acupse-10-esguerra

Job creation:

21 July 2010

Layunin nating paramihin angtrabaho dito sa ating bansa Pres. Benigno C. Aquino III, Inaugural Address, 31 June 2010

Mahigit anim na milyong trabaho, kung maaari sampung milyongtrabaho Pres. Gloria M. Arroyo, Inaugural Address, 30 June 2004

Sa abot ng aking makakayabibigyannatin 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.

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

Percen

t

Unemployment rate, 1998-2009

Unemployment in selected Southeast Asian countries, 2007-2008

Country Labor Force UnemploymentParticipation RateRate

Indonesia 67.5 8.4Malaysia 62.4 3.2Philippines 64.9 7.4Singapore 63.6 3.2Thailand 72.5 1.4

Unemployment by age group, 2009

Age group Labor Force Unemployment Share(in thousands) Rate

All 37,892 7.5 100.015-24 8,168 17.6 50.825-34 10,072 8.3 29.535-44 8,416 3.2 9.545-54 6,364 2.8 6.355-64 3,401 2.7 3.265+ 1,472 1.3 0.7

Regional unemployment rate

0.0 5.0 10.0 15.0 20.0

National Capital Region

Cordillera Admininistrative Region

Ilocos Region

Cagayan Valley

Central Luzon

CALABARZON

MIMAROPA

Bicol Region

Western Visayas

Central Visayas

Eastern Visayas

Zamboanga Peninsula

Northern Mindanao

Davao Region

SOCCSKSARGEN

Caraga

ARMM

2008

2004

Source: Yearbook of Labor Statistics, 2009.

Poverty, labor force participation, and unemployment

1998 2006Poor Non-poor Poor Non-poor

Out of labor force 19.2 80.8 26.8 73.2Unemployed 17.4 82.6 20.5 79.4

Unemployment by educational attainment, 2008

Educational Labor Force Unemployment ShareAttainment (in thousands)RateAll 36,805 7.4 100.0No grade 660 2.1 0.5Elementary 11,425 3.3 14.0High school 14,457 8.6 45.5College + 10,263 10.6 39.9

Regional underemployment rate


0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0


Cordillera Admininistrative Region

Ilocos Region

Cagayan Valley

Central Luzon

CALABARZON

MIMAROPA

Bicol Region

Western Visayas

Central Visayas

Eastern Visayas

Zamboanga Peninsula

Northern Mindanao

Davao Region

SOCCSKSARGEN

Caraga

ARMM

2008

2004

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

Growth of GDP and aggregate employment, 1999-2009

Employment

GDP

Employment by sector and class of worker 2003-2009

2003 2004 2005 2006 2007 2008 2009

TOTAL EMPLOYMENT (in '000) 30,635 31,613 32,313 32,636 33,560 34,089 35,061

BY SECTOR (shares)Agriculture, Fishing, & Forestry 37 36 36 36 35 35 34 Industry 16 16 16 15 15 15 15 Manufacturing 10 10 10 9 9 9 8 Services 48 48 48 49 50 50 51

BY CLASS OF WORKER (shares)Wage & Salary Workers 50 52 50 51 52 52 53 Self-Employed 38 37 37 37 36 35 35 Unpaid Family Workers 12 11 12 12 12 12 12

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

Labor market mismatches

2 in every 5 establishments have job openingsApproximately 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

Top 10 Hard-to-Fill Vacancies (Professionals)

1 Accountants2 Systems analysts & designers3 Electrical engineers4 Computer programmers5 Computer engineers6 Mechanical engineers7 Chemical engineers8 HRD professionals9 Electronics & communications engineers

10 Industrial engineers

Next Top 10 Hard-to-Fill Vacancies (Professionals)

11 Medical technologists12 Civil engineers13 Journalists/writers14 Pharmacists15 Architects16 Chemists17 Librarians/archivists18 Medical doctors19 Geologists and geophysicists20 Social work professionals


12.7% of hard-to-fill vacancies are for technicians and associate professionals

Top 5 Hard-to-Fill Vacancies (Technicians and Associate Professions)

1 Mechanical engineering technicians2 Aircraft pilots, navigators and flight engineers3 Bookkeepers4 Social work associate professionals5 Air traffic safety technicians


Nearly half of the hard-to-fill vacancies are for clerks

Top 5 Hard-to-Fill Vacancies (Clerks)1 Call center agents2 Cashiers & ticket clerks3 Accounting & bookkeeping clerks4 Data entry operators5 Medical transcriptionists


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 adsare the most dominant modes of recruitment.

School preference is not important in recruitment. Employers have high regard for the readiness.

Employment insecurityPercentage disagreeing or strongly disagreeingD (Source: Green, 2009)

Difficulty of job replacement and worry about job loss Source: Green, 2009)

010,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2003 2004 2005 2006 2007

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

Establishments Resorting to Permanent Closure/RetrenchmentDue to Economic Reasons and Permanently Displaced Workers


Establishments resorting to permanent closure/retrenchment (by reason)

2003 2004 2005 2006 2007

REASONS 3,262 2,008 2,943 2,979 2,468

Lack of Market 720 419 505 498 325

Uncompetitive Price of Product 27 25 40 30 10

Competition from Imported Products 12 7 10 16 11

High Cost of Production 88 75 92 72 75

Lack of Capital 111 70 91 67 44

Peso Depreciation 4 3 4 - 4

Financial Losses 431 339 526 690 443

Economic Crisis 24 18 20 16 5

Reorganization/Downsizing/Redundancy 1,566 904 1,343 1,302 1,265

Change in Management/Merger 97 43 70 65 49

Lack of Raw Materials 28 17 25 20 12

Minimum Wage Rate Increase 5 3 40 22 15

Others 149 85 177 181 210

INDICATOREstablishments Reporting


Permanently displaced workers (by reason)

