You are on page 1of 50

Job creation:



21 July 2010

Layunin nating paramihin ang

trabaho dito sa ating bansa Pres.


Benigno C. Aquino III, Inaugural Address, 31 June
2010

Mahigit anim na milyong trabaho,

kung maaari sampung milyong


trabaho Pres. Gloria M. Arroyo, Inaugural
Address, 30 June 2004

Sa abot

ng aking makakayabibigyan
natin ang masa ng hanapbuhay at
dangal sa araw-araw Pres. Joseph E. Estrada,
Inaugural Address, 30 June 1998

We must get the entire economy to

generate productive employment


keeping in mind that for each citizen, a
job means not merely material income,
but social usefulness and self-
Pres. Fidel V. Ramos, Inaugural Address, 30 June
1992

Wages and salaries account for 54


percent of household income. (FIES 2006)
41 percent of households depend on
wages and salaries for at least 50 percent
of their income. (FIES 2006)
Income from self-employment is

which understates the importance of
labor income for majority of households.

Unemployment rate, 1998-2009


14.00
12.00

Percent

10.00
8.00
6.00
4.00

2.00
0.00

Unemployment in selected Southeast Asian


countries, 2007-2008
Country

Indonesia
Malaysia
Philippines
Singapore
Thailand

Labor Force Unemployment


Participation Rate
Rate
67.5
62.4
64.9
63.6
72.5

8.4
3.2
7.4
3.2
1.4

Unemployment by age group, 2009


Age group Labor Force Unemployment Share
(in thousands) Rate
All
37,892
7.5
100.0
15-24
8,168
17.6
50.8
25-34
10,072
8.3
29.5
35-44
8,416
3.2
9.5
45-54
6,364
2.8
6.3
55-64
3,401
2.7
3.2
65+
1,472
1.3
0.7

Regional unemployment rate


ARMM
Caraga
SOCCSKSARGEN
Davao Region
Northern Mindanao
Zamboanga Peninsula
Eastern Visayas

2008

Central Visayas

2004

Western Visayas
Bicol Region
MIMAROPA
CALABARZON
Central Luzon
Cagayan Valley
Ilocos Region
Cordillera Admininistrative Region

National Capital Region

0.0
Source: Yearbook of Labor Statistics, 2009.

5.0

10.0

15.0

20.0

Poverty, labor force participation, and


unemployment

1998
2006
Poor Non-poor Poor Non-poor
Out of labor force 19.2 80.8 26.8 73.2
Unemployed
17.4 82.6 20.5 79.4

Unemployment by educational attainment,


2008
Educational
Attainment
All
No grade
Elementary
High school
College +

Labor Force Unemployment Share


(in thousands)Rate
36,805
7.4
100.0
660
2.1
0.5
11,425
3.3
14.0
14,457
8.6
45.5
10,263
10.6
39.9

Regional underemployment rate


ARMM
Caraga
SOCCSKSARGEN
Davao Region
Northern Mindanao
Zamboanga Peninsula
Eastern Visayas
Central Visayas

2008

Western Visayas

2004

Bicol Region
MIMAROPA
CALABARZON
Central Luzon
Cagayan Valley
Ilocos Region
Cordillera Admininistrative Region

National Capital Region

0.0
Source: Yearbook of Labor Statistics, 2009.

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

Growth of GDP and aggregate


employment, 1999-2009
8.0%
7.0%

6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
-1.0%

-2.0%

Employment
GDP

Employment by sector and class of worker


2003-2009
2003

2004

2005

2006

2007

2008

2009

30,635

31,613

32,313

32,636

33,560

34,089

35,061

BY SECTOR (shares)
Agriculture, Fishing, & Forestry 37
Industry
16
Manufacturing
10
Services
48

36
16
10
48

36
16
10
48

36
15
9
49

35
15
9
50

35
15
9
50

34
15
8
51

BY CLASS OF WORKER (shares)


Wage & Salary Workers
50
Self-Employed
38
Unpaid Family Workers
12

52
37
11

50
37
12

51
37
12

52
36
12

52
35
12

53
35
12

TOTAL EMPLOYMENT (in '000)

Source: Philippine Industry Yearbook of Labor Statistics (2008), Current Labor Statistics (April 2010)

Labor market mismatches


2 in every 5 establishments have job
openings
Approximately 1/3 (or 35.3%) of which are
-to-

Hard-to-Fill Vacancies
Defined as vacancies for which
establishments found difficulties in
recruitment

