12-13 July 1999

Civil Society Perspectives on Structural Adjustment Policies

Citizens' groups formally launched the SAPRI-related initiative Citizens' Assessment of Structural Adjustment (CASA)-Philippines on 12-13 July at the Film Center of the University of the Philippines, Diliman, Quezon City. Nearly 300 people representing non-governmental and peoples' organizations -- one-third of them from outside of the Manila metropolitan area -- traveled from all 12 regions of the country to participate in this Opening National Forum. They included members of small-farmer associations, research institutes, labor unions, environmental groups, and organizations of the urban poor, indigenous peoples, health-care workers, students and teachers.

The Freedom from Debt Coalition -- the lead organization for CASA-Philippines -- had spent the preceding year lobbying the new Philippine government intensively but unsuccessfully to reconsider its refusal to take part formally in the trilateral SAPRI exercise. Nevertheless, civil-society representatives were joined at the Opening Forum by the World Bank country representative and an official of the Central Bank. Both the World Bank and the government appear interested in following the civil-society process. The 15-member steering committee, representing major geographical regions and national civil-society networks, has been organizing educational seminars as well as planning workshops on economic-policy issues identified as primary areas of concern.

The Forum's opening plenary was addressed by Wigberto Tanada, member of the country's House of Representatives, who noted that structural adjustment policies and appropriations for debt servicing had stunted industrialization, limited capacity for job creation, and prevented adequate social-service provision. Walden Bello, author and University of the Philippines economics professor, gave a historical perspective of structural adjustment in the Philippines over the past two decades. Vinay Vargava, the World Bank representative, expressed the Bank's interest in civil-society's perspectives and its openness to participatory processes. National representatives of CASA and international representatives of SAPRIN also addressed the plenary.

The Forum's first afternoon session was dedicated to presentations and testimonies by members of a broad range of civil-society organizations from across the country on the impact of four sets of adjustment policies. Information was also presented from a desk study being undertaken on the effects of privatization on workers and the poor. On the second day, Forum participants broke into four groups organized by themes to present testimonies and discuss areas on which to focus research. Each group reported on its conclusions in a final plenary session.

I. The Impact of Agricultural Sector Liberalization on Food Security

Forum participants discussed the impact on small-scale farmers and food security that adjustment policies liberalizing the agricultural market have had. Of major concern are the lowering of tariff and non-tariff barriers to food and other agricultural imports under an indiscriminate trade liberalization program. As a result of cuts in government spending for agricultural-support services under previous stabilization programs, domestic food production cannot compete with cheaper imports. This has affected the income of small and, particularly, of poor farmers, who have thus had to convert to production for export.

This phenomenon, along with a government bias toward cash-crop production, has also undermined food security, defined by participants as self-sufficiency, self-reliance, accessibility and sustainability. Insufficient state support for infrastructure services, such as irrigation, post-harvest facilities and farm-to-market roads, has meant that small-scale farmers are unable to improve productivity levels or get their products to market at prices that cover their costs. Liberalization of prices following privatization of the marketing board had also negatively impacted farmers. Cultivation of rice and other staples was said to be on the decline, and small-scale farmers who cultivate food crops were finding themselves further marginalized. Participants also spoke of the lack of access to formal credit as a key problem for farmers, whose only option is the informal market, which offers short-term credit at exorbitant rates.

Participants explained that large-scale farmers had been converting land to cultivation of export crops such as bananas, and that public resources for services such as irrigation were being oriented to these cash crops. They stressed, however, that international price fluctuations can strongly affect gains made in this sector and that this conversion and cultivation have imposed extensive social and environmental costs on large segments of the population. The displacement of rural communities and the consequent massive urban migration that has resulted from the further impoverishment and marginalization of small-scale farmers, as well as the disproportionate burden on women of a loss of food security, were important social impacts emphasized. Environmental impacts cited included soil degradation and the loss of biodiversity as a result of the extensive use of chemicals on export crops, such as bananas, and large-scale monocropping.

