The old narrative about OFWs is passé

We usually think of OFWs as “modern day heroes” and it’s so easy to see why. The dollar they send back home is the linchpin that’s preventing the Philippine economy from disintegrating. They work so hard in foreign lands, suffer loneliness and isolation, and some got abused by their employers—all in the name of the dollar or euro that they desperately need to feed their families, send their kids to school, build dream homes and ultimately prop up the economy. But blogger and writer Jessica Zafra has an interesting counterintuitive take on this in her review of Chito Rono's film "Caregiver":

“Hey, we’re not exactly sitting by the pool sipping banana daiquiris either. Most of us work, all of us have problems. It is also possible to experience alienation and isolation in your homeland. How about a little respect for the Pinoys who stick around and do the best they can in truly trying circumstances? No one has a monopoly on suffering, but everyone has a unique story. We need fresh insights on the Pinoy experience at home and abroad, ...”

Oo nga naman.

What social observers often miss is the fact that the narrative about OFWs may have changed. We often refer to OFWs as economic refugees driven to foreign shores by want and desperation. These days, however, a significant proportion of OFWs are high paying professionals (medical professionals, engineers, software engineers, artists, skilled workers, among others) who are attracted by a host of factors other than economic. It’s the brave new world of globalization and our professionals, the crème de le crème of society who may actually have lots of opportunities here, are exercising their options to enrich their lives by experiencing how it is to live in foreign cultures and climes. It’s a decision no different from those Americans, Koreans, and Europeans who settled here in the Philippines for the love of the warm weather and the beautiful beaches.

With the advent of technologies like Internet chat, global roaming, SMS, video conferencing, voice-over-internet calls, it’s possible that the imagined negative social impact of labor migration on family cohesiveness may not actually be that alarming. Maybe, maybe not. But what I'm trying to say is that the old story line by now should be passé and we need to appreciate that.

Seems like the 7 percent growth rate has started to trickle down

The recent numbers on jobs based on the October 2007 Labor Force Survey seem to tell us so. The NSO report says the jobless rate has declined a full percentage point from 7.3 percent last year to 6.3 percent this year. Underemployment has declined from 20.4 to 18.1 percent. That’s a two full percentage point down, meaning that a significant number of dissatisfied employees has gone down as well.

The details are quite interesting. The percent share of farm jobs has declined but those of the industry sector has gone up, mainly because of a growing job uptake in construction. There’s also a growing share of jobs in the services sector particularly in the transportation, storage and communications; real estate and renting; education; health and social work; and private households. It means more people are hiring maids and drivers? That says something.

And there’s a significant increase in own account workers, an indication perhaps of greater entrepreneurship activities. Figures on those who get wages and salaries are also encouraging as more private establishments are hiring.

In terms of occupation, the percentage shares of professionals are rising. So are those of trade and related workers; clerks; and laborers and unskilled workers. This trend is not surprising because of robust construction sector. Hey, it quite broad-based.

Is this the trickle down effect of the 7 percent growth rate we have been registering? Seems like it. But expect the doubters to dismiss these numbers. I’m a doubter myself but I don’t denigrate these numbers:I feel these are real gains by real people. And it’s not because of Malacanang but despite Malacanang.

I'll look at the numbers again when I have the time.

The Left's strike against the people!

The Left is going to launch a transport strike tomorrow morning. Stupid! What are they trying to prove? First, let’s face it guys, you followers of Joema who is enjoying a nice life in Euriope, there’s really nothing you can do. It’s a global trend and government couldn’t do anything about it, except do certain policies to cushion it. And indeed, the strong peso has so far been cushioning the rise in local prices.

And second, if you are protesting against the rise in prices, why is it that you guys, admirers of Joema, are trying to hurt us ordinary people? The rich in this country are going to their work in style in their SUVs while more than 70 percent of us ordinary guys are going to use public transport. And you guys are going to make life difficult for us! Why are you trying to hurt us?

If you communists out there want to hurt “the ruling class” in this country, go and picket the oil companies! Go block those SUVs and you will see. Simpleng tao lang ang kaya niyo!

Loyalty is passé; engagement is now name of the game

“O, where is loyalty? If it be banished from the frosty head, where shall it find a harbor in the earth?”—William Shakespeare, in King Henry the Sixth, Part II

IN these days of brain drain everywhere, there’s no longer any sense for companies to expect eternal “loyalty” from their employees. The game now—according to Russell Huntington, human-resource firm Watson Wyatt’s Asia-Pacific human capital director—is all about “engagement.” It means that if companies would like to hold on to their skilled or talented employees, both parties should be on the same page on where the company is heading for, and management should give workers more room to contribute to the achievement of company goals.

