[OPINION] The Philippine job challenge: Action, not rhetoric

Committing to models of virtuosity, sustainability, and the strongest environment, social, and governance (ESG) standards when times are good is one thing. Adhering to these principles when the going gets tough is another matter, and tough times may well still lie ahead for the Philippines. 

The unemployment rate rose to 17.7% or some 7.3 million unemployed Filipinos in the labor force in April 2020, according to Philippines Statistic Authority data. This was a record high reflecting the impact of the nation’s COVID-19 economic shutdown. In contrast, the Philippine unemployment rate in January 2020 was 5.3%, while in April 2019, it was 5.1%.

Headlines abound about the challenges facing the nation’s largest and most visible businesses, from Philippine Airlines to Jollibee Foods to most recently, ABS-CBN. And the situation might well be even more dire for more than a million micro, small, and medium-size businesses (MSMEs) struggling to survive. By one estimate, many of these businesses in the Philippines have just two to 3 months worth of cash left. (READ: Duterte’s threats have chilling effect on investors, warns business group)

Business leaders in the Philippines and across the region, take note. Cross-sector partnerships will be key. Civil society must be engaged, and governments will have to play a role, whether through policy changes or direct or indirect financial support.

The ongoing COVID-19 pandemic has wreaked havoc across the Indo-Pacific region, displacing populations, challenging governments and healthcare systems, and even stretching the limits of “conscious capitalism” in some of the world’s most developed economies. This includes both the Philippines and the United States.

Even wealthy Singapore, with its exemplary governance, infrastructure, and business environment, has faced challenges. We see this firsthand as the city state is home to the Milken Institute Asia Center, where we both serve as fellows of this non-profit, non-partisan economic think tank.

During this public health crisis, the best – and not necessarily just the biggest – companies and large family businesses in the Philippines and across Asia should step forward and step up in their treatment of employees at home and abroad. Business owners, executives, and investors can help ensure that long-touted ESG leadership is not simply a buzzword from when times are good. More action, less rhetoric means going beyond and building upon existing COVID-19 assistance programs by taking steps to further support and sustain people’s livelihoods. (READ: [PODCAST] Pagdurusa ng manggagawang Pilipino sa gitna ng pandemya)

Regardless of what laws mandate, all stakeholders must focus on what the virus bodes for ESG standards implementation. While the best environmental and governance practices have been embraced by many companies, their true test now emerges in the “S,” or social issues space.

Traditionally, the “S” in ESG has covered several topics, including product safety and consumer protection, labor practices, workforce diversity, and human rights across a company’s supply chain.

How companies in the Philippines treat their employees in a given market now will influence how their business and product brands are perceived long after the pandemic. This will include treatment of female workers, contract employees and part-time staff.

Economic challenges are significant. Countries face what the International Monetary Fund (IMF) projects to be the worst recession since the Great Depression. According to the International Monetary Fund’s June 2020 world economic outlook report, the global economy is projected to shrink by 4.9% in 2020, a stark contrast to the 3.3% global GDP expansion for this year that it forecasted in January. 

For Southeast Asia, the IMF expects the “Great Lockdown” recession to lead to an overall decline of some 2.0% in 2020 GDP of the 5 largest ASEAN economies – Thailand, Singapore, Malaysia, Indonesia, and the Philippines. 
The coronavirus has tremendously disrupted business and society. Companies continue to cut costs and re-evaluate their workforces, and countless employees live in fear over their job security.

Growing job loss numbers underscore the scale of the global coronavirus shock. In the United States, unemployment filings – while not slowing –reached more than 26 million by the third week of April, nullifying all job gains made since the end of the last recession. And in economies with limited social safety nets and where large portions of the workforce constitute the informal sector, the loss of a job can be even more devastating on individual households.

According to a report by Maybank – “Labor Market – Retrenchments and Recovery” – the Philippines is set to have the highest unemployment in Southeast Asia this year. And around the world, overseas Filipinos are also facing unprecedented challenges, driving down remittances, with economic and social consequences at home and abroad.

Amid these challenges, however, anecdotes abound of major businesses around the world vowing to take care of their workforce through a variety of new measures.

Importantly, large corporations are not the only ones showing the way. Numerous smaller businesses with significantly fewer resources have also stepped up to strengthen safety nets for their employees via innovative measures.

Good leadership is innovative. Good leadership is contagious. Good leadership must show the way.

Whether in the Philippines or elsewhere, difficult times call for all companies – small, medium, and large, and family-owned, privately-held, or publicly-listed – to work towards greater employee security. Protecting employees today will enable businesses to establish a strong foundation for continued success and legitimate ESG bragging rights in a post-pandemic world. – Rappler.com

Curtis S. Chin, a former U.S. Ambassador to the Asian Development Bank, is the inaugural Asia Fellow of the Milken Institute. Abhinav Seetharaman is the Princeton-In-Asia Fellow at the Milken Institute Asia Center in Singapore. Follow them on Twitter at @curtisschin and @AbhiSeetharaman.