Research on Labor Market Characteristics: A Comparison between

Philippines and Australia

Hours Worked
Philippines
The normal hours worked of an employee shall not exceed 8 hours a day.
However, Health Personnel shall have a maximum of 40 hours a week. If made to work
in excess of 40 hours, they are entitled to 30% additional pay. Overtime Work is work
rendered beyond 8 hours. Every hour worked in excess of 8 hours earns an additional
pay of P25%. The rate is 30% if done on a rest day or holiday. Generally, everyone is
covered by the law on overtime. Normal hours can be less than 8. The wage and benefits
of a part-time worker are in proportion to the number of hours worked. Assuming that
he should be earning P400.00 for an eight-hour work, he shall then get P200.00 for
work done in four hours. Employed persons are classified as either full-time workers or
part-time workers. Full-time workers are those who work for 40 hours or more, while
part-time workers work for less than 40 hours.

Of the total employed persons in

October 2013, 62.7 percent were full-time workers, while 36.3 percent were part-time
workers. By comparison, in October 2012, full-time workers comprised 64.2 percent
while part-time workers made up 34.8 percent.
Australia
The standard working week in Australia is 38 hours per week or 7.6 hours per
day, usually worked Monday to Friday. Work beyond that amount is overtime and
attracts a premium (Working Today).

Further, according to Working Today, work is arranged over a four-week, twentywork day cycle of 8 hours per day, with the accumulated 0.4 hours per day being taken
on the 20th day as an Accumulated or Rostered Day Off.
Thus, beyond 38 hours per week is overtime. Generally, it attracts a premium of
1.5 times the ordinary rate of pay for the first 3 hours (2 hours in some industries) and
double time thereafter (Working Today). Most awards require that employees be
available to work reasonable overtime if the employer wishes.
However, there is a right for an employee to refuse to do overtime that would
result in the employee working unreasonable hours which was introduced in the early
2000s by the Australian Industrial Relations Commission.
Victorian Minimum Wage Orders do not set any higher pay rate beyond 38 hours
per week (Working Today).

The graph shows the average actual hours worked. Source: Australian Bureau of
Statistics (ABS)
According to the article written by the Australian Bureau of Statistics entitled:
Trends in Hours Worked (2010), the average actual hours worked per employed
person have decreased over the past 32 years (ABS). Prior to the year 2000, there was
an increase in the average actual hours worked by both full-time and part-time

employed people. Since 2000, however, the average actual hours worked by full-time
employed people have been decreasing. The trend in average actual hours worked was
due to the changing full-time to part-time composition of the workforce (ABS, 2010).
Thus explains the fact that Australians are not working longer hours however it may
seem.
Wages
Philippines

Under Philippine law, wages are remunerations or earnings for services rendered.
Employers and employees may agree on rate but should not fall below the minimum
wages (P466/day) set by the Regional Tripartite Wages and Productivity Boards
(RTWPB) which has jurisdiction over the place of work. The pay of employees is
intended to be given whole to the employee in Philippine legal tender. Deductions from
employee wages are generally frowned upon with only a few allowed by law including
income tax, contributions to social welfare agencies such as SSS and Pag Ibig, and union
dues under appropriate agreements. A new law passed in 2008 exempts minimum

wage earners from paying income taxes. Because of this, no deductions will be made
from their pay on the basis of income tax.
Wages in Philippines decreased to 2327.50 Index Points in the first quarter of
2013 from 2613.30 Index Points in the fourth quarter of 2012. Wages in Philippines is
reported by the National Statistics Office of Philippines. Wages in Philippines averaged
1590.17 Index Points from 1995 until 2013, reaching an all-time high of 2613.30 Index
Points in the fourth quarter of 2012 and a record low of 870.27 Index Points in the first
quarter of 1995. In Philippines, wages are benchmarked using indexed salaries.
Australia
In the article written by Australian Industry Group (2013), the Wages Price
Index (WPI) is generally seen to be the most timely and reliable indicator of wage
changes in the Australian economy, while the Average Weekly Earnings data (AWE,
only released twice-yearly) is useful for comparing earnings levels across states and
industries.
The latest WPI show that total hourly rates of pay (excluding bonuses) grew by
0.6 per cent in the March quarter, to be 3.1 per cent higher over the year. This was
slower than the quarterly growth rate seen in the December quarter (0.8 per cent in the
quarter). The annual rate of wages growth is now at its slowest since June 2010
(Australian Industry Group, 2013).
In the private sector, total hourly rates of pay (excluding bonuses) grew by 0.5
per cent in the March quarter to be 3.1 per cent higher over the year. In the public
sector, total hourly rates of pay (excluding bonuses) grew by 0.7% to be 3.1% higher over
the year, down from 3.3% in the December 2012 quarter (Australian Industry Group,
2013).

State variations in wage increases reflected the strength of labour demand

in each state and possibly localized skill shortages. Western Australia recorded the
strongest increase in private sector wages in March 2013 (3.6%) followed by South
Australia (3.4%), Victoria (3.3%) and Tasmania (3.2%). Queensland and New South
Wales recorded the slowest rates of growth with 3.1% and 2.9% respectively (Australian
Industry Group, 2013).

