Group 1 Joanne, Mandy, Grace & Shirlyn

LABOR PRODUCTIVITY MEASURES

Outline of Presentation

1. Statistics defining the labor

market and RP labor

Productivity 2. Government initiatives

DEFINITION
Labor

productivity refers to the amount or quantity of output produced by a given quantity of labor input.

COMPUTATION
Gross Domestic Product LABOR PRODUCTIVITY = -----------------------------------No. of Employed Persons

PHILIPPINE LABOR FORCE (April 2004)

31.0M Less than 15 yrs. old

84.0M Total Population

53.0M 15 yrs. old & above

16.5M Not in Labor Force 36.5M In Labor Force

Philippine Labor Force (April 2004)

36.5M In Labor Force

5.0M Unemployed

31.5M Employed

16.1M Wage & Salary

11.7M Own-Account

3.7M Unpaid Family Members

PHILIPPINE WORKFORCE
Workforce
35,000 30,000 25,000 20,000 15,000 10,000 5,000 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Workforce

PHILIPPINE GDP
GDP
1,400,000 1,200,000 1,000,000 800,000 GDP 600,000 400,000 200,000 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

RP Labor Productivity
1995-2005 At Constant 1985 Prices
38,000 37,000

Labor Productivity (Php)

36,000 35,000 34,000 33,000 32,000 31,000 30,000 29,000 28,000 1995 1996 1997 1998 1999 2000 2001 YEAR 2002 2003 2004 2005

Labor Productivity, GDP & Workforce

1995-2005 At Constant 1985 Prices
40,000 35,000 30,000 25,000 800,000 20,000 600,000 15,000 10,000 5,000 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 400,000 200,000 Labor Productivity Workforce GDP 1,400,000 1,200,000 1,000,000

RP Labor Productivity By Region

1999-2003 (Average) At Constant 1985 Prices
90000 80000 70000 60000 50000 40000 30000 20000 10000 0
P H I L NCR CAR I II III IV V VI VII VIII IX X XI XII XIII A R M M

Comparative Labor Productivity - Asia

2000-2005 At Constant 1985 Prices
55,000 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 2000 2001 2002 2003 2004 Singapore Malaysia Thailand Indonesia Philippines Korea China Cambodia Vietnam

Labor Productivity, Selected Asian Countries

1997-2003 (Average) At Constant Prices in US Dollars

Country

Average Productivity

How RP Compares

Japan

40,631

55 x

Singapore Korea Malaysia

Thailand

39,857 17,805 5,717

2,184

54 x 24 x 8x
3x

Indonesia
RP

521
734

(- 41%)
-

Labor Productivity in Selected ASEAN Countries At Constant US Dollars 1998-2002

1998 1999 2000 2001 2002 Ave. Singapore 38,409 39,806 38,72 37,813 44,567 39,857 Malaysia 5,400 5,756 5,910 5,801 n.a. 5,717 Thailand 2,064 2,357 2,255 2,056 2,190 2,184 Indonesia 535 603 526 1,549 1,765 996 Philippines 768 810 778 645 670 734

Population (in Million) vs. GDP (in Billion US$)

Singapore

92

76

75

Philippines Malaysia 23 90

201 Thailand
62 122

153

Indonesia

Productivity Comparison: RP vs. Selected ASEAN Countries

The value of the output of the average Filipino worker in 8 hours: Can be done by a Indonesian worker in 11 hours and 18 minutes Can be done by a Thai worker in 2 hours and 42 minutes Can be done by a Malaysian worker in 1 hour Can be done by a Singaporean worker in 10 minutes

Human Development Index of Selected Asian Countries

Country Japan Hongkong Singapore Korea Brunei Malayasia Thailand Philippines Sri Lanka China Vietnam Indonesia 2001 9 24 26 27 32 56 66 70 81 87 101 102 2002 9 23 25 27 32 59 70 77 89 96 109 110 2003 9 26 28 30 31 58 74 85 99 104 109 112

Why Are We Lagging Behind?

