For those who want to understand better how the pandemic has impacted on the world of work, I would suggest a book written by famous journalist, Thomas L. Friedman, entitled Thank You for Being Late, with the sub-title “An Optimist’s Guide to Thriving in the Age of Accelerations.” He was also the one who explained to the non-specialist the complex process of globalization in another best seller entitled The World Is Flat. The key word is “acceleration.”
In this little over year during which the world has suffered from the tragic effects of COVID-19 virus that, as we pray in the Oratio Imperata “has disturbed and even claimed lives,” we have heard or read many times that the exponential growth of such activities as teleconferencing, e-commerce, online learning, and other IT-enabled daily activities was a result of acceleration. What could have taken three years without the pandemic was made possible in three months. I am sure that those of us who are among the non-techie senior citizens and had to force ourselves to adjust to new ways of attending board meetings, giving lectures or economic briefings, or just saying hello to relatives and friends, can identify with this observation. Without all the lockdowns in which we Filipinos were number one in the East Asian region, we wouldn’t have had the motivation to learn all those apps and algorithms with which we now have sufficient familiarity, after the patient assistance from younger members of our family (especially grandchildren for those over 70).
It is understandable that those of us who belong to the highly educated class in our society are focused on the uses in our professional work and other daily activities of such products of digital technology as Facebook, Twitter, the cloud, 4G, LinkedIn, Skype, and Big Data. We must not forget, however, that the vast majority of Filipinos have more modest requirements to be able to eke out a decent living for themselves and their families. We should take as our guiding principle in building the New Reality after the pandemic what Pope Francis wrote in his latest book, Let Us Dream: “For me it’s clear: we must redesign the economy so that it can offer every person access to a dignified existence while protecting and regenerating the natural world… What I also see — and this give me hope — is a people movement calling for profound change, a change that flows from the roots, from the concrete needs of people that arises from the dignity and freedom of the people. This is the deep change that arises from people capable of meeting, organizing, and coming up with truly human proposals.”
To avoid redesigning the post-pandemic economy along the lines of very developed economies or taking into account only the circumstances of the elite in our society, we should take a very close look at the present stage of our economy in what Friedman calls the age of accelerations. It does not take much reflection to realize that the vast majority of our people are still very much stuck in the first three stages of the industrial revolution, i.e., the age of mechanization, the age of electrification, and the electronics age. Although many of them have literally one of their fingers in the Industrial Revolution 4.0 through the smart phone that is ubiquitous in our country, the vast majority of them still make their living with the small plot of land they got as agrarian reform beneficiaries, the low-quality education they got from our schools, their physical strength, and whatever skill they can acquire on the job. Without neglecting the imperatives of making sure that our knowledge workers are able to constantly improve their ability to keep pace with the age of accelerations, we must devote more of our attention to investing in the human capital of the less privileged members of our society.
We must have what Friedman calls a “New Social Contract.”
He quotes from Byron Auguste, who cofounded Opportunity@Work, a social venture that aims to enable at least one million more Americans to “work, learn, and earn to their full potential” in the next decade. Auguste wrote that in a very major economic shift, a new asset class becomes the main basis for productivity growth, wealth creation, and opportunity. In the agrarian economy, that asset was land. In the industrial economy, it was physical capital. In the services economy, it was intangible assets, such as methods, designs, software, and patents. In today’s knowledge economy it will be human capital — talent, skills, tacit know-how, empathy, and creativity. These are massive, undervalued human assets to unlock — and our educational institutions and labor markets need to adapt to that. We must avoid a growth model based on assets or opportunities that are accessible only to a fortunate few. The massive redistribution of wealth that would be required to support such a society is not politically sustainable.
More than ever, we must focus on investment in human capital, especially in the poorer segments of society. Investing in human capital can produce a more dynamic economy and inclusive society, since talent and human capital are far more equally distributed than opportunity or financial capital. To give shape and direction to this focus on human capital, Friedman suggests three social contracts: those between workers and employers, students and educational institutions, and citizens and governments. He considers it the only way to create an environment in which every person is able to realize his or her full potential and human capital becomes a universal, inalienable asset.
To even begin designing such social contracts, we must have a clear idea of the actual human resources of the Philippines today. In 2020, the Philippine labor force (made up of all Filipino citizens who are over 15 years and who are actually looking for work) counted 42.9 million men and women. These are the people for whom we must redesign the post-pandemic economy so that each one of them can attain a “dignified existence” in the words of Pope Francis.
In financial terms, since the fundamental unit of each society is the family, each one of them must belong to a household that can earn at least P20,000 in real monthly income (which can be a combination of money and real goods and services). This is what UA&P economists have calculated as the threshold family income for an average family of five (parents with three children) in today’s prices.
