In 1980, the revised Companies Code was enacted to “establish a new concept of commercial companies so that they are not simply entities established for private gain, but effective partners of the national government in the dissemination of benefits. of capitalism for the social and economic development of the nation. This planted the seed of corporate social license as an inclusive development force in the country.
The Philippine Constitution of 1987 further reminded corporations of their inclusiveness mandate by stating that “the use of property has a social function and all economic agents must contribute to the common good. … Corporations… have the right to own, establish and operate economic enterprises, subject to the duty of the state to promote distributive justice and to intervene when the common good requires it.
Scandals
In 2002, the Securities and Exchange Commission (SEC), following scandals that rocked the Western world following the Enron bankruptcy, promulgated the Code of Corporate Governance.
The new Code defines corporate governance as “a system by which shareholders, creditors and other stakeholders (emphasis added) of a company ensure that management improves the value of the company. while competing in an increasingly globalized market.
With this innovative introduction of the stakeholder concept, the SEC has asked directors and officers of corporations to consider not only the interests of shareholders and creditors, but also those of other parties who are affected or have an interest in it. the activities of the company. The SEC further broadened the stakeholder principle in the 2016 revision of the Corporate Governance Code for Listed Companies (PLC) by explicitly mentioning employees as stakeholders and requiring employee participation in the governance process. business.
Finally, in 2018, the SEC released its Sustainability Reporting Guidelines for DFCs. The guidelines call on DFC to disclose economic, environmental and social activities that contribute to sustainability. Disclosures in the social category include employee management, working conditions, labor standards and human rights. The timeline of legal and regulatory developments shows that inclusive stakeholder capitalism is the country’s public policy. Specifically, the government has gradually ordered companies to improve the well-being of employees, while pursuing the growth of their shareholders.
Elevation
Has the growth of the company translated into the improvement of employees?
Some economic analysts consider the 2010s to be the most prosperous period in Philippine development history.
OFW’s remittances were robust, averaging around $ 25 billion per year and with roughly the same level of annual revenue from the BPO industry. The country’s credit rating was upgraded to investment level for the first time. Based on these and the skyrocketing revenue growth among the top 1000 companies, the economy has grown by more than 6% per year, on average, from 9 trillion pesos in 2010 to 19 trillion pesos. in 2019. The Philippine Stock Exchange Index also more than doubled from around 3,000 in 2010 to around 8,000 in 2019.
What happened to poverty? In the early 2010s, 26.3% of Filipinos (23.3 million, or about 4 million families) were officially considered poor.
The country has pledged, as part of the United Nations Millennium Development Goals, to reduce the poverty rate to 17.2% by 2015. We have largely missed the target, reducing poverty to only 21.6%. We officially ended the decade with an incidence of poverty of 16.6%.
Surprisingly, the wealthiest Filipinos have profited tremendously from record growth in the economy and capital market over the decade. The former head of the National Economic and Development Authority, Cielito Habito, noted that “the increase in the wealth of our top 40 richest people already equates to the basics – 76.5%, or more than three-quarters – of the overall increase in the country’s income last year! He lamented our “oligarchic economy where most of the nation’s wealth and income is in the hands of a few.”
According to Ciel’s observation, The Economist reported that during the 2010s, the Philippines had the slowest rate of poverty reduction among its neighboring countries. World Bank data also shows the country has the slowest growth rate for its middle class, overtaken by Vietnam, Indonesia and Thailand. Looking at the decade as a whole, the country’s economic growth has therefore not been inclusive.
Regarding employees, the World Bank has drawn attention to the problem of poor Filipino workers.
In its 2018 report, Making Growth Work for the Poor, the bank observed that “poor quality jobs (or ‘working poverty’), rather than unemployment, is the biggest challenge in the Philippines.” The report states that “the main constraint facing poor households in urban areas is the low level of wages paid to unskilled workers.”
In summary, the 2010s were marked by what Delano Villanueva, a former economist at the International Monetary Fund, would call “social extraction” – a process where the elite take advantage of the political order to increase the returns to their advantage in already substantial capital while underpaid workers, most of whom are poor.
The path to follow
The United Nations Sustainable Development Goals have challenged countries to achieve decent work alongside economic growth.
The International Labor Organization defines decent work as “productive work, providing a fair income with security and social protection, preserving fundamental rights, offering equality of opportunity and treatment, prospects for personal development and the possibility of to be recognized and to make your voice heard. . “Businesses will have to work hard to get there.
On September 28, shareholders in the Philippines held their annual summit on “Building Better Businesses: Shifting Shareholders’ Attention to Stakeholdersâ€.
Keynote speaker Ambassador Benedicto Yujuico, president of the Philippine Chamber of Commerce and Industry, argued that “the pandemic has created the context in which transformative adaptation is at least possible. We have the unique opportunity to reset and rebuild the economy in an inclusive and sustainable way, an opportunity in which we can expand the capacity of our economy to create decent and quality jobs, especially that we have a young expanding workforce.
Pandemic
As we adapt to the pandemic, companies can only uplift their employees if they provide quality jobs that expand the productive capacity of their workers while paying them enough to live a decent life.
This will require substantial investments in the development of human capital and reduce the incomes of the richest, but it will surely diffuse the benefits of capitalism more effectively and benefit everyone in the long run. Let’s avoid the mistakes of the 2010s. Let’s really make business and economic growth inclusive this time around. INQ
This article reflects the personal opinion of the author and does not reflect the official position of the Management Association of the Philippines or the MAP. The author is co-chair of the MAP Social Justice Committee subcommittee for the Pact for Shared Prosperity and professor of business ethics at De La Salle University.
E-mail: [email protected]
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