Guidelines IPA can affect the skin (irritant and allergic contact dermatitis), respiratory system (asthma, irritation), and central nervous system (neuropyschological impairment). There is also some controversy that semiconductor workers have a higher incidence of adverse reproductive outcomes. It is also believed that a number of chemicals used are also potentially carcinogenic.[3] Curtailment of freedoms Neoliberal globalization facilitates capital movement from one place to another but restricts and curtails freedom to form unions and hold collective actions. Official statistics reports that only  4.7 percent of electronic workers are organized in unions with collective bargaining agreements. This is not surprising  as many workers in the industry especially those hired by manpower agencies are told not to join unions during their employment orientation.  In a company in Laguna where workers attempted to organize, one worker shared that the management immediately crushed the union, “On our first attempt, the company bribed the union leaders and on our second attempt they sacked our union leaders.” Even electronics workers who have been successful in defending their unions constantly face threats of union busting as in the case of NXPSCIWU.  Twenty four ( 24) union officials were dismissed in the middle of union negotiations in May 2014  for not working on holidays. The union and their supporters protested the move and three months later, the management reinstated 12 of the 24 union officers and negotiated a new agreement. The electronics industry in the Philippines may be regarded as the biggest manufacturing subsector in the country but it does not build the country’s foundation for industrialization. It is highly dependent on global market, making it more vulnerable to shocks from capitalist crisis and puts workers in  perennially precarious working conditions.###   [1] 2016 Top Markets Report Semiconductors and Related Equipment A Market Assessment Tool for U.S. Exporters U.S. Department of Commerce | International Trade Administration | Industry & Analysis (I&A) July 2016 [2] Semiconductors Electronics Industry of the Philippines Inc or SEIPI is the largest organization of electronics and semiconductor companies in the Philippines. [3] ‘Toxic Effects, Isopropyl Alcohol’, Reed Group MD Guidelines, accessed from http://www.mdguidelines.com/toxic-effects-isopropyl-alcohol