BLES-K>^,:
April 2010

1 out of 4 hard to fill vacancies is for a


professional worker
1
2
3
4
5
6
7
8
9
10

Top 10 Hard-to-Fill Vacancies


(Professionals)
Accountants
Systems analysts & designers
Electrical engineers
Computer programmers
Computer engineers
Mechanical engineers
Chemical engineers
HRD professionals
Electronics & communications engineers
Industrial engineers

11
12
13
14
15
16
17
18
19
20

Next Top 10 Hard-to-Fill Vacancies


(Professionals)
Medical technologists
Civil engineers
Journalists/writers
Pharmacists
Architects
Chemists
Librarians/archivists
Medical doctors
Geologists and geophysicists
Social work professionals

BLES-K>^,:
April 2010
12.7% of hard-to-fill vacancies are for
technicians and associate professionals

1
2
3
4
5

Top 5 Hard-to-Fill Vacancies


(Technicians and Associate Professions)
Mechanical engineering technicians
Aircraft pilots, navigators and flight engineers
Bookkeepers
Social work associate professionals
Air traffic safety technicians

BLES-K>^,:
April 2010
Nearly half of the hard-to-fill vacancies are for clerks

Top 5 Hard-to-Fill Vacancies (Clerks)


1 Call center agents
2 Cashiers & ticket clerks
3 Accounting & bookkeeping clerks
4 Data entry operators
5 Medical transcriptionists

BLES-K>^,:
April 2010
Recruitment Criteria & Practices:
College degree is a minimum requirement.
Years of work experience is a big advantage in job search.
Network of friends/relatives/neighbors and classified ads
are the most dominant modes of recruitment.
School preference is not important in recruitment.
Employers have high regard for the 
readiness.

Employment insecurity
Percentage disagreeing or strongly disagreeing
D(Source: Green, 2009)

Difficulty of job replacement and worry about


job loss Source: Green, 2009)

Establishments Resorting to Permanent Closure/Retrenchment Due to


Economic Reasons and Permanently Displaced Workers

3,500

80,000

3,000

70,000
60,000

2,500

50,000

2,000

40,000
1,500

30,000

ESTABLISHMENTS Resorting to
Permanent Closure (L)
DISPLACED WORKERS (R )

1,000

20,000

500

10,000

0
2003

2004

Source: Yearbook of Labor Statistics, 2008.

2005

2006

2007

Establishments resorting to permanent


closure/retrenchment (by reason)
INDICATOR
REASONS

Establishments Reporting
2003

2004

2005

2006

2007

3,262

2,008

2,943

2,979

2,468

720

419

505

498

325

Uncompetitive Price of Product

27

25

40

30

10

C ompetition from Imported Products

12

10

16

11

High C ost of Production

88

75

92

72

75

111

70

91

67

44

431

339

526

690

443

24

18

20

16

1,566

904

1,343

1,302

1,265

C hange in Management/Merger

97

43

70

65

49

Lack of Raw Materials

28

17

25

20

12

40

22

15

149

85

177

181

210

Lack of Market

Lack of C apital
Peso Depreciation
Financial Losses
Economic C risis
Reorganization/Downsizing/Redundancy

Minimum Wage Rate Increase


Others

Source: Yearbook of Labor Statistics, 2008.

Permanently displaced workers (by reason)


INDICATOR

Displaced Workers
2003

2004

2005

2006

2007

REASONS

67,977

36,163

57,594

59,376

51,125

Lack of Market

22,734

9,932

11,146

14,947

7,458

Uncompetitive Price of Product

829

1,857

1,523

1,089

282

C ompetition from Imported Products

150

117

175

519

757

High C ost of Production

3,421

1,970

2,062

1,231

2,019

Lack of C apital

1,810

968

2,511

1,603

1,585

58

48

25

338

9,222

7,134

11,601

13,133

12,066

655

118

697

414

138

18,788

9,452

14,103

15,981

17,350

C hange in Management/Merger

2,666

1,705

5,253

2,196

1,864

Lack of Raw Materials

1,626

890

5,461

1,148

569

78

54

580

457

484

5,940

1,918

2,457

6,658

6,215

Peso Depreciation
Financial Losses
Economic C risis
Reorganization/Downsizing/Redundancy

Minimum Wage Rate Increase


Others

Source: Yearbook of Labor Statistics, 2008.

Permanently Displaced Workers by Region, 2009 (preliminary)


Caraga
Central Mindanao
Southern Mindanao
Northern Mindanao
Western Mindanao
Eastern Visayas
Central Visayas
Western Visayas
Bicol Region
MIMAROPA
CALABARZON
Central Luzon
Cagayan Valley
Ilocos Region
Cordillera Administrative Region
National Capital Region
0
Source: Yearbook of Labor Statistics, 2009.

