Only in the Philippines!

Philippine labor is not among the cheapest in Asia and the Pacific, and is even among the most expensive in Southeast Asia, next only to Singapore, data from the National Wages and Productivity Commission showed.

Data from the policymaking commission, an agency under the Department of Labor and Employment, showed the Philippines placing seventh in a ranking of 13 economies in the region, in terms of having the lowest minimum wage.

Workers in the National Capital Region (NCR) earn a daily minimum wage of P382 or $8.09.



That compares to Vietnam’s $1.26-$1.55 daily minimum wage; Cambodia’s $1.49-$1.66; Indonesia’s $1.95-$3.63; China’s $3.66-4.14; Thailand’s $4.44-$6.09, and Malaysia’s $7.19 -$15.40.

"The minimum wage in the Philippines is not as competitive as the other developing and emerging economies listed in the [NWPC data]. Clearly, the minimum wage of workers in Cambodia, Vietnam, and China are more attractive relative to workers in the NCR and the Philippines," University of Asia and the Pacific economist Cid L. Terosa said in a recent e-mail.

"[But the] wage differences can be traced to the quality of labor in a country. The wage is higher partly because of the quality of labor in the Philippines," he said.

Analysts said that a higher wage floor could be a manifestation that the Philippine labor market is composed of high-caliber workers compared to peers in neighboring countries.

"The competitiveness of the country’s labor market is strong. I believe that we are competitive because of how good we are particularly in electronics and business process outsourcing (BPOs)…Productivity is what we offer," National Competitiveness Council co-chairman Cesar B. Bautista said in a phone interview.

Another indication of the labor market’s competitiveness is the increasing number of overseas Filipino workers (OFWs), said Francis Chua of Federation of Filipino-Chinese Chambers of Commerce and Industry, Inc. "Our competitiveness is evident in the bulk of OFWs working abroad and the increasing amount of money they send home. So this is a good indication that we provide quality labor," Chua said.

However, Chua also noted that wages are set higher in economies where the standard of living is high in order for workers to cover their expenses.

"The same goes if the wage is low — it is because the government subsidizes commodity prices. That’s how tricky wage is," Chua said.

American Chamber of Commerce of the Philippines legislative committee chairman John D. Forbes said that a higher wage floor does not equate to labor productivity altogether.

"Filipinos have higher wages because they have a larger number of dependents compared to other Asian countries where they have fewer mouths to feed, where the wife most probably has a job also, and where there is efficient management of agriculture, thus, a lower price of rice," Forbes said in an interview.

"The problem is that market forces do not determine the minimum wage in the Philippines. The government tends to listen to organized trade union, which only represents a portion of the work force. And this should not be the case," he added.

Moreover, Terosa said, apart from considering the family threshold budget "based on the typical basket of goods and services that families or households buy," productivity should also be a yardstick in setting the minimum wage. "Productivity measures should give us an idea of the amount of work given by minimum wage earners," he said.

While a higher minimum wage might seem a disincentive for investors who are in search of locations for their businesses, chamber leaders said that this is not always the case.

Investors are more concerned about the overall cost of doing business.

For instance, if an investor plans to build an English language school, they would not consider China since most of the workers there are English illiterate.

"But the Chinese people have been learning and by the time they become good in this area, Filipinos might also lose the job simply because they provide the same labor, while under a lower minimum wage," Forbes said.

Labor-intensive investors take into account wages, but also the other costs like utilities and transportation, he added.

Chua estimated that labor cost makes up just a small portion of total cost, saying, "Investors in semiconductor, for instance, which is material-intensive, take into account the raw materials that will be used…labor cost for semiconductor…usually takes up only less than 1 percent of total cost."

Source: M. A. C. B. Cabarles, BusinessWorld