Research Paper

“The Impact of Globalization on Employment in

the Philippines”

Submitted by:

Sayaboc, Mary Grace

Cabillo, Mae

Submitted to:

Sir Jeremy Sinoy Sates

June 14, 2023

 Table of Contents

Abstract………………………………………………………………………...….….…3

Introduction…………………………………………………………………….……..…4

Problem Statement…………………………………………………………….……...…5

Objectives…………………………………………………………………..…….…......5

Significance of the Study………………………………………………….……………6

Scopes and Limitations……………………………………………………….…….…..8

Conclusion……………………………………………………………………………..10

References………………………………………………………………………….…..11

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 Abstract

This paper presents one of the few empirical estimates of the impact of
globalization, here represented by trade flows, on employment level and structure
using Philippine data. Using both aggregate and sub-industry level manufacturing
data, the paper shows that increases in the propensity to export shift the demand for
labor upward. It also shows that the impact of the propensity to import on labor
demand is unclear, yielding significantly positive to insignificant coefficients. In
terms of employment structure, the impact of openness on the proportion of
women workers is not significant at the aggregate level; at the manufacturing
sub-industry level, however, the increase in the propensity to export is a boon for
women workers. Finally, increases in export propensity increase the proportion of
low-skilled production workers both at the aggregate and manufacturing
sub-industry levels.

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 Chapter I

Introduction

According to Anciceto C. Orbeta Jr, globalization has been associated with

profound changes in the labor market such as changes in the level and structure of
labor demand, in skill shortages and relative wages, and in employment elasticities,
among others. All of these have far-reaching implications on workers’ welfare and
therefore on the success of the process of adjustment to globalization itself. The
heated debates on these issues are clear indications that this is far from being
resolved. The paper contributes to this debate by disentangling some of these
issues and providing an empirical basis for some of the arguments.

A better understanding of the impact of globalization will guide analysts and

policymakers in the design of a policy environment that will allow workers to
better ride the tide of globalization. O’Rourke and Williamson [2000] defined
globalization to mean “the integration of international commodity markets”.
Globalization is characterized by two major aspects that have a profound impact on
labor markets. One is the increase in cross-border movements (trade) of final goods
and services. The other is the increase in the cross-border flow of production
inputs—namely, labor, capital, and technology. Of course, globalization has other
aspects, such as the increase in the social interaction of peoples (see, for example,
Castles [1999] citing Held et al. [1999], but these are of limited importance for the
purposes of this paper.

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II. Problem Statement

The impact of globalization on employment in the Philippines has been significant

and has brought about various effects on the labor market. Globalization,
characterized by increased international trade, foreign direct investment, and
technological advancements, has both positive and negative consequences for
employment in the country. Globalization has also played a role in the transfer of
knowledge, technology, and skills to the Philippines. Multinational corporations
and foreign investors often introduce advanced technologies and management
practices, leading to increased productivity and efficiency in local industries. This
can result in the creation of high-skilled jobs and the development of a more
competitive workforce.

2.1 Objective:

● To estimate the impact of globalization, represented by trade flows, on employment

levels in the Philippines.
● To examine the effect of increased propensity to export on the demand for labor.
● To analyze the impact of the propensity o import on labor demand and determine its
significance.
● To assess the influence of globalization on the employment structure, particularly the
proportion of women workers.
● To investigate the relationship between export propensity and the proportion of
low-skilled production workers.
● To contribute empirical evidence and insight to the ongoing debate on the effects of
globalization on labor markets.
● *To provide a better understanding of the implication of globalization for workers'
welfare and the adjustment process.

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III. Significance of the Study

The significance of this study on the impact of globalization on employment

in the Philippines is the study contributes to the limited empirical research on
the specific impact of globalization, particularly trade flows, on employment
in the Philippines. By providing empirical estimates and analysis, it adds to
the body of knowledge regarding the relationship between globalization and
employment dynamics. The findings of this study can guide policymakers in
formulating effective policies and strategies to address the challenges and
harness the benefits of globalization on employment. Understanding the
specific impacts on labor demand, employment structure, and gender
dynamics can help in designing targeted interventions and initiatives to
promote inclusive growth and improve workers' welfare.