Productivity growth critically depends on:

Investment climate
Improvement in quality of worklife

Job enhancements

Why Are We Lagging Behind?

Investment climate comprises:
1/ Macro fundamentals social and political stability, macroeconomic stability, economic openness and Competitive markets 2/ Governance and institutions transparency and efficiency in regulation, taxation and legal system; Strong and well-functioning financial sector; labor market flexibility and skilled labor force 3/ Infrastructure transportation, telecommunications And power and water supply

Investment Climate and Growth

Gross Capital Formation (as % of GDP)

Higher rates of capital formation have fueled productivity and economic growth GDP per capita growth rates: selected Asian countries

RP appears least favorable in terms of wage rate relative to labor productivity

RP with lowest GDP per capita growth and slowest poverty reduction early to late 1990s

RPs Investment Climate in Perspective

Ease of Entry and Exit Procedures Ranking out of 102 countries, 2003

RP ranks 2nd to worst out of 102 countries in irregular payments in public contracts and business costs of corruption, 2003

RP ranks 2nd to worst out of 102 countries in irregular payments in public contracts and business costs of corruption, 2003

Working time required to buy..

1 Big Mac In Minutes
1.
2. 3. 4.

1 Kg. of rice In Minutes

5.
6. 7. 8.

9.
10. 11. 12.

Tokyo Hong Kong Taipei Singapore Kuala Lumpur Seoul Shanghai Bangkok Manila Jakarta Mumbai Karachi

10 13 18 21 25 28 30 50 62 67 112 132

8 13 12 11 10 38 29 25 25 20 96 46

Domestic Purchasing Power

Hourly Pay Hourly Pay Annual Net Gross Income
1. 2. 3. 4. 5. 6. 7. 8.

9.
10. 11. 12.

Tokyo Taipei Seoul Singapore Kuala Lumpur Hong Kong Bangkok Shanghai Manila Jakarta Mumbai Karachi

64.1 44.2 40.0 37.2 33.8 28.7 15.0 18.3 14.5 12.9 10.7 10.8

66.0 48.6 40.2 39.2 38.0 33.7 18.8 18.0 16.3 15.5 12.5 12.4

74.7 58.6 48.5 43.7 43.8 42.0 21.5 19.1 20.3 18.0 15.7 15.1

Gross and Net hourly pay

Gross Pay Per hour US $
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

Taxes, Deductions Per hour US $

Gross Pay Per hour US $

Tokyo Hong Kong Taipei Seoul Singapore Kuala Lumpur Shanghai Bangkok Jakarta Manila Karachi Mumbai

17.60 8.00 8.30 7.90 6.90 3.70 3.30 1.80 1.70 1.40 0.90 0.80

4.00 1.00 1.40 2.00 1.50 0.60 0.90 0.10 0.20 0.20 0.10 0.10

13.60 7.00 6.90 5.90 5.40 3.10 2.40 1.70 1.50 1.20 0.80 0.70

Working hours and vacation days

Working Hours Per Year Paid Vacation Days per Year

Hong Kong 2. Mumbai 3. Taipei 4. Karachi 5. Manila 6. Seoul 7. Bangkok 8. Jakarta 9. Kuala Lumpur 10. Singapore 11. Shanghai 12. Tokyo Paris
1.

2,398 2,347 2,327 2,302 2,301 2,270 2,184 2,175 2,152 2,056 1,958 1,864 1,561

8 25 13 27 14 20 10 11 17 14 13 16 26

Taxes and social security contributions

Taxes and SS As % of Gross Wage
1.

2.
3. 4. 5.

6.
7. 8. 9. 10. 11. 12.

Shanghai Seoul Tokyo Singapore Taipei Manila Kuala Lumpur Mumbai Hong Kong Karachi Jakarta Bangkok

27 25 23 21 17 16 16 13 12 11 10 4

Source: Fortune Magazine, January 20, 2003

If we stay where we are, our cheese is going to be taken away.

