Labor issues hurting exports, says trade exec

MANILA, Philippines — Uncertainties in the labor sector brought about by the issue of contractualization have caused significant harm to the country’s exports which contracted for the second consecutive month in March after more than a year of expansion.

Sergio Ortiz-Luis Jr., president of the Philippine Exporters Confederation Inc. and vice chair of the public-private Export Development Council, told The STAR the decline in merchandise exports for the month of March could be attributed to the lack of sufficient supply caused primarily by exporting firms’ decision to put on hold expansion plans.

The Philippine Statistics Authority reported that exports fell 8.2 percent to $5.5 billion in March from $6 billion a year ago as revenues from sales of manufactured goods and agro-based products declined.

“For one, based on how I understood it, it is agriculture products which decreased. Electronics managed to increase by a minimal five percent. Agri products are plagued by lack of supply to be exported. There are orders, but no supply,” Ortiz-Luis said.

“There are a number of exporters that are holding out development or expansion because of the burning issue on contractualization. They are not hiring because they are afraid that once they increase production, they will hire people. And they are not prepared to take people on a permanent basis yet. So rather than doing that, they opted not to expand first. They are waiting it out,” the export leader said.

Ortiz Luis is referring to earlier calls made by labor groups to President Duterte to abolish all practices of contracting in the country which was opposed by employers, saying there is a form of legal contracting acceptable under the law.

Duterte signed last May 1 an executive order which puts an end to illegal contracting.

Although issues in the labor sector have not been completely addressed in the EO signed, Ortiz Luis said there is no need to push the panic button yet in the exports sector given the two consecutive months of decline.

“Many of the reasons are temporary. I think they are addressing infrastructure and the agriculture supply. I hope the labor issue will be resolved in a manner that it is globally acceptable,” he said.

Ortiz-Luis remains confident the country will still achieve targets set under the Philippine Export Development Plan.

“Last year we did really well, and we are expecting growth hopefully again this year,” he said.

Trade Secretary Ramon Lopez earlier said the country could aspire for a growth target of between 12 to 15 percent growth for merchandise exports this year.