Insights for labor market adjustments. Globalization brings about changes in

labor markets, and understanding these changes is crucial for workers and
industries to adapt and thrive. This study provides insights into the
adjustments that occur in the labor market due to globalization, such as
changes in skill requirements and employment composition. Such insights
can help individuals, industries, and labor market institutions in making
informed decisions and adapting to the evolving demands of the global
economy. Also, the study examines the impact of globalization on the
proportion of women workers in the labor market. Analyzing the effects at
both the aggregate and sub-industry levels provides insights into the potential
opportunities or challenges faced by women in the context of globalization.

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This can inform policies and initiatives aimed at promoting gender equality
and empowering women in the workforce. And the contextual relevance
since the study focuses on the Philippines, a country that has experienced
significant globalization effects.

By examining the specific context of the Philippines, the findings of this

study can be directly relevant and applicable to policymakers, researchers,
and stakeholders in the country. It provides a localized perspective on the
impacts of globalization on employment, which can inform targeted
interventions and strategies. Overall, the significance of this study lies in its
contribution to knowledge, policy guidance, insights for labor market
adjustments, attention to gender dynamics, and contextual relevance to the
Philippines. It aims to enhance understanding and facilitate evidence-based
decision-making regarding the effects of globalization on employment in the
country

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IV. Scopes and Limitations

The scope of the study is that it focuses on the Philippines since the study
specifically examines the impact of globalization on employment in the
Philippines. It provides insights into the Philippine labor market dynamics and how
globalization influences employment levels and structure within the country. The
analysis of trade flows focuses on the impact of trade flows, including exports and
imports, on employment. It explores how changes in the propensity to export and
import affect labor demand and the composition of the workforce.

Also in a sub-industry level analysis, the study goes beyond the aggregate level and
analyzes the impact of globalization on employment structure at the sub-industry
level within the manufacturing sector. This allows for a more detailed examination
of the effects within specific industries. And the study also considers the gender
dimension of the impact of globalization on employment. It investigates the
influence of globalization on the proportion of women workers, providing insights
into the potential gender implications of globalization in the labor market.

The limitations of the study are the data because the study relies on available data
sources, which may have limitations in terms of coverage, accuracy, or timeliness.
The analysis is based on the data available at the time of the study, and any
changes or updates in data could affect the findings. Its causality and
generalizability examine the relationship between globalization and employment,
establishing a causal link can be challenging. Other factors, such as domestic
policies, technological advancements, and economic conditions, can also influence
employment levels and structure. The findings of the study may be specific to the
Philippines and may not be directly generalizable to other countries or contexts.

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Also, it limited variables since the study primarily focuses on the impact of trade
flows on employment. Other aspects of globalization, such as foreign direct
investment and technological advancements, are not extensively explored. The
study may not capture the full range of factors that contribute to changes in
employment due to globalization.

And the complex nature of globalization is a multifaceted phenomenon with

interconnected economic, social, and political dimensions. The study may not
capture the full complexity of globalization and its diverse impacts on
employment. Other factors, such as social interactions and cultural changes, which
are beyond the scope of this study, may also play a role in shaping labor market
outcomes. Timeframe and knowledge cutoff: The study's findings are based on the
available literature and data up until the knowledge cutoff date of September 2021.
Changes in the global and national economic landscape beyond this timeframe may
not be fully reflected in the study.

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 V. Conclusion

The impact of globalization on employment in the Philippines has been

multifaceted. On one hand, globalization has led to the creation of new job
opportunities, particularly in sectors such as manufacturing, services, and
information technology. It has attracted foreign investment and fostered the
growth of export-oriented industries, providing employment to many
Filipinos. Additionally, globalization has prompted the demand for skilled
labor, leading to skill upgrading and improved employability for individuals.

However, globalization has also brought challenges to the employment

landscape in the Philippines. The pressure of global competition has resulted
in wage stagnation or even wage cuts in some labor-intensive industries. The
expansion of the informal sector and precarious work has created
vulnerabilities for workers, as they lack social protection and adequate
benefits. Moreover, the phenomenon of brain drain, with highly skilled
professionals leaving the country for better opportunities elsewhere, has
created a shortage of skilled labor domestically.

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 References

1. Orbeta. The impact of globalization on employment in the Philippines

https://ideas.repec.org/a/phs/prejrn/v39y2002i2p1-36.html.
2. StudyMode. Effects of Globalization in the Philippines.
https://www.studymode.com/essays/Effects-Of-Globalization-In-The-Philippi
nes-1120679.html.

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