- Lee Hsien Loong, Singapores Deputy prime minister on China

China is the new reality. Anybody who thinks the economic models that worked for us in the 20 years before China was part of the world economy will work in the 20 years after theyre just dreaming.
- Koh Boon Hwe, Chairman, Singapores Ariline

Adjustments made by neighboring Asian countries to the new reality:

Taiwan:
Shipped its high tech industry to the mainland where labor is cheap Those who opted to stay engaged in importing lower-cost workers from places like the Philippines.

Japan:
Not just make things in China, theyre stepping up efforts to sell to China market

Adjustments made by neighboring Asian countries to the new reality:

Singapore and Malaysia:

Government planners try to climb to the value chain into knowledge-intensive industries like biotech, design, and software development

Hongkong:
Officials bet a Disney theme park slated to open by 2006 will boost tourism an area already dominated by mainland Chinese especially now that quotas on how many can come into the territory have been scrapped.

Adjustments made by neighboring Asian countries to the new reality:

South Korea and Thailand:

To compensate weak US demand, they are redirecting exports to China and boosting sales to their consumers.

As a formidable rival (after five years since Asias financial crisis):

7 to 8 percent annual growth rate Export surged to 21% last year to $322 billion thereby making it the largest exporter of goods to the US. Per UN estimate China took in about $50 billion in FDIs more than the rest of Asia combined It is already the worlds dominant manufacturer of textiles, shoes and toys

It is also gaining swiftly in the production of computer components, telecommunication devises, and other electronic goods that have been a mainstay of growth in many Asian economies

The Dongguan Heat:

An hours drive up the Pearl River from Hong Kong Decade ago, a patchwork of rice paddies and vegetable fields Now a manufacturing megalopolis with more than 20,000 factories and migrant army of 5.5 million people

Workers:
Make an average of $100 a month About 3 in 4 are women in the early 20s Labor is plenty that there is no need for employees to trouble with applicants lacking perfect vision

Effect in Japan:

Sanyo launched a production at a $30 million factory in Haiers home in Qingdao to build compressors for Haiers refrigerators September, Nissan dealt with Dongfeng Motor Group & build up 900,000 cars and trucks a year in China by 2010 Toyota signed a deal with First Auto Works to build 400,000 cars

Philippines is being left behind. We need to work together to reverse this trend. Role of Private sector: Main engine of economy, create investments and employment, increase productivity, create wealth. Role of government: Create conducive environment for productivity.

DOLE initiatives

1. On developing capacity of informal sector and vulnerable workers Strengthen entrepreneurial capabilities Set-up demonstration projects

Encourage employers assistance

DOLE initiatives
2. On Employment

a. Modernizing the Labor Market Information System

Strengthen coordination with LGUs

Make PESOs main mechanism for employment services

Make available alternative job search devices

b. Apprenticeship and Employment Program

DOLE initiatives
2. On Employment

a. Modernizing the Labor Market Information System

Strengthen coordination with LGUs

Make PESOs main mechanism for employment services

Make available alternative job search devices

b. Apprenticeship and Employment Program

DOLE initiatives
3. On Workers Protection a. Wage Fixing b. New Labor Inspection Framework With 200 workers or more Self Assessment Checklist With 10-199 workers For Inspection With less than 10 workers TAVs

DOLE initiatives

4. On Labor Relations

a. Industrial Relations Adjustments

b. Speedy resolution of cases Department Order No. 40-03 Indexing of Labor Case Decisions/ Templating Arbitral Awards

DOLE initiatives

5. On Productivity Improvement WISE OSH ISTIV

Dont merely do your best; do whatever is necessary to get the job done.
Sir Winston Churchill

The National Wages and Productivity Commission (NWPC) and the Regional Tripartite Wages and Productivity Boards (RTWPBs) were created on July 1, 1989 with the enactment by the Philippine Congress of Republic Act 6727, also known as the Wage Rationalization Act.