II. The Impact of Trade and Investment Liberalization and Labor Flexibilization on Workers

Trade unionists and workers from the textile and garment industry, a cement factory and a motorcycle assembly plant, as well as migrant workers and representatives of organizations of the urban poor, testified as to the impact of liberalization policies on wages, employment and working conditions. They referred to liberalization as being part of a package of free-market reforms that comprises deregulation, trade liberalization, capital-account liberalization that relaxes restrictions on the flow and movement of foreign capital, sweeping privatization and labor flexibilization. Forum participants spoke of links between these policies, on the one hand, and the collapse of domestic industries or their takeover by foreign firms, growing unemployment and the trend toward "jobless growth", violation of labor standards and destruction of unionism, on the other.

Workers in the electronics industry spoke of factories closing down due to a lack of competitiveness in the global market. When the cost of production is considered too high in the Philippines, factories are moved to other countries where labor is cheaper, such as China or Indonesia. Participants testified to an increase in foreign control of industries and a trend of transnationalization of production, where one factory specializes in the production of one part of an appliance for all the brands of that product. With such industry mobility and specialization, along with the higher qualifications required for employees in the fewer jobs available in the formal sector, there has been an increase in unemployment that has fueled the growth of the informal sector and forced many skilled workers to migrate overseas.

New labor-flexibilization rules and the drive to increase competitiveness have led industries to cut costs through various job arrangements, such as contractualization and casualization. While often in violation of Philippine labor standards, these labor-flexilibization schemes are particularly prevalent in the textile and garment industry. Forum participants testified that few of these factories hire regular workers, and, in fact, many shut down, fire workers and then rehire them on a contractual basis. Whereas the minimum wage is 198 pesos/day for a regular worker, contract workers receive 140 pesos/day without any benefits or job security. Different factories within an industry will often exchange their workforces in order to get around the law limiting contractual hiring to no more than six months when the position is "usual and necessary to the production process." In addition, safety standards as stipulated in the Labor Code are frequently violated in garment factories, and forced overtime is common. Furthermore, participants testified, contractual hiring and other labor-flexibilitation schemes destroy unions and reduce bargaining power.

Noting that 75 percent of workers in the textile and garment industry are women, Forum participants added that women are most prevalent in low-skilled jobs and contractual work. In addition, overall, women tend to suffer the greatest impact of trade liberalization, as they carry the greatest burden in compensating for a decrease in household income and purchasing power due to low wages and greater unemployment.

III. The Impact of Liberalization of Foreign Investment and the Mining Industry on the Environment and Indigenous Peoples

Forum participants focused their discussion of this theme on the impact of the restructuring of the mining industry since the mid-1980s and, in particular, the Mining Act of 1995 -- part of the foreign-investment liberalization process designed ostensibly to foster national development. The government, by opening the borders and enticing foreign capital through industrial deregulation and liberalization measures that opened certain industries to foreign ownership and raised foreign-equity participation and through the passage of legislation providing incentives for investment in mining, expanded mining activities in a way that has negatively impacted important segments of the population.

The shift in particular from tunneling to open-pit mining in the latter half of the 1980s has had disastrous effects on indigenous peoples and other communities and on the environment, according to Forum participants. Furthermore, the impetus under adjustment to draw foreign direct investment into hard-currency-generating industries led to the adoption of the 1995 Mining Act. This effective liberalization of the mining industry allowed an extensive opening to foreign capital for use, management and control of mining lands. Mining firms can now be fully foreign-owned and enjoy investment incentives such as tax holidays and tariff-free imports, full repatriation of investments, full remittance of earnings and freedom from expropriation. Applications for mining rights are pending for nearly one quarter of the country's total land area. Seventy percent of these lands border on or are located within areas occupied by indigenous peoples.

Forum participants asserted that these adjustment policies have generated little employment, caused environmental destruction, created health problems and endangered lives, violated human rights, exacerbated women's oppression, dislocated indigenous peoples and Moro communities and violated their rights, and provided no compensation for residents of affected areas. While liberalization policies have benefitted large-scale strip mining, small-scale miners, many of whom are indigenous peoples, have been displaced. The physical and cultural dislocation of indigenous peoples and the disregard for their right to their ancestral domain, it was argued, is not an environmental issue, but a critical land-tenure issue closely linked to the liberalization of the mining sector.