Source: Econmagic.com
The trend index for Australia grew up by percentage each year since 2009.

In the annual change from 2012, according to Australian Bureau of Statistics

(2013), the trend index for Australia rose 2.5% through the year to the December
quarter 2013, and the seasonally adjusted index rose 2.6%. Furthermore, rises in the
original indexes through the year to the December quarter 2013 at the industry level
ranged from 1.6% for Professional, scientific and technical services to 3.3% for
Electricity, gas, water and waste services (ABS, 2013).
Labor Costs
Australia

The graph shows the labor cost per employee by state and territory.
TOTAL COSTS
Total labor costs incurred by employers in Australia during 2010-2011 were
$620,357 million (ABS, 2012). The components of the total labor costs are defined,
according to the Australian Bureau of Statistics (2012), as the following:
1. Earnings
Total employee remuneration during the reference year, regardless of the form of
remuneration. This comprises:

gross wages and salaries

the value of salary sacrificed (excluding fringe benefits tax)

the ungrossed value of fringe benefits provided by employers through

arrangements other than salary sacrifice
severance, termination and redundancy payments

Gross wages and salaries are net of amounts reimbursed for employees on government
employment programs. Workers compensation payments paid through the payroll and
fringe benefits tax paid by employers are excluded from earnings.
During 2010-2011, 87.3% of the total labor costs are comprised of employee
earnings.
2. Superannuation
Employer contributions to superannuation funds on behalf of employees. Contributions
by employees, or employer contributions under salary sacrifice arrangements, are
excluded.
Superannuation is the second largest component of the total labor costs with 7.6%.
3. Payroll tax
Employers whose wage and salary payments reach a specified level, as defined in each
states or territorys payroll tax legislation, are liable to pay this tax. Employers may
claim exemptions for some categories of employees. Religious, not-for-profit and
general government organizations are generally exempt from payroll tax.
Total labor costs comprised 3.0% of payroll tax during 2010-2011.
4. Workers compensation
Workers compensation costs comprise, in general, the costs of insurance premiums

paid plus any other costs not reimbursed by insurers. Premium rates are usually
determined by considering the industry of the employer and the employers previous
claims history. Non-reimbursed costs may vary depending on the legislation which
applies in each state, but can include wages and salaries, other costs such as medical and
legal costs, and lump sum settlement payments. In addition, most states and territories
allow very large employers to self-insure, where, except in extreme circumstances,
workers compensation costs are borne by the employers. The direct costs of selfinsurance are included in the estimates of workers' compensation costs in this
publication.
Workers compensation costs 1.7% of total labor costs.
5. Fringe benefits tax
A tax paid by employers due to fringe benefits provided for their employees. There are
exemptions which apply to some categories of employers (e.g. certain not-for-profit
organisations) and certain benefits (e.g. laptop computers). Estimates of the ungrossed
value of fringe benefits (a component of earnings) and fringe benefits tax both relate to
the year ended 31 March.
The smallest component of total labor costs in Australia during 2010-2011 is the fringe
benefits tax which is 0.5% of total labor costs.
Moreover, total labor cost are accounted by more than half of the percentage
from large businesses, which are firms with 100 or more employees with 61.2%; while
medium businesses, which are firms with 20-99 employees, and small businesses, or
firms with less than 20 employees, accounted for 19.0 and 19.8% respectively (ABS,
2012).

77.2% of the labor costs represent private sector employers which is equivalent to
about $478,968 million of the total labor costs (ABS, 2012). While the remaining, 22.8%
of the total, represents the public sector which includes which is equivalent to about
$141,389 million. The public sector includes public trading and financial enterprises,
moreover, the national, state or territory and local government departments and
authorities.
Child Labor and Education
Philippines
The Philippines has about 5.5 million child laborers (from five to 17 years old)
with nearly three million of them doing hazardous tasks, a 2011 survey on children
release by the National Statistics Office (NSO) showed. Hazardous child labor is defined
as being likely to harm childrens health, safety or morals by its nature or circumstances.
Children may be directly exposed to obvious work hazards such as sharp tools or
poisonous chemicals. Other hazards for child laborers may be less apparent, such as the
risk of abuse or problems resulting from long hours of work. Hazardous work is
considered as one of the worst forms of child labor. The root of child labor is directly
linked to poverty and lack of decent and productive work and also exposed to sex trade,
drug trafficking, other illicit activities and armed conflict.
The 2011 Survey on Children conducted by the National Statistics Office (NSO)
and released showed that out of the 29.019 million Filipino children aged 5-17 years old,
about 18.9 percent or 5.59 million were already working. This is higher than the 4
million Filipino working children registered in a 2001 survey conducted by the ILO and
the US Department of Labor. Of those 5.59 million children at work, 3.028 million were
considered as child laborers and 2.993 million were reported to be exposed to hazardous

