Convergence in Work Systems, ASEAN Integration and Implications to Professional Practice

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UP Vice President for Administration Maragtas SV Amante.

With the global movement of capital, people and resource issues in work and employment, as well as labor and capital relations, have become prominent. How would people, technology and resources from various countries and cultures  effectively produce desired results? How would the gains or losses arising from competition be shared through improvements in income distribution and living standards? In what areas of work systems—hiring, job design, employment terms and conditions, compensation, skills development, social security and disputes settlement—will there be more convergence?

These questions have been asked during many periods of industrial history, and significantly by the postwar scholars of industrialization. Kerr, Dunlop, Harbison and Myers’ Industrialism and Industrial Man (1960) offered the classic statement of the “logic of industrialism” thesis, which the authors proposed as a response to Marxian theory’s equation of industrial society with capitalism.

The authors suggested that as nations embark on the irreversible journey into industrialization, the unifying forces of industrialism such as class movement, bureaucracy and technology, would conduce societies towards convergence.

Specifically, Kerr et al. sought to identify the “inherent tendencies and implications of industrialization for the work place,” hoping to construct from this a portrait of the “principal features of the new society.”

The overriding elements common to industrial society which drive convergence include “rapid changes in science, technology, and methods of production; a high degree of occupational mobility, with continual training and retraining of the work force; increasing emphasis on formal education, particularly in the natural sciences, engineering, medicine, managerial training, and administrative law.” The convergence theorists also predicted a workforce “highly differentiated in terms of occupational titles and job classifications; the increasing importance of urban areas as centers of economic activity; and the increasing role of government in providing expanded public services, orchestrating the varied activities of a large and complex economy, and administering the “web of rules of industrial society.” Most significantly, Kerr et al. envisioned these developments as cutting across categories of political ideology and political systems.

The convergence hypothesis highlights the arguments that human resource management (HRM) within organizations would become increasingly similar due to a firm having a structure free from cultural influences with globalization. Multinational enterprises shall be free from the influence of national institutions making these global transmission belts of capital the main force for convergence. On the other hand, scholars supporting the divergence hypothesis argue that organizational structures are not set and that management practices would reflect national differences in regulations, government policies, culture and beliefs as well as national educational systems .

Within the ASEAN, it is important to track and examine the convergence towards improvements in the following:

  1. Enterprise development and job creation by domestic and foreign investment;
  2. Patterns of management control brought about by the diversity in capital equity;
  3. Management philosophy, structure and tools;
  4. Organizational culture and interventions: orientation seminars, training, etc.;
  5. Organizational effectiveness and tools: organizational development (OD), HRM, organizational behavior (OB)tools;
  • The role of  labor laws and policies in defining company policies especially with respect to workers rights.
Amante (seated at the table, 3rd from right) joins a panel of speakers during the Regional Discussion on the ASEAN Internship Program held at the UP Institute of Small-Scale Industries Teodoro Room on January 10, 2014.

Amante (seated at the table, 3rd from right) joins a panel of speakers during the Regional Discussion on the ASEAN Internship Program held at the UP Institute of Small-Scale Industries Teodoro Room on January 10, 2014.

Case study: Opening up the Philippine professions to foreigners  

The test of convergence is highlighted in the current efforts to promote the opening up of the practice of Philippine professions to foreigners, in the context of the Constitution and related  laws, and its strategic interface with the labor market.

Article XII, Section 12 of the Philippine Constitution of 1987 provides as follows:
“… xxx…The practice of all professions in the Philippines shall be limited to Filipino citizens, save in cases prescribed by law.” Other provisions of the Philippine Constitution provide for “…the sustained development of a reservoir of national talents consisting of Filipino scientists, entrepreneurs, professionals, managers, high level technical manpower, and skilled workers…” (Article XII, Section 1)

In pursuit of this Constitutional mandate, existing policy provides that: “The State recognizes the important role of professionals in nation-building and, towards this end, promotes the sustained development of a reservoir of professionals whose competence has been determined by honest and credible licensure examinations and whose standards of professional service and practice are internationally recognized and considered world-class brought about the regulatory measures, programs and activities that foster professional growth and advancement.” (Section 2. Statement of  Policy, Professional Regulation Commission (PRC) Modernization Act of 2000, R.A. No. 8981).