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

Competition from Imported Products 150 117 175 519 757

High Cost of Production 3,421 1,970 2,062 1,231 2,019

Lack of Capital 1,810 968 2,511 1,603 1,585

Peso Depreciation 58 48 25 - 338

Financial Losses 9,222 7,134 11,601 13,133 12,066

Economic Crisis 655 118 697 414 138

Reorganization/Downsizing/Redundancy 18,788 9,452 14,103 15,981 17,350

Change 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

Minimum Wage Rate Increase 78 54 580 457 484

Others 5,940 1,918 2,457 6,658 6,215

INDICATORDisplaced Workers


0 5,000 10,000 15,000 20,000 25,000 30,000


Cordillera Administrative Region

Ilocos Region

Cagayan Valley

Central Luzon

CALABARZON

MIMAROPA

Bicol Region

Western Visayas

Central Visayas

Eastern Visayas

Western Mindanao

Northern Mindanao

Southern Mindanao

Central Mindanao

Caraga

Permanently Displaced Workers by Region, 2009 (preliminary)


0 20,000 40,000 60,000 80,000

2003

2004

2005

2006

2007

Permanently Displaced Workers by Industry

Wholesale and Retail Trade, Repair of Motor Vehicles, Motorcycles and Personal and Household GoodsManufacturing

Agriculture, Hunting and Forestry

ALL INDUSTRIES


Accession & separation ratesNCR, 2003-2008

Source: BLES, Current Labor Statistics, various years.

6.827.12

8.66

9.22

10.4710.75

9.38

6.76

6.09

7.67 7.7 7.64

8.37 8.4

2003 2004 2005 2006 2007 2008 2009

Accession rate Separation rate

Labor turnover rate, NCR 2003-2008


0

0.5

1

1.5

2

2.5

3

2003 2004 2005 2006 2007 2008

Turnover Rate = (Accession Rate - Separation Rate)

Labor turnover rate, NCR 2003-2008

0

2

4

6

8

10

12

2003 2004 2005 2006 2007 2008

Due to replacement

Due to expansion

Accession Rate

0

2

4

6

8

10

12

2003 2004 2005 2006 2007 2008

Employer-initiatedEmployee-initiated

Separation Rate


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 laborcontracts 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)

`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

D

Limited only to wage and salary workers in private establishments (which is about half of the employed) and family-operated activities

Scope of Philippine minimum wages

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

Source: NSO Labor Force Surveys

Around 75% worked for private establishments (roughly a third of

the total employed); the rest worked for government

Around 12% are employers

Employed persons by class of workersshare to total, 1991-2007

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20

30

40

50

60

70

80

90

100

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

r20

07

in p

erce

nt

Wage and Salary Workers Own-account workers Unpaid Family workers

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

Poverty and employment by class of worker (1998, in percent)

Exemptions and non-complianceWorkers 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

Scope of Philippine minimum wages

^

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 areWholesale 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)

July 2006below

minimum wage

within minimum

wage

above minimum

wageself employed unemployed not in the labor force Total

below minimum wage 425 16 54 108 18 34 655within minimum wage 63 72 37 15 9 6 202above minimum wage 76 47 590 57 11 17 798Total 564 135 681 180 38 57 1,655

January 2007

Household heads and spouses (national), percent

July 2006below

minimum wage

within minimum

wage

above minimum

wage

self employed unemployed

not in the labor force Total

below minimum wage 65% 2% 8% 16% 3% 5% 100%within minimum wage 31% 36% 18% 7% 4% 3% 100%above minimum wage 10% 6% 74% 7% 1% 2% 100%Total 34% 8% 41% 11% 2% 3% 100%

January 2007


Household heads and spouses (non-agriculture)

July 2006below

minimum wage

within minimum

wage

above minimum


below minimum wage 222 14 41 45 11 18 351within minimum wage 59 66 36 11 8 6 186above minimum wage 59 45 564 48 10 17 743Total 340 125 641 104 29 41 1,280

January 2007

Household heads and spouses (non-agriculture), percent

July 2006below

minimum wage

within minimum

wage

above minimum

wage




January 2007


Household heads and spouses (manufacturing)

July 2006below

minimum wage

within minimum

wage

above minimum


below minimum wage 50 2 9 6 3 9 79within minimum wage 19 25 10 0 1 2 57above minimum wage 12 8 134 7 2 6 169Total 81 35 153 13 6 17 305

January 2007

Household heads and spouses (manufacturing), percent

July 2006below

minimum wage

within minimum

wage

above minimum

wage




January 2007


Household heads and spouses (production/laborers)

July 2006below

minimum wage

within minimum

wage

above minimum


below minimum wage 123 7 26 30 7 11 204within minimum wage 44 45 23 9 6 5 132above minimum wage 35 32 244 31 6 9 357Total 202 84 293 70 19 25 693

January 2007

Household heads and spouses (production/laborers), percent

July 2006below

minimum wage

within minimum

wage

above minimum

wage




January 2007

Thank You!

21 July 2010

acupse-10-esguerra

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