The NWPC and RTWPBs have the following major mandates: Fix minimum wages on regional, provincial, and/or industry levels

Promote productivity improvement and gainsharing

R.A. 6727

The NWPC envisions a highly productive and justly compensated Filipino workforce To ensure a decent standard of living for workers and to improve their productivity

OPERASYON

PAGPAPATUPAD NG

PAW S

WASTO AT
ITINALAGANG SAHOD

PRODUCTIVITY AWARENESS PROGRAM

Proactive Approach to Addressing Challenges

Department of Trade and Industry

Investment and Trade Promotion Structural Challenges

A.

Integrating Philippine economy into the domestic and global supply chain (geographically and source of income) Enabling SMEs to be competitive Strengthening enforcement of competition and antitrust policy

B.

C.

A. Integrating the Philippine Economy

1. Fix domestic trade linkages Intra-inter-province transportation system (e.g., inter-island shipping, air transport, rail system) Domestic telecom system
2.

Course/guide investments into the countryside Reduce cost of doing business in rural areas Improve efficiency of distribution channels Strengthen rural finance system

A. Integrating the Philippine Economy

3. Pursue vigorously clustering strategy. To build competitiveness and productivity accelerate SME development disperse economic activities to the countryside National clusters: Wood-based - Microelectronics Food-based - Machinery / tool and die ICT Maintain support for key intermediate industries Packaging, Petrochemicals, Shipping, Telecoms

4.

Priority Trade and Investment Areas

1) 2) 3) 4) 5) 6) 7) 8) 9) 10) E-Services ( IT enabled services) Micro Electronics Motor Vehicle Parts and Components Wearables Home Furnishings Construction Materials Giftware and Holiday decor Food Products Marine Products Organic and Natural Products

B. Enabling SMEs to be Competitive

Financing/Micro-financing E-Business Simplified business procedures Improved business environment Special initiatives (e.g., BIMP-EAGA, SubicClark Area Development (SCAD), competitiveness survey, National Business Registry

C. Strengthening Enforcement of Competition and Anti-Trust Policy

National and comprehensive competition policy Fair Trade Commission

Japanese firms outsourcing in RP

NEC Telecom Software Phils: software for network and telecom management systems
JGC Phils: engineering, procurement, construction management services

APTi (Toshiba): firmware and device drivers

Fujitsu: application software and middleware Canon Information Technologies Phils. Inc.:

computer hardware design and proto typing

Tsukiden Group: Computer Software LSI Design, R&D

U.S. firms outsourcing in RP

America-On-Line: technical and billing support Arthur Andersen: custom software Barnes & Noble: inventory management; on-line purchases Bechtel: Engineering design Caltex: finance & accounting support

Citibank: systems development & support

Fluor Daniel: regional design work James Martin: software development

Procter & Gamble: accounting services

European firms outsourcing in RP

Societe Generale de Surveillance (Swiss): data processing
International Red Cross (Swiss): business process outsourcing Alitalia (Italian): business process outsourcing

MEDIUM TERM PHILIPPINE DEVELOPMENT PLAN 2004-2010

National Economic and Development Authority

THE BASIC TASKS

The basic task of our Medium-Term Philippine Development Plan for 2004-2010 is to fight poverty and build prosperity for the greatest number of Filipino people. We must open up economic opportunities, maintain socio-political stability, and promote good stewardship --- all to ensure a better quality of life for all our citizens. We will focus on strategic measures and activities that will spur economic growth and create jobs. This can only be done with a common purpose to put our economic house back in working order. -President Gloria Macapagal-Arroyo

Fight poverty and build prosperity for the greatest number

Economic Growth & Job Creation Trade & Investment

Energy Energy Independence

Social Justice & Basic Needs Responding to Basic Needs of the Poor National Harmony: Automated Elections National Harmony: The Peace Process

