Laid off regular workers face tough times in years ahead, study says

PRES RELEASE
15 February 2009

Workers who lose regular jobs in the current crisis are in for tough times—with or without a recovery in the job market. Displaced workers face low re-employment rates and significant wage losses in the short and medium term as they compete with younger workers over mostly non-regular work, contractual, casual and piece-rate jobs.

The dismal prospects faced by workers displaced by the global recession that has already claimed tens of thousands of local jobs can be gleaned from a study of displaced workers done in 2008 by the Angelo King Institute of the De La Salle University.

The study, authored by Clarence Pascual, an economist, was presented yesterday at a forum held at the Bantayog ng mga Bayani in Quezon City. The forum was organized by the Partido ng Manggagawa as part of its 8th founding anniversary celebration.

The study surveyed some 150 production workers of a local garments company that closed shop in November 2003. It looked into the employment experience and current labor force status of displaced workers five years after layoff. Extensive interviews with displaced workers from four other companies were also conducted to gather qualitative data and insights on life after layoff.

While the study was done in relation to the impact of globalization on workers welfare, the findings are relevant to the current situation.

According to the case study, the likelihood of displaced workers finding any kind of wage employment is dismally low while the chances of landing a regular full-time employment similar to what they have lost is nil to zero.

“Less than a third (32 %) of the workers found a wage job at anytime in the next five years after layoff. When the survey was taken in mid-2008, a mere 16% of the displaced workers were holding on to a wage job. Five years after losing their jobs, over 60% of the workers were still unemployed or have exited from the labor force,” explained Pascual.

Pascual added that an overwhelming majority of those who found a new wage job after displacement took up temporary, non-regular jobs that paid lower wages. Non-regular jobs were also marked by unemployment spells in between contracts or jobs. The unemployment and earnings losses suffered by displaced workers did not improve over time.

The study also finds that job loss can have dire consequences on the worker’s health and well-being as well as that of the worker’s family. Being laid off from work raises the risk of the worker’s family falling into poverty. The loss of a major source of income for the family is compounded by equally serious problems.

Displaced workers are also vulnerable to illnesses of varying seriousness, from frequent headaches to hypertension or strokes (cerebro vascular accident). In more than a few cases, these illnesses lead to workers’ death. With the loss of work-related health insurance, laid off workers cannot afford the high cost of drugs and health care. Loss of health insurance can also impact on young children.

Interviews with displaced workers reveal that a consequence of job loss than can have long term repercussions on the worker’s family is the risk of children taken out of school. Surprisingly, production workers despite minimum level wages were able to send children to college, relying on loans from employers, friends and informal lenders. Their regular job was their biggest asset, a gold-standard collateral in the eyes of creditors. The loss of a regular job means loss of access to credit, which could mean children dropping out of school or the inability to meet costly contingencies.

The study finds low re-employment rates and significant earnings losses and which persists over the medium-term as a significant cost of job loss. It traces these to the surrounding economic conditions, namely, the decline of the garments industry, high youth unemployment, and the proliferation of temporary and contractual employment. To improve re-employment possibilities, it calls for a strategic focus on generating adequate productive employment, including public employment programs.

While there were more self-employed workers than wage workers among the displaced workers in the survey, self-employment was more often than not considered as employment of last resort by the workers. Self-employment is marked by low and irregular earnings and lack of long-term sustainability. Moreover, the study covered the period 2004-2008, a period of respectable economic growth. Promoting self-employment and micro entrepreneurship in the context of a growing economy may have some merit, but not during a slow down or recession.

To avoid the more drastic consequences of job loss, the study recommends expansion of new and existing social protection schemes to cover workers laid off in the current crisis. This may include, according to the author, free extension of PhilHealth membership for displaced for a period of five (5) years after layoff.

The government may also consider giving out scholarships or education loans for displaced workers with children in tertiary level. Yet another option is automatic inclusion in the government’s conditional cast transfer program for displaced workers with children in primary and secondary levels. The government and the Social Security System may also need to explore some form of income support for workers laid off by the global crisis.

In the same forum, the Partido ng Manggagawa presented its campaign for a bailout package for workers and the poor which consist of (1) direct subsidy for displaced workers from the SSS, GSIS and OWWA; (2) Tax refund for workers; (2) Reforms on public employment program; (3) Extension of health coverage for displaced workers, and (5) Moratorium on demolitions and evictions.