child labor. The survey showed that 69.5 percent of child laborers, or 2.106 million, were
attending school. The Philippines has pledged to reduce by 75 percent all worst forms of
child labor by 2015, which is anchored on the United Nations millennium development
goal of achieving universal education.
Australia
Child labor laws in Australia is defined the employment of children as any person
under 18 years of age, is governed by a number of different federal, state, or territory
laws, as well as the provisions of the applicable industrial instrument (NSW Business
Chamber, 2012). Child labor laws are related to the employment of school-aged person,
state child employment laws and the relevant school leaving age.
Moreover, there are no maximum working hours in most states; however,
children under the age of 17 cannot work during school hours without special
permission (Angloinfo).
The context of the term child varied from some regions in Australia. It means
persons under the age of 16, except in New South Wales, where it meant any persons
under 15 (ABS, 2007).
In a study conducted in Queensland by the Commission for Children and
Younger People and Child Guardian (2005), child employment context has changed
over the past 15 years, with more students working at younger ages and for longer hours.
A high percentage of children are employed in industries such as retail and fast food.
Furthermore, South Australia does not have adequate child labor laws thus were
lagging behind the rest of the nation (The University of Adelaide, 2013).

Labor Force Participation Rates

Philippines

Labor Force Participation Rate in Philippines remained unchanged at 63.90

percent in the fourth quarter of 2013 from 63.90 percent in the third quarter of 2013.

Labor Force Participation Rate in Philippines is reported by the National Statistics

Office of Philippines. Labor Force Participation Rate in Philippines averaged 65.96
Percent from 1990 until 2013, reaching an all-time high of 94.70 percent in the fourth
quarter of 1993 and a record low of 63.20 Percent in the fourth quarter of 2007.
Australia

Source: Econmagic.com
In 2011-12, males aged 20-74 years had a higher labor force participation rate
(79%) than females in the same age group (65%) (ABS, 2013).
According to the Australian Bureau of Statistics (2013), the labor force
participation rate for males increased marginally between 2002-2003 and 2011-2012
(increased just over 1%), while it increased by just over 4% for females during the
period. The increase is due to the growth of the labor force participation of the older
female age groups. However, the labor force participation rate was higher for males than
females across all age groups (ABS, 2013).
Minimum Age of Workers
Australia

Child labor laws in Australia is defined the employment of children as any person
under 18 years of age, is governed by a number of different federal, state, or territory
laws, as well as the provisions of the applicable industrial instrument (NSW Business
Chamber, 2012). Child labor laws are related to the employment of school-aged person,
state child employment laws and the relevant school leaving age.
The context of the term child varied from some regions in Australia. It means
persons under the age of 16, except in New South Wales, where it meant any persons
under 15 (ABS, 2007).
Australia has not signed an international convention on a minimum age of
workers yet. Hence, the country is lagging behind much of the developed world (The
University of Adelaide, 2013).
Compulsory Education
Philippines

Compulsory education means all are required by law to attend school for the
prescribed duration. Compulsory education also clearly defines what and how many
years of education the government must provide for its citizens.
Education is offered through formal and non-formal systems. The number of
years of formal schooling in the Philippines is one of the shortest in the world. The
educational ladder has a 6+4+4 structure, (i.e., six years of elementary education, four
years of secondary education, and typically four years to gain a bachelors degree). But
now, the Federation of Associations of Private Schools and Administrators, the countrys
largest association of private schools, wants the two years of senior high school or
Grades 11 and 12 of the K to 12 program placed under the Commission on Higher
Education (CHED) and the Technical Education Skills and Development Authority
(TESDA) instead of the Department of Education (DepEd). The K-to-12 program would
equip high school students with the skills to land a job after graduation even without
enrolling in college and compete with their counterparts in other countries. Graduate
students may be eligible for an additional two to three more years of studying to
complete their post-graduate degrees.
Australia
Education in Australia is internationally recognized as being of a very high
standard (Angloinfo). Children can start schooling at the age of 3 but compulsory
education starts from ages 5 to 15. Compulsory education, further, is the responsibility
of state governments. Although the states each have their own education system, they all
follow the same model and receive extra funding from federal government (Angloinfo).

Comparative or Competitive Advantage

The comparative advantage of Australia over the Philippines is the wages.
There is annual increase in the wages, though grow little on the past 5 years, in
Australia while there is little to none of increase in the Philippines.
There is also a highly competitive education in Australia while the Philippines are
still in progress to make the education system likely.
However, labor costs in the Philippines are lower than in Australia which would
attract investors to the former.
Further, there are adequate policies that protect children in employment in the
Philippines while Australia has not signed an international convention that perhaps
protect younger children in employment.
Policy Recommendation
The researchers recommend the government of the Philippines to create more
programs that will induce more workers in the labor force. It is recommended to
encourage more investments while wages and labor are low in the country. It will then
reflect the employment status of the Philippines.
Moreover, it is recommended to increase wages at a gradual pace perhaps so as
to enthuse the labor force in working in the country or at least find a job.
Meanwhile in the context of education system of the Philippines which has been
newly enhanced thus it is recommended to promote competence in the academe
through further support for children and youth as well as the professionals to pursue
research and graduate studies or alike.
The government should monitor and strictly prohibit children on working in
hazardous workplaces. They should create policies that will reduce child employment in

the Philippines and rather support all the children complete school as it was compulsory
and a responsibility of the government.

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