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Workers Organizing pt 1 – Export Processing Zones

July 4, 2011

I was recently talking to a friend about Filipino workers and how they were organizing against the issues they faced but also in solidarity with other Filipinos. He told me that it has become very difficult for workers to organize because more and more jobs are contractual – not permanent positions (this sounded familiar to what is taking place in Canada), many of the factories have moved out of the major cities (this also sounded familiar), and the factories are being relocated to Export Processing Zones.

I remember hearing about Export Processing Zones in the Caribbean, primarily the case of the Canadian clothing company Gilden and its operations in Haiti, but I didn’t know much about them.

Here’s an 2007 article from on Export Processing Zones in Cavite, which is just south of Manila



It was almost midnight. The picket line in front of Phils-Jeon Garments Factory, Inc., a transnational corporation (TNC) inside the Cavite Economic Zone (CEZ), was nearly deserted. Some 130 workers were on strike due to the management’s refusal to bargain, forced leave of regular workers and illegal termination of their union president. Aling Norma (not her real name) a Phils-Jeon worker, is inside a makeshift tent with a co-worker when men wearing ski masks entered their tents. “Tinali kami [ng mga lalaki], piniringan at binusalan. Pagkatapos, isinakay kami sa sasakyan kasama yung mga gamit namin. Inupuan kami para hindi kami makita ng bantay. Maya-maya ibinaba kami sa labas ng CEZ” (We were tied, blindfolded and our mouths covered. We were forced to ride on a vehicle, with our belongings, and sat on to conceal our presence. Then we were released and left outside the gates of CEZ.) Aling Norma recounted.

The CEZ is one of the country ’s export processing zones (EPZs), employing over 80,000 workers. EPZs are categorized as special economic zones (SEZ), or “selected areas which have the potential to be developed into agro-industrial, industrial, tourist/recreational, commercial, banking, investment and financial centers,” as stated in the Special Economic Zone Act of 1995.

At present, there are 262 factories inside CEZ, about 240 of which are partly or fully-owned by foreign investors, among them Phils-Jeon and Chong Won Fashion, Inc.

The lure of incentives

Business establishments inside SEZs enjoy fiscal incentives that are exclusively granted by the government. For instance, while corporations outside SEZs are required to pay a 32 percent income tax, the companies in SEZs are exempt from paying taxes, with the condition that five percent of the annual gross income of all establishments inside the zone be remitted to the national government. Any capital equipment or machinery used in production is not subject to real property tax, while other establishments have to pay taxes for equipment bought and owned. Also, losses in operations for the first 10 years are deducted on the taxable income for the six years following the year of loss. However, since TNCs are concentrated in SEZs, these incentives usually benefit foreign investors alone — to the detriment of local industries which, given their small capital, cannot compete with big corporations.

Aside from these incentives, SEZs have strategic locations in Cavite, Laguna, Batangas, Rizal,
Quezon and similar areas where goods are traded through a network of international seaports and airports. The Philippine Economic Zone Authority (PEZA), the governing body of SEZs, ensures that there are no trade disruptions by monitoring the performance of workers.

Labor leaders, however, contest the composition of the PEZA, which includes representatives of the Department of Trade and Industry, Department of Finance, Department of Labor and Employment, Department of Interior and Local Government, National Economic and Development Authority, Bangko Sentral ng Pilipinas, and the ecozone business sector. Meanwhile, SEZ workers are unrepresented in the regulating body.

Labor leaders further assert that both the national government and PEZA seek to maximize the labor market through flexibility schemes that allow the expansion of TNCs. Among these flexibility schemes are depressed wages, excessive quotas, poor working conditions, and union busting.

Exploitative practices

The minimum wage in the CEZ is pegged at P272 ($6.03 at an exchange rate of $1=P45.04), an amount based on the needs of the workers and the capability of the capitalists to pay. Despite this, some factories inside the CEZ pay 25 percent less than the minimum wage for contractual workers. However, according to the National Wages and Productivity Commission, a family of six in Cavite needs a daily income of P669 ($14.85). Thus, even with both husband and wife earning a minimum wage, their combined income will still fall short of the required daily income.