In the spirit of the provisions of the Constitution, Articles 40, 41 & 42 of the Philippine Labor Code (PLC) requiring employment permits for non-resident aliens remain in place.

While the practice of professions is primarily reserved for Filipino citizens, exceptions are recognized, based on existing laws mandating the professional regulatory boards, which provide for both individual and corporate business practice of professions.

There are 46 laws that regulate  Philippine professions, in addition to the practice of law, which is regulated by the Philippine Supreme Court.There is diversity of the rules and  regulations regarding ownership and control. Accredited specialty boards exist for certain professions such as medicine and dentistry.

The following professional regulatory laws do not provide for reciprocity in allowing foreigners to practice their profession:

  • Criminology: R.A. No. 6506 (An Act Creating the Board of Examiners for Criminologists in the Philippines and for other Purposes);
  • Forestry: R.A. No. 6239 (The Forestry Profession Law);
  • Pharmacy: R.A. No. 5921 (An Act Regulating the Practice of Pharmacy and Setting Standards of Pharmaceutical Education in the Philippines and for other Purposes); and
  • Radio Technology: R.A. No. 7431 (Radiologic Technology Act of 1992)
  • Law: the practice of law is regulated by the Supreme Court.

The following professional regulatory law does not provide for Special  Temporary Permit (STP):

  • Pharmacy: R.A. No. 5921 (An Act Regulating the Practice of Pharmacy and Setting Standards of Pharmaceutical Education in the Philippines and for other Purposes)

There are existing laws, rules and regulations on the registration of foreign professionals to enable them to practice in the Philippines. Many of the professional regulatory laws also provide for reciprocity. Foreign professionals are allowed limited practice by virtue of Special Temporary Permits (STPs), which fall within these exceptions.

The Philippines has entered into commitments through the General Agreement on Trade in Services (GATS) and the ASEAN Framework Agreement on Services (AFAS),  among others. The Philippines also has Mutual Recognition Agreements (MRAs) with other ASEAN countries which include the health professions (nursing, dentistry, etc.); accountancy; engineering; and architectural services. These are existing arrangements which affirm and bolster the country’s direction towards liberalizing the professional services.

Ms. Muhammad Nasir Hilvati, Deputy Director of the Universiti Kebangsaan Malaysia, addresses the audience.

Ms. Muhammad Nasir Hilvati, Deputy Director of the Universiti Kebangsaan Malaysia, addresses the audience.

Labor market pressures: Supply and demand of professionals

As a  force of convergence, the foreign chambers of commerce in the Philippines have lobbied for the removal of the practice of professions from the Foreign Investment Negative List  (FINL). They have also requested action on the liberalisation of the entry of foreign managers and professionals into the Philippines. There is also a pending proposal to repeal the requirement of reciprocity for foreign professionals to practice in the Philippines. While all other laws, regulations and requirements for the individual practice of professions remain in force, there would be important implications such as equal treatment of both Filipino and foreign professionals in registration and processing requirements, including the ownership and control of enterprises which would be channels of investment for the corporate practice of professions.

It is important to distinguish between foreign and local or domestic labor market effects, in terms of the surpluses or shortages for certain skills and occupations. Many professional occupations have niches in highly globalized industries, such as shipping crew (both officers and ordinary seafarers), airline pilots and crew, health care, finance, engineering,  architecture, and the like.

Elasticity of demand refers to the response of employers to hire more or less a certain group of skills or occupations, depending on changes in pay rates and other compensation.

Elasticity of supply refers to the response of professionals or skilled workers to changes in pay rates and other compensation.

Skills refer to both the ability and capacity acquired through deliberate, systematic, and sustained effort to smoothly and adaptively carry out complex activities or job functions involving ideas (cognitive skills), things (technical skills), and/or people (interpersonal skills). Skills are acquired through training, and certification. Skills could be generic to the industry, enabling workers to move from one firm to another; or firm-specific acquired through on-the-job training (OJT). Blue collar workers are usually referred to as skilled labor, while professionals who are white collar workers have certified competencies and expertise, acquired through formal education and licensure.

