Triggering a downward spiral

This is my column today.

If what has happened so far since the start of the year is an indication of what’s in store for us for the rest of the year, I am afraid we’re heading for serious trouble and not entirely on account of external forces such as the global recession. We’re heading for serious trouble because quite frankly it seems many among our leaders have resigned themselves to the fact that there’s not much that can be done this year but mope and sulk around and wring our hands in frustration.

In other words, we seem to be pulling ourselves into a downward spiral and there seems to be no resistance from the people who should be out there rallying people not to lose hope.

I am aghast, for example, that the Secretary of the Department of Labor and Employment seems bent on making his mark as this country’s foremost prophet of doom that his department might as well be renamed as the Department of No Labor and Unemployment. He has been on the front pages of most dailies in the last few days shaking his head in frustration, whining about the jobs that have been lost, and making dire predictions about the grand-scale massacre of employees that is supposed to be forthcoming. He probably has also been on television except that I haven’t been watching the newscast lately as I’ve sworn not to be party to the way media and certain enterprising people are moving heaven and earth to commercialize the celebration of Chinese New Year; but that’s another column.

It is possible of course that Secretary Marianito Roque’s statements are being taken out of context. It has been known to happen. Very often, media picks up only the sensational part of a statement and glosses over the rest— the qualifying statements, the rejoinders, and the footnotes that provide a better context to the news. However, given the resources of the department and his stature, he should know better in terms of how to deal with the media. Besides, no one from his department, certainly not the Secretary of Unemployment himself, has made an effort to correct the impression being formed in people’s minds that we’re doomed this year.

Someone told me that perhaps Roque simply does not want to raise people’s hopes; that the man is being a realist and wants to caution everyone and prepare them for tough times. Excuse me, but raising people’s hopes and continuously believing in the promise and the future of Philippine labor is exactly what the Secretary should be doing. Especially in difficult times like these. He should be the country’s and the labor sector’s main cheerleader.

But if it seems even Roque and the entire labor department has thrown the towel, what else are ordinary people supposed to do but give in to paranoia?

This is bad news, very, very bad news. This is the time when everyone should be gung-ho. This is the time when people should be creating more opportunities for employment instead of simply sitting around, moping and waiting for expected storm that may never come anyway.

Yes, the global recession is real. But it’s not a death sentence. There’s definitely so much we can do to make sure we soften the impact on our people. The pump-priming initiatives the government intends to do are steps in the right direction. Perhaps Congress can also finally put its act together and pass the necessary legislation that would make the country more competitive.

For example, one of the reasons why many global companies pack up and leave the country when tough times come is that our labor laws are antiquated; they need major revisions to keep up with the times. In case we have forgotten, wages in our country are higher than those in China or Vietnam and we are one of the few that dictate minimum wages on industry. Of course we take pride in our human capital and claim that every cent paid is worth it, but still, wages should be linked to productivity and profitability rather than arbitrarily imposed.

While I also would caution people against being unnecessarily optimistic, I wouldn’t also want to contribute to the doom-and-gloom scenario building that everyone seems bent on crafting. The truth is that there are lots of jobs out there. Most companies actually have need for workers. The problem is that they are not hiring—or if they are, only for critical positions —precisely because they are now being more cautious. They are waiting out the storm—the one that our leaders have been predicting.

While Roque is whining about how the rising unemployment in the country is not normal, the other message that needs to be put out there—in screaming headlines—is that it is still business as usual in most industries and companies.

The People Management Association of the Philippines conducted a study in the second and third week of January to get a quick pulse of the employment situation in the country. PMAP is the national association of human resource managers—the people in charge of hiring and firing. The sample of the study was limited, with only 177 companies participating, but it was statistically valid. The study pointed out that “although information from member companies in the electronic and export sectors confirm news reports of heavy layoffs, the survey showed that for the companies represented in the survey, layoffs are limited to 10 percent of respondents.” In short, the layoffs and downsizing do not comprise a general trend.

In fact, 60 percent of the respondents of the study revealed that their companies may increase headcount this year. Of this, 43 percent said the increase in manpower would be due to growth in business while 39 percent said it would be due to more aggressive business strategies. Unfortunately, the dark cloud cast by our prophets of doom seemed to have spooked most business organizations. Actual hiring is being done cautiously, with 48 percent of total respondents saying they are only doing replacement hiring for critical positions and a further 10 percent freezing hiring for regular positions.

According to the study, “the most optimistic sector seems to be [business process outsourcing], with 10 of the 13 company respondents saying they may increase headcount in 2009 due to business expansion. However, four companies out of the 13 respondents say they are also only hiring for critical positions at present. A proportionally bigger number of outsourcing companies among the respondents are also giving lower salary increases this year, compared to 2008 (6 out of the 13).

Fifty-two percent of respondents say projected salary increases for this year is 6-10 percent. This proportion of respondents is lower than the 64 percent last year who reported giving actual increases of 6-10 percent. About 30 percent say that they are currently giving lower salary rate increases to respond to more difficult times. Employees in about 25 percent of respondent companies in manufacturing, 30 percent in outsourcing and 17 percent in services are also not being asked to render overtime work. Less than 10 percent of respondent companies (8 percent in manufacturing and 6 percent in services) have resorted to shortened work hours.

To sum up, there a number of companies directly affected by the global recession but this is a minority—more of an exception at this point rather than the trend. Second, majority of business organizations in this country are on an expansion mode due to business growth and aggressive business strategies. However, and this is the sad thing, most companies are being cautious and are deliberately holding off their expansion programs and consequently, their hiring programs, thanks to the prophets of doom in this country.