In addition, some factories require the laborers to work beyond the regular working hours. Aling Rina (not her real name), a worker in Chong Won, said she had to work up to 48 hours nonstop to reach a daily quota of 1,500 to 5,500 pieces of clothing articles.

Aling Rina added that they are not allowed to eat, drink or use the toilet during working hours or even during overtime. Thus, urinary tract infection, usually caused by irregular urination, is common, as well as respiratory problems. Two of her co-workers even died — one due to over-exhaustion and another due to asthma attacks.

To combat these unfair labor practices, the workers formed unions that will represent them in collective bargaining agreements: Nagkakaisang Manggagawa ng Chong Won (NMCW or United Workers of Chong Won) and Kaisahan ng Manggagawa sa Phils-Jeon, Inc. (KMPJI or Unity of Workers of Phils-Jeon). Their employers retaliated by forming a union of their own and by refusing to hold a certification election, thereby obstructing the process of recognition of the two unions.

According to Antonio Tujan, Jr., Executive Director of IBON Foundation, the formation of unions is discouraged by TNCs since bargaining agreements tend to raise wages and prevent the extension of working hours. Unions also facilitate the organization of strikes and protest actions.

Ruling violence

President Gloria Macapagal-Arroyo’s Medium Term Development Plan for 2004-2010 equates harmonious labor relations with fewer strikes and more settlements or voluntary arbitration. Thus, some factories inside CEZ employ an unwritten ‘No Union, No Strike’ Policy. The workers who take part in unions are illegally terminated or, as in Aling Rina’s case, given more difficult jobs. From being a sewer, she became a trimmer who had to remain standing while she worked. She was also moved to a place with little ventilation, along with some of her co-workers who are active in NMCW.

“On the government’s part, the main device used to prevent strikes is what is called the assumption of jurisdiction (AJ),“ KMU spokesperson Prestoline Suyat said. “The government uses the AJ to stop strikes instead of investigating what triggered these. In the end, the disputes are resolved in a manner that favors the capitalists.”

NMCW and KMPJI launched their strikes simultaneously on September 25 last year. Two days after, KMPJI members were violently dispersed by PEZA’s Jantro Guards, and the CEZ police, injuring 13 workers. Last June 10 to 11, NMCW members were harassed by men wearing ski masks. “Ang nakapagtataka, mahigpit ang checkpoint noon sa CEZ, paano sila nakapasok?” (What is strange is that with the strict checkpoint at CEZ, how could they have entered?) asked Aling Norma.

Meanwhile, the violent dispersal of workers remained uninvestigated. The strikers were even sued by the management for slight physical injuries supposedly inflicted on the group that dispersed them.

Continuous struggle

After having been dispersed repeatedly and violently, the workers, including Aling Norma and Aling Rina, were forced to abandon their picket lines. The issues have now been brought to the courts: various cases have been filed against the managements of Phils-Jeon and Chong Won, including unfair labor practice, forced leave, illegal termination, slight physical injury, and grave threats. Chong Won has filed a declaration of bankruptcy in a trial court in Imus, Cavite. Phils- Jeon is still in operation.

Phils-Jeon and Chong Won are not the only companies guilty of unfair labor practices. Electronic factories, for instance, use chemicals hazardous to health without the knowledge of the workers. The effects of these chemicals vary from allergies to more serious cases of tuberculosis and cancer. In another case, a union leader of a CEZ factory was nearly killed in an ambush. There are also many cases of accidents due to lax safety precautions.

At present, CEZ workers continue their struggle not only against their employers, but also against anti-labor policies and directives issued by the government. For as long as the government favors these companies, the workers inside SEZs are left with no choice but to battle mechanisms which deny them their rights.


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