5,000 10,000 15,000 20,000 25,000 30,000

Permanently Displaced Workers by Industry


2007

Wholesale and Retail


Trade, Repair of Motor
Vehicles, Motorcycles
and Personal and
Household Goods
Manufacturing

2006

2005
Agriculture, Hunting
and Forestry

2004

ALL INDUSTRIES

2003
0

20,000

Source: Yearbook of Labor Statistics, 2008.

40,000

60,000

80,000

Accession & separation rates


NCR, 2003-2008
Accession rate

Separation rate
10.47

10.75

9.38

9.22

8.66
7.67

6.82
6.76

8.37

7.7

8.4

7.64

7.12
6.09

2003

2004

2005

Source: BLES, Current Labor Statistics, various years.

2006

2007

2008

2009

Labor turnover rate, NCR 2003-2008


Turnover Rate = (Accession Rate - Separation Rate)

3
2.5
2
1.5
1
0.5
0
2003

2004

Source: BLES, Current Labor Statistics, various years.

2005

2006

2007

2008

Labor turnover rate, NCR 2003-2008


Accession Rate

12

Due to replacement

10

10

Due to expansion

0
2003

2004

2005

2006

Separation Rate

12

2007

Source: BLES, Current Labor Statistics, various years.

2008

Employer-initiated
Employee-initiated

2003

2004

2005

2006

2007

2008

Insecurity in employment is popularly


associated with the use of short-term,
contingent, low-paying contracts.
86 percent of 1200 firms (PLFS, 2000)
30 percent of 2.5 million workers in
establishments with more than 20 workers
(BLES, 2004)
28 percent of rank-and-file employees are
non-regular (BLES 2008)

Insecurity also depends upon the ease of


finding a job that is comparable to the present
one.
Displaced workers have a low re-absorption
rate and options limited to short-term jobs.
A high percentage either become unemployed
or prematurely exit the labor force making re-
absorption more difficult.
Exit from labor force becomes permanent
with skills deterioration.

Human capital investment is key to


employment security.
The best insurance against permanent job loss
is lifelong education and training.
But this needs to be complemented by a labor
market information system and some form of
income support to mitigate losses arising from
job separations.

Labor market flexibility is equated with job


insecurity in the Philippines because of the
dominance of numerical flexibility as a
strategy to adjust to competition.
&
states which underwrite a supportive social
Z

Do labor regulations inhibit job


creation?
Most common are : minimum wages and
employment protection
Minimum wage still an intensely debated
issue in the Philippines
Employment protection: some labor
contracts are considered illegal (labor-only
contracting); employees have to be

employer

Level of minimum wages in 2007 (PPP US$)

WDtth highest out


of 130 (among top 50%)

Source: ILO, March 2009

Levels of minimum wages relative to


GDP per capita: developing &
transition economies

Source: ILO, March 2009

Wages and minimum wages (monthly


levels in local currency, 2002/2004)

Source: Saget (2008)

D
`MWs that seem far too high to be considered
reasonable

`Maxi MWs the MW is too high to be


considered as a genuine MW
Causes: MW negotiation tends to become a
platform for actual wage negotiations, reinforced
by system of exemptions

Scope of Philippine minimum wages


Limited only to wage and salary workers in private
establishments (which is about half of the employed) and
family-operated activities
Employed persons by class of workers
share to total, 1991-2007

Employed Persons by Class of Workers (Share to total), 1991-2007

100
90
80

Around 12% are employers

70

in percent

60

Around 75% worked for private


establishments (roughly a third of
the total employed); the rest
worked for government

50
40
30
20

Wage and Salary Workers

Own-account workers

Unpaid Family workers

10

Source: NSO Labor Force Surveys

20
07

19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
r

Poverty and employment by class of


worker (1998, in percent)
Class of worker

Poor

Non-poor

Wage and salary

39.8

50.9

Self-employed

40.9

37.1

Unpaid family worker

19.3

12.0

Total

100.0

100.0

Population in thousands

6,336

20,951

Scope of Philippine minimum wages


Exemptions and non-compliance
Workers in micro, cottage, and small
Small and medium enterprises (SMEs) comprise 99.6%
of all registered business in the Philippines and employ
70% of the workforce (NSCB, 2001)
The analysis of geographic distribution of enterprises
throughout the country indicates a high concentration
in the National Capital Region (NCR), which accounts
for 24.4% of all establishments and 40.1% of all
employees.