“Engagement is when employees help the company succeed,” said Huntington. “Loyalty is history.”

If loyalty is indeed passé, it’s not because workers have gone bad. It’s more because since in the 1980s, employers thought workers were disposable items in their pursuit of global competitiveness. Well, that’s the unionist’s perspective, anyway, although it seems to contain some grain of truth. The bigger reason really lies in the emergence of the “new economy” and the Information Revolution that accelerates the pace of globalization.

Manolo Abella, a Bangkok-based labor-migration expert formerly connected with the International Labor Organization, says the raging war for talent results from the growth of global-supply chains, as liberalization of trade policies has made it possible for transnational companies to move production to cheaper locations.

As an aside, globalization has diluted the notion of loyalty both ways: workers don’t have much qualms about leaving their companies because the “hooks” of those fishing for talent are numerous and varied, and there are so many choices and material attractions for anyone who’s skilled and determined and hardworking enough. But on the other hand, companies also tend to lose the kind of “loyalty” to employees as the past two generations know it—where they’d do everything to keep the workers who were there “at the creation” of the enterprise, so to speak. Indeed, what loyalty can one expect from a company based halfway around the world, and perennially looking to cut costs and stay competitive in a globalized industrial setting?

“The emergence of global production structures have been everywhere, accompanied by greater movements or transfers of technical and managerial personnel,” says Abella in a paper on labor migration. “Another important development has been the growth of informal as well as flexible forms of employment, opening markets for foreign workers willing to enter occupations or sectors abandoned by natives.”

And currently, it’s a lot easier for people to leave their companies or for companies to fire workers because of a paradigm shift in labor-management relations.

In the 1980s, “corporate downsizing” became the trend as companies moved heaven and earth to become “lean and mean.” There was a global economic slowdown and exports from the newly industrializing economies of East Asia were giving everybody hell in the global marketplace. It was easy to make the downsizing decision because powerful computers as well as new, better software enabled firms to use just-in-time production that didn’t require high inventory levels. Suddenly, the old labor-management ethos of “lifetime employment” and “company loyalty” vanished as hundreds and thousands of workers lost and found jobs across the globe.

What we are stressing here is that the old ways of doing things in human- resources management no longer apply. Workers, especially “knowledge workers,” can no longer be treated as inputs or disposable cogs in the production machine.

Company managers should take pains in explaining the future of the company and how each one fits into the overall picture. Companies should develop clear career paths for each. It should explain the goals, vision and mission and devise clear mechanisms by which each employee could contribute to the attainment of those goals. This way, employees can share in the company’s dream, giving them strong incentives to stay.

And employers shouldn’t forget about “base pay”—or that which employees get through payroll every 15 days! Huntington of Watson Wyatt said Filipinos, compared with their counterparts in the Asia-Pacific region (especially Hong Kong, Indonesia, Malaysia, Singapore and Taiwan), are not necessarily lured by money when they start seeking jobs fresh from university. Their main criteria for joining are the reputation of the company and career-development opportunities. In other words, they want to learn and grow with the company. That’s at the start, when they’re young and keener on learning from the best in the field. But inevitably, as they grow older and more settled in their careers, the base pay starts to matter more, if the experts are to be believed.

This information may imply that as these employees mature with the firm, they may start thinking about settling down, owning pieces of property like a house, lots or condominiums for their future families. That’s when base pay becomes a very important issue. Along this line, Huntington clarified that base pay has remained a very important reason why talented employees in the Philippines leave. Consider that that’s also the time when these employees, having gained significant experience and skills, become so attractive to headhunters here and abroad. The “pull” is very strong, and a company must be painfully aware at all times of such “lures” and do everything to “engage” or help them find greater sense in staying even if base pay can’t be substantially increased.

Without company “engagement,” they are likely to leave for greener pastures either here or abroad. That explains why increasingly we are sending skilled professionals, including IT engineers, construction engineers, nurses, doctors who became nurses, physical therapists, architects, managers, advertising experts, journalists and even soldiers.

The bottom line for a country like the Philippines is rather tough. That should mean local companies have a lot of “engagement” to do. And they should do it before it’s too late. (Drafted as editorial for BusinessMirror editorial, Nov 20 2007).

Holding up half the sky from the depths of hell?

“People are more violently opposed to fur than leather because it’s safer to harass rich women than motorcycle gangs.”—Unknown

Congratulations, therefore, are in order for all the women: our mothers, daughters and sisters! And certainly, the entire society deserves credit as well. The Philippines’ 2007 Gender Gap Index ranking indicates that culturally, the Philippines has come a long way from a feudal past when parents thought society should not invest in women’s education and personal advancement because they were going to be married off anyway and will stay in the homes of their husbands. These days we are increasingly seeing the influential roles being played by women in Philippine society, be it in civil-society organizations, business or politics.