Where do our workers earn a living? Information on this will give a clue to the types of social contracts that must be negotiated. Some 55% to 57% of the labor force are employed in Services; 23% to 25% work in agriculture as small farmers, farm workers, fisherfolk, and landless farmers; 19% to 20% work in industry, with 8% to 9% in the industrial subsection of manufacturing (other sectors of Industry are public utilities, construction and mining). Although only some 25% work in agriculture (farming and fisheries), if we include the whole value chain of agribusiness (post-harvest, agricultural inputs, logistics, food processing, and food retailing), the percentage jumps to as high as 65%, as recently reported in a column by foremost commentator on agricultural issues, Ernesto Ordonez. That is why the most important solutions to providing work to the unemployed and underemployed will be found in the agribusiness sector. Attaining the top Sustainable Development Goals (SDGs) of food security and zero hunger will also automatically address the problem of providing more work. It is important to accelerate the Build, Build, Build program that is directly related to providing more farm-to-market roads, irrigation systems, post-harvest facilities and other infrastructures directly targeted towards the small farmers, especially the rice and corn farmers.
As regards the poorest of the poor among the farmers — the coconut farmers — the private sector has a significant role in helping consolidate the millions of hectares of coconut farms so that the small farmers can be organized either in cooperatives or as “corporatives” involving large investors (whether domestic or foreign) that can do the consolidation work to attain the necessary economies of scale that will enable the farm owners to get much higher value for the coconut products in the forms of coconut water, coconut sugar, coconut milk, virgin coconut oil and a host of other by-products of the coconut tree. I have often referred to two possible existing models of successful consolidation: that of Axelum in Misamis Oriental and Cardinal Agriculture in Brooke’s Point, Palawan. This is the social contract that should be made among the farmers, the Government, and the large corporate investor. A very important role is that of the Department of Agrarian Reform that, instead of continuing to focus on the fragmentation of coconut farms, should make sure that there is this necessary consolidation through cooperatives, corporatives, and other models that we can learn from countries like Malaysia, Thailand and Vietnam to finally redeem the coconut farmers from abject poverty.
Since more than 50% of the labor force are in the services sector, we should look for more creative ways of organizing service workers, both new and old, so that that they can attain what Pope Francis calls a “dignified existence.” We already referred to the challenge of improving the earnings and social security of the thousands of delivery riders who have been spawned by e-commerce. They should be regularized as employees and not as individual contractors. It should be top priority in the Build, Build, Build program of the Government to implement the P1.1-billion national bike lane project that will improve the safety of these bike riders.
We should also revisit the whole industry of Workers’ Cooperatives that have organized restaurant, household, and hospitality workers. It is time that we look at the way domestic workers are organized in more advanced economies like Hong Kong, Singapore, and some Middle Eastern countries where those who do household work like cleaning apartments, cooking meals, doing the laundry, are not live-in workers but actually have a life of their own and only report to their respective employers during limited hours of the week. They are treated as regular employees and are given the same social benefits as those who work for corporations. This approach can first be tried in the tens of thousands of condominium units that are dotting highly urbanized centers, not only in the National Capital Region but increasingly in the surrounding regions of Calabarzon, Central Luzon, Central Visayas, Western Visayas, Davao, Cagayan de Oro and others. The younger couples of today will increasingly find it difficult to enjoy the luxury of having the same live-in domestic helpers that their parents or grandparents had. They will have to increasingly do more of their own household chores but would appreciate being helped these part-time service workers who can be organized as Workers’ Cooperatives.
The retraining, reskilling or upskilling of repatriated OFWs should also be on top of the agenda of human resource development programs of the Technical Skills Development Authority (TESDA) and affiliated organizations, such as the academe and industry associations. Philippine society owes a big debt to these OFWs who have sustained our economy through thick and thin. In fact, during the pandemic, their remittances to their relatives have hardly fallen, and in 2021, when there are still dark prospects for the economy, those who are still employed abroad are expected to increase their remittances for the whole year at 3% to 5%, contributing close to 10% of the country’s GDP. A recent study by the International Organization for Migration (IOM) reported in this paper indicated that more than three-fourths of those OFWs who lost their jobs, especially in the Middle East and had to return to the Philippines, are still struggling to find new jobs. Helping these repatriated OFWs to either go back overseas again or seek employment in the Philippines should be given the highest priority by both the State and the private sector.
I have just scratched the surface in identifying creative ways of negotiating social contracts between employees and employers as well as the citizens and the State in meeting the challenges of the New Reality resulting from the era of acceleration that has been made even more rapid by the pandemic. I would emphasize again that most of our efforts in crafting these new social contracts should be focused on the more disadvantaged members of our society, those whose family incomes for a household of five are less than P20,000.
To be continued.
Bernardo M. Villegas has a Ph.D. in Economics from Harvard, is Professor Emeritus at the University of Asia and the Pacific, and a Visiting Professor at the IESE Business School in Barcelona, Spain. He was a member of the 1986 Constitutional Commission.