Part-time workers

^
38% of non-agricultural workers receive wages lower
than MW; 78% in agriculture
Close to 50% in 15-24 age group earn below the MW
By sector, proportions below MW are
Wholesale and retail trade 50%
Manufacturing at least 30%
Transport, communication and storage above
30%
Community, social and personal services 27-32%
NCR increased after 2005

Views on the minimum wage


Dt
in fact it has been set beyond that level;
viewed as second to the most problematic
among labor policies after restrictions on
worker termination (Sicat, 2009). Firms
without fiscal incentives, those with export
orientation, domestically owned, of larger
size, and younger tended to have stronger
views against the current minimum wage
policy.

Views on the minimum wage


Organized labor: mixed views from abolition
of RTWPBs to across-the-board wage
legislation; MW policy has too many
objectives, need to agree on what it is for: a

wage bargaining)
But if safety net, there should be no
exemptions; however, level should be subject
of negotiation.

Minimum wage effects


Few studies in developing Asia (e.g.
Indonesia); negligible in Philippines
Aside from employment and income
distribution effects, there are also effects on
unions, CBAs, and inflation.

Effect of an increase in minimum wages:


transition matrix
Household heads and spouses (national)
January 2007
July 2006
below minimum wage
within minimum wage
above minimum wage
Total

below
minimum
wage
425
63
76
564

within
minimum
wage
16
72
47
135

above
minimum
wage
54
37
590
681

self employed unemployed


108
15
57
180

not in the
labor force

18
9
11
38

34
6
17
57

Total
655
202
798
1,655

Household heads and spouses (national), percent


January 2007
July 2006
below minimum wage
within minimum wage
above minimum wage
Total

below
minimum
wage
65%
31%
10%
34%

within
minimum
wage
2%
36%
6%
8%

above
minimum
wage
8%
18%
74%
41%

self
employed
16%
7%
7%
11%

unemployed
3%
4%
1%
2%

not in the
labor force
5%
3%
2%
3%

Total
100%
100%
100%
100%

Effect of an increase in minimum wages:


transition matrix
Household heads and spouses (non-agriculture)

January 2007
July 2006
below minimum wage
within minimum wage
above minimum wage
Total

below
minimum
wage
222
59
59
340

within
minimum
wage
14
66
45
125

above
minimum
wage
41
36
564
641

self employed unemployed


45
11
48
104

not in the
labor force

11
8
10
29

18
6
17
41

unemployed

not in the
labor force

Total
351
186
743
1,280

Household heads and spouses (non-agriculture), percent

January 2007
July 2006
below minimum wage
within minimum wage
above minimum wage
Total

below
minimum
wage
63%
32%
8%
27%

within
minimum
wage
4%
35%
6%
10%

above
minimum
wage
12%
19%
76%
50%

self
employed
13%
6%
6%
8%

3%
4%
1%
2%

5%
3%
2%
3%

Total
100%
100%
100%
100%

Effect of an increase in minimum wages:


transition matrix
Household heads and spouses (manufacturing)
January 2007
July 2006
below minimum wage
within minimum wage
above minimum wage
Total

below
minimum
wage
50
19
12
81

within
minimum
wage
2
25
8
35

above
minimum
wage
9
10
134
153

self employed unemployed


6
0
7
13

not in the
labor force

3
1
2
6

Total

9
2
6
17

79
57
169
305

Household heads and spouses (manufacturing), percent


January 2007
July 2006
below minimum wage
within minimum wage
above minimum wage
Total

below
minimum
wage
63%
33%
7%
27%

within
minimum
wage
3%
44%
5%
11%

above
minimum
wage
11%
18%
79%
50%

self
employed
8%
0%
4%
4%

unemployed
4%
2%
1%
2%

not in the
labor force
11%
4%
4%
6%

Total
100%
100%
100%
100%

Effect of an increase in minimum wages:


transition matrix
Household heads and spouses (production/laborers)

January 2007
July 2006
below minimum wage
within minimum wage
above minimum wage
Total

below
minimum
wage
123
44
35
202

within
minimum
wage
7
45
32
84

above
minimum
wage
26
23
244
293

self employed unemployed


30
9
31
70

not in the
labor force

7
6
6
19

Total

11
5
9
25

204
132
357
693

Household heads and spouses (production/laborers), percent

January 2007
July 2006
below minimum wage
within minimum wage
above minimum wage
Total

below
minimum
wage
60%
33%
10%
29%

within
minimum
wage
3%
34%
9%
12%

above
minimum
wage
13%
17%
68%
42%

self
employed
15%
7%
9%
10%

unemployed
3%
5%
2%
3%

not in the
labor force
5%
4%
3%
4%

Total
100%
100%
100%
100%

Thank You!

21 July 2010