Skills occupational shortage or surplus is the interaction between labor demand and supply, within a specific time frame and geographic space. Shortage or surplus is also a function of compensation and working conditions, on the supply side. Labor supply depends on compensation and working conditions, and other terms and conditions of the contract of services. Critical skills such as rural health professionals for instance have inelastic demand, meaning poor and rural communities need the doctors, nurses and other health practitioners, regardless of fees for professional services. On the other hand, certain professions such as nurses, marine transport or aircraft mechanics have high supply elasticity—meaning more young people are willing to work for these professions due to the high compensation offered in foreign countries.

The Philippines has specific needs in terms of critical skills and occupations to serve the nation, in both the public and private sector. Examples include rural health professionals. These needs are over and above the requirements of industry. The Constitutional mandate is to support and promote “…the sustained development of a reservoir of national talents consisting of Filipino scientists, entrepreneurs, professionals, managers, high level technical manpower, and skilled workers.”

Filipino professionals who used to practice in foreign countries are highly specialized. These Filipino professional experts may decide to go home and practice in the Philippines. Under current regulations, they cannot practice their high level profession in the Philippines since they have not taken the PRC board exams. There is a need to provide for exemptions for these cases. Visiting professors who are also high level professionals and experts in academe could practice their profession in the Philippines. The STPs are only for foreigners. But Filipinos who are from abroad, and decide to be  returning scientists or experts (“balik-scientist”) under the DOST program could not be given STPs to practice their professions due to the nationality requirement.

Sound labor market policies should include policies to put in place supportive human resource development programs, such as competency skills training, upgrading and retooling. These include career or occupational guidance programs for job seekers, with timely access to information on the availability and location of job vacancies.

Conclusions: Towards a new social contract

The interdependence of social and economic systems, and mediated by new technology influence the institutions, processes and outcomes of such integration, are becoming more evident as forces of convergence in work systems, including the ASEAN.

International and transnational linkages will continue to grow but even more important, even as national and purely domestic policies and practices will need to adjust to the growing size and scope of an integrating global economy. In Asia, especially among the “emerging economies,” the shift in framework and processes at the workplace may indicate a much more significant, and dynamic field.

With increasing regional economic integration especially in ASEAN, there is a demand for best practices in the priority areas of trade, business, including labor and employment relations. People to people cooperation and social dialogue with producers and consumers, as well as business, workers, employers and government are keys to eliminating the social tensions from the inequalities from regional integration.

At the same time, the ASEAN community, through their people’s organizations, need to be fully provided with the fundamental awareness for them to directly benefit from the regional integration, with guarantees for the exercise of rights to freedom of association and collective bargaining, to improve wages, health and safety, job security and other working conditions. Labor and employment relations need to be continuously improved, through harmonized labor laws, equal opportunities for employment, skills development, fair procedures for the settlement of labor disputes, and compensation.

The demand for greater people-to-people solidarity comes along with the “mixed noodles” of bilateral and multilateral free trade agreements between Asian countries (Japan, China, and Korea; ASEAN), with India, Europe, the United States, Australia, and other emerging economies. Some of the FTAs had provisions on labor exchange, referred to as “the movement of natural persons,” including skilled people.

A new social contract is built on the rational expectation that ASEAN peoples through their community and people organizations are able to build strong and sustainable economies together, to guarantee the elimination of social and income inequalities, green-friendly competitive opportunities for entrepreneurship, mutually beneficial and progressive trade and business investments to create decent and rewarding jobs.

With people-to-people cooperation, a strong and prosperous ASEAN of diverse cultures and communities would be a reality through shared values and expectations of the people who are producers and consumers in the real economy, including workers, employers, and economic and business leaders who with their hard work are rewarded with better jobs, higher incomes, social protection and improved lives with sustainable, green economies. With the commitment and hard work of the diverse peoples and cultures of ASEAN, this vision should be a reality soon.
The ideas expressed in this article are the author’s own personal views, and are not the official position of the UP.

Dr. Amante is vice-president for Administration and professor, School of Labor and Industrial Relations (SoLAIR), University of the Philippines. He earned his BA in Economics from UP, MA in Policy Economics from the University of Illinois, and PhD in Business and Commerce, major in Industrial Relations, from Keio University in Tokyo. Email him at [email protected]
For more articles on the ASEAN Integration from the UP Forum, please click here.