Forum participants also testified to the increase in disease in areas of open-pit mining, especially among women and children. There has been an increase in the incidence of skin disorders, and deaths from poisoning have been reported. Environmental problems that were emphasized include the destruction of bio-diversity, soil degradation, increased toxicity of the fish catch, and the depletion of water sources.

At the household level, several negative impacts from the liberalization of mining were cited by Forum participants. There has been greater economic dislocation or loss of livelihood as a result of the shift away from tunnel mining, as well as the edging out of small-scale miners, which has led to greater family indebtedness. Indigenous people have turned to agriculture as a livelihood option, but this has proved unviable because of soil degradation resulting from strip mining. In addition, there has been a shift in the gender division of labor, with women taking on a double burden. The role of women in production has increased as men lose their sources of income, yet women's workloads in the household remain the same or even increase as certain tasks require more time and effort. As an example, water scarcity due to environmental degradation means that it becomes more difficult to provide for household water needs, a task that is traditionally the responsibility of women.

IV. The Impact of Budget Policies on Education and Health Services

Insufficient government spending on education and health as a result of adjustment policies was cited by participants as a central problem that has negatively impacted the provision of these basic services. The problems related to the quality of and limited access to education were extensively discussed. Budget allocations have not kept pace with growing need, and there is a deficiency of schools and teachers as well as of books and teaching aids. Forum participants noted differences in services provided in predominantly poorer regions of the country, such as areas of Mindanao, where drop-out rates in primary school reach as high as 50 percent. A secondary-school teacher in western Mindanao testified to the deplorable conditions in schools that make student learning difficult: 50 classrooms serve a student population of 11,000, and textbooks are so scarce that the few available must be shared by many students. As a result, literacy rates in the region are particularly low and youth have even greater difficulties finding gainful employment. Participants also noted that poor families are often unable to cover the increased costs of sending their children to school because, although primary and secondary education are free in theory, authorized fee collections for materials, vaccinations and meals amount to user fees that the poor cannot afford.

In the area of health care, participants indicated a deterioration in services provided over the past 20 years under structural adjustment as a result of insufficient expenditures and the ineffective allocation of the limited available funds. Liberalization of the health-care sector under the adjustment program in the 1980s led to the deregulation of pharmaceuticals and an increase in hospital and doctor fees. Privatization, manifested in the contracting out of services by hospitals, has reduced accessibility by increasing costs to consumers. Public clinics often lack medicines, and public services provide more curative than preventative care. Decentralization of health-care services in the 1990s has not been accompanied by the necessary transfer of funds and capacity to manage services at the local level. Participants also testified to the fact that NGOs have increasingly been put in the position of carrying the burden of service provision that should be the responsibility of the state.

Forum participants referred to the country's large debt-service burden as an obstacle to increasing the budget allocations for health and education. They recommended a budget increase of at least five percent for basic services and cited the need for greater efficiency in resource use and for improvement in the allocation of available resources, as well as for implementation of people-centered education and health-care systems that provide access to quality services for all segments of the population.


The Forum participants focused their attention on the adjustment package of interrelated free-market reforms comprising: deregulation; the liberalization of trade, investment and the flow of foreign capital; sweeping privatization; labor "flexibilization"; and cuts in social spending and in subsidies and support for small producers. They explained how, over the past 20 years, these and related policies that have thrown the Philippine economy wide open and promoted export production have increased the concentration of wealth, especially in foreign hands, and increased the country's debt burden, while imposing heavy costs on much of the Philippine population. These costs, the participants said, have included: a decrease in food security; extensive soil degradation and other environmental problems; serious health problems paralleling a decrease in affordable health care; the devastation of indigenous communities; the destruction of livelihoods; massive urban and overseas migration; the suppression of wages and incomes; the violation of human and labor rights; and a greatly expanded burden on women. The discussion of these adjustment policies and their effects, beyond engendering a broad understanding and consensus, also helped clarify the issues on which field research is necessary to further elucidate these links.

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