Education & Youth Opportunity Education Science & Technology Culture

Anti-Corruption & Good Governance Anti-Corruption Bureaucratic Reforms Defense Against Threats to National Security Responsive Foreign Policy

Agribusiness Power Sector Environment & Reforms Natural Resources Housing Construction Tourism Infrastructure

Fiscal Strength
The Financial Sector Labor

National Harmony: Healing the Wounds of EDSA Basic Needs: Peace and Order Rule of Law

Constitutional Reforms

THE BASIC TASKS (10-Point Agenda)

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Creation of ten million jobs (including support for 3 million entrepreneurs and development of 2 million new agribusiness land) Education for all of school age (including putting a computer in every high school) Budget Balance Decentralization of development through network of transport and digital infrastructure Power and water supply throughout the country Decongestion of Metro Manila Development of Clark and Subic as the most competitive service and logistics center in Southeast Asian region Automated elections Peace to Mindanao and all insurgency areas Just closure of divisive issues from EDSA 1,2 and 3

THE MACROECONOMY MACROECONOMIC TARGETS

2004
GDP Growth (%) Investment-to-GDP/ Exports of goods and services ($Bn) NG Deficit/GDP CPSD/GDP 2/ Inflation (%) 1/
1/

2005
5.3-6.3 20.3 47.4 (3.6) 6.0 4.0-5.0

2006
6.3-7.3 21.4 52.3 (2.9) 5.3 4.0-5.0

2007
6.5-7.5 22.5 58.2 (2.0) 4.6 3.0-4.0

2008
6.8-7.8 24.1 65.4 (1.1) 3.9 3.0-4.0

2009
7.0-8.0 25.8 74.3 (0.2) 3.0 3.0-4.0

2010
7.0-8.0 27.7 84.3 0.0 1.0 3.0-4.0

4.9-5.8
1/

20.1 43.1 (4.2) 6.7 4.0-5.0

Emerging forecast is 6.2 % for 2004. The inflation target for 2 005 has also been revised upwards to 5-6 percent. 2/ Preliminary

THE MACROECONOMY MACROECONOMIC TARGETS

2004 Net Job Creation (in thousand) 1/ Agriculture Industry Services Unemployment Rate (%) 1/ Poverty Incidence (% of Families) 2/ Subsistence Incidence 1240 203 234 803 12.1 25.69 14.95 2005 1029-1256 290-331 174-212 565-713 11.9 24.35 14.10 2006 1263-1527 298-340 249- 291 717- 896 11.6 22.93 13.42 2007 2008 2009 2010 1695-2081 320-371 366-431 1009-1279 8.9 17.88 11.30 1380-1669 1502-1821 1594-1945 297-342 265-312 818-1016 11.1 21.61 12.87 309-355 299-351 894-1114 10.4 20.31 12.31 321-370 333-391 941-1184 9.7 19.04 11.76

MDGs are also likely to be ahieved with the successful implementation of the Plan.
1/ 2/

Average of January, April, July 2004 surveys Fighting target is to reduce poverty incidence by half from 28.41% in 2000 (34% based on population). Poverty incidence targets are based on population growth forecast of 1.93% in 2005-2010and 2.11 in 2000-2005 from 2.34 % in 2000-2005

References :
www.tesda.gov.ph/services1/issue18.asp www.dlsu.edu.ph/research/centers/cberd/ pdf/bus_focus/2005 www.dole.gov.ph/news/details.asp www.dap.edu.ph/mnaap/mnaap.php www.neda.gov.ph/ads/mtpdp/MTPDP2004-2010/ PDF/MTPDP%202004www.upd.edu.ph/solair/pjlir.htm www.sunstar.com.ph/economicforum/ pernia_presentation.pdf www.dti.gov.ph/contentment/66/67/234.jsp www.policy.aim.edu.ph/downloads/