The government is giving counseling and retraining to “about 60,000 workers that could be affected nationwide” in the electronics industry as factories close down or cut workforces amid a deepening global recession, the secretary of labor said Thursday.

The labor department is “getting daily notices now not only of retrenchments but also of reduction of work shifts, reduction of working hours and compression of the workweek,” Secretary Marianito Roque said.

“The semiconductor industry is already getting hit,” Roque said in a television interview Thursday.

“We have seen this as early as three months ago,” he said. “We expected that we’ll be getting hit in the first semester of this year.”

Plants employing 19,000 people have so far reduced shifts or working hours, Roque said. He did not say how many had been laid off.

The job cuts highlight the poor state of the electronics industry and could be the beginning of a wave of job losses in the sector.

“We have to admit that this is not business as usual in the Philippines for the electronics sector and in the garments sector as well,” Roque said. “These will be the two particular areas that would be affected by the global financial crisis.”

Roque said the government expected the business process outsourcing (BPO) sector to take up some of the slack in labor demand, with a “nominal growth” in the call center industry expected to create about 130,000 jobs this year.

The Philippines also hopes to send its workers to “hotel jobs in Bulgaria, and even manufacturing jobs also in some countries like Australia,” he said.

Loss at Intel

A big loss will be at Intel Corp., the world’s biggest maker of microprocessors, which announced Thursday that it would close down this year its assembly test plant outside Manila, which has 1,800 workers left after a big retrenchment last November.

“The impact of the economic downturn on our business was more severe than we anticipated and the outlook is uncertain,” Intel Philippines said in a statement.

The announcement came a day after Intel slashed prices of a number of its chips and a week after it reported that its fourth-quarter revenue fell 23 percent from the year-earlier period and profit plummeted 90 percent.

Arthur Young, chair of Semiconductors and Electronics Industries in the Philippines Inc., said news of the Intel plant closure was “very sad” for the industry.

“Intel has been in the country for 35 years and has been a great contributor to the growth of the industry. It’s very sad to hear that they’re leaving,” he said in a telephone interview.

Markets all over the world are very soft and “rationalization is one of the few options left for companies,” Young said.

Another US giant, Texas Instruments Inc, announced last month that it had dismissed 392 workers at its plant in Baguio City. It is expected to let go of more workers.

The electronics sector accounts for about 70 percent of Philippine exports and employs 480,000 workers.

Intel said its laid-off employees would be “offered a severance package” and various “transition services.”

The plant, in Cavite province, manufactures Flash memory, microprocessors and chip sets. Intel said the closure was part of efforts to restructure its manufacturing operations worldwide.

It said it also planned to close two assembly test facilities in Penang, Malaysia, and halt production at wafer fabrication plants in Hillsboro, Oregon, and in Santa Clara, California. It said between 5,000 and 6,000 jobs would be affected, but added that some employees would be offered positions elsewhere in its operations.

Intel’s smaller rival, Advanced Micro Devices Inc. (AMD), is also being hit by the global downturn. It plans to cut 1,100 workers after dismissing 2,200 others in the two previous rounds of firings.

What went wrong

Young said the government should engage Intel management in an “exit interview,” to find out what went wrong and what could have been done differently to prevent the company’s departure from the country.

He said the Intel plant in Cavite had been suffering declines in returns over the past few years and had not been up to par with some of its neighbor-sites within the Intel network.

The opening of Intel’s Vietnam facility, for instance, should have given the government an idea that it should step up efforts to address issues that were making Intel’s Philippine operations less competitive than other sites, he said.

Young said the problems included infrastructure, power costs and power supply efficiency. “We recently got a reprieve from government by way of the ecozone [special economic zone] rate, but that should have been done earlier on,” he said.

State-owned electricity producer National Power Corp. and the retailer Manila Electric Co. offer large power users in special economic zones a special ecozone rate of P3.27 per kilowatt-hour.

Despite Intel’s closure, Trade and Industry Secretary Peter Favila expressed confidence that export and investment targets for the year would still be met.

“Our forecasts are already conservative. The country remains competitive,” Favila said.

He said Intel’s departure was understandable in light of worldwide difficulties. “Orders haven’t been materializing from the US, so I completely understand Intel’s decision,” he said. “The President also understands. Besides, we’re not the only one that was hit.” Abigail L. Ho, Riza T. Olchondra, The Associated Press and Agence France-Presse