Since 2021, Filipino workers in the electronics and electrical (E&E) subsector have pressed capitalists for safe workplaces and just benefits. They called for a law for free vaccination and paid leave during the pandemic. Like other parts of the manufacturing sector, the E&E industry was deemed essential and all its workers were required to report to their factories even amid an upsurge.

The local economy leans heavily on the E&E subsector. It comprises the biggest portion of the country’s exports in terms of value. It is the single biggest contributor to the gross domestic product. This is despite the subsector being narrow and its growth on the decline. It is also dominated by foreign companies and does not have linkages to local industries.

The Philippines is not a significant contributor to the global E&E trade. It only contributes 1% to the global industry of semiconductors, its main product. Growth started to slow in 2007 and has not recovered since Intel withdrew its operations and transferred to Vietnam in 2009. From a 70% share in exports in 2001, it dropped to 43% in 2012 and 55% in 2019. Its share in the GDP also dropped from 15.58% in 2010 to 9.8% in 2018.

In the main, the country’s E&E is focused on assembly and testing or A&T of integrated circuits, mainly analog semiconductors. In the entire process of producing semiconductors, this is is the most manual or labor-intensive. There is no manufacturing of components from raw materials, or creation of any parts done in the country. There is also no research and development, and very minimal design and other high value-added processes.

Almost all E&E companies are owned or related to multinationals and are dependent on foreign capital. It is a part of a global assembly line for US, Japanese and South Korean firms. It gets its components from China, US and Japan. Some of the foreign companies which operate from the country are SMNI Electronics, Texas Instruments, Samsung, NXP and Toshiba. Their only link to local industries is for materials used for packaging the components.

At present, the Philippine E&E does not exist outside the flow of global trade. These past few years, it has been plagued by shortages of semiconductors. When the Covid-19 pandemic raged, it was hit by supply shortages, border closures and the international transport crisis.

The Philippine E&E is a small sector. Electronic firms, its biggest block, only number 259. This is less than 1% of the total number of establishments in the counrty. Because of its labor-intensive nature, it employs 344,450 workers or almost 12% of the total working force in the manufacturing sector. Its factories are concentrated in the National Capital Region and export processing zones in Southern Tagalog, Central Luzon and Central Visayas.

As it is mainly focused on A&T, E&E products from the Philippines are low value-added. Its value-added only reaches up to 10%, lower than the value-added in the manufacturing of beverages.

Electronic products do not have high margins. The subsector also do not have the potential for upgrading.

Around 80% of its workers in the production are low- and medium-skilled. Most of them are elementary and high school or technical-vocational school graduates. The industry hires only a small percentage of highly-skilled workers like engineers.

Foreign companies in the industry exploit the vast ocean of unemployed workers in the country. They also benefit greatly from the incentives and tax holidays of up to 10 years offered to them within export processing zones. They are among those pushing for further reduction of corporate taxes.