Indeed, it’s a fitting tribute to women in a society that is increasingly relying on its women to move the economy forward. If we look deeper into the numbers, it’s obvious that our new growth drivers—outsourcing, electronics and overseas labor migration—are mostly “manned” by women. Increasingly, we are sending more skilled professionals going abroad. They are mostly medical professionals, caregivers and artists who are predominantly women. We are increasingly sending abroad information-technology professionals, many of whom are women.

But on hindsight, some of these trends are not necessarily favorable to women and society as a whole. For one, it means we are increasingly sending abroad women who are sorely needed to give motherly care for our own children. The fathers and relatives could probably supplant the mothers, but reality—or at least the common anecdotal evidence in our immediate community—seems to indicate that households with single parents are not always the best environment within which children should grow up in. Horror stories about teenage pregnancy, alcoholism and drug abuse, even incest, among OFW families are too common to ignore.

That many of the women have to go beyond the borders to become breadwinners indicate that, increasingly, women are disproportionately bearing the burden imposed by a flawed economic strategy that traces its roots to the 1970s. Nothing is wrong with labor migration per se, but if it’s the only thing that keeps the economy afloat, as is the case of the Philippines lately, something must be wrong somewhere.

It means women are being forced to take roles and so much risk they probably wouldn’t want to take if only there were more options within the country. We are specifically referring to caregivers and domestic help, mostly women, who are prone to abuse in alien cultures. Isn’t that another form of oppression?

A recent episode in the multiawarded TV documentary Probe Team dwelt on human trafficking, and the stats were appalling, bearing out what we just had a hunch about all this time, i.e., that the Philippines ranks also among the top five countries from where originate victims of human trafficking, especially young women. This shouldn’t be surprising. For many decades, it had been quite easy for unscrupulous recruiters and the network of traffickers to ship out young, unsuspecting, unsophisticated poor women from the countryside, promising them jobs in the Middle East or some Southeast Asian destination (usually Malaysia or Indonesia), only for them to find themselves stranded in some brothel, broke and broken, their documents all tampered with or forged, and thus no good for any decent job.

Until recently, it wasn’t surprising to find queuing up at the Naia an illiterate woman bound for Kuwait or some similar destination, there to work as a domestic.

The government early this year bucked massive protests by setting a floor wage of $400 for domestics, at the risk of losing a big chunk of the overseas market to nationalities that will bite at cheaper rates. Policymakers justified this by saying it was one way of discouraging a surge of OFWs in such low-end positions, which attract the more vulnerable types, anyway, and encouraging deployment of better skilled—hence, more educated and less risky to abuse—workers. Last time we checked, the controversial policy seems to be working in this wise, although the recruiters are complaining because the deployment is declining.

To be fair, the government may be right after all on this score, but until then, it should keep pursuing the line that one can’t build an economy on the backs of its women, especially those prone to all forms of abuse, while tearing, because of their absence, the social fabric back home. Let’s hope next year’s gender index will show even better results.

The looming talent crisis in the Philippines

‘Brain drain” is a reality that the Philippines has to deal with squarely. And we should deal with it now.

As we have discussed in our recent five-part series on the issue, brain drain has gone mainstream, affecting all sectors of the economy, especially hospitals, airlines, mining, manufacturing, information technology, the performing arts, journalism, the armed forces, aviation, weather forecasting, hotels, advertising and accounting. It has negatively affected both the public and private sectors.

Name any profession these days, and chances are one could immediately hear complaints about companies finding it too hard to find or retain “the right people” for the simple reason that the best ones are leaving for better-paying jobs abroad. It has become a major headache among private companies and even a greater problem within government bureaucracy.

Gone are the days when employees are expected to stay with the company for the rest of their lives. These days, employees, especially the highly skilled ones, are in constant search for employers that can give them the best working environment, the best pay package, the best experience, and training that could even enhance their skills—companies that could give them the excitement of doing “the next big thing.”

With the rapid flow of information, national borders have become meaningless—more so because Filipinos, having imbibed the culture of both the East and West by virtue of our historical experiences, could easily adapt in any cultural environment.

Make no mistake about it, the trend toward greater global labor mobility is not just related to the personal decisions of individual employees and the greater ease to travel beyond national borders. The corporate world has also contributed to this trend.
In the ’80s, “corporate downsizing” became the trend as companies tried becoming “lean and mean” to cope with global economic slowdown and greater global competition brought about by the emergence of “newly industrializing economies.” Suddenly, the old labor-management ethos of “lifetime employment” and “company loyalty” vanished as hundreds and thousands of workers lost jobs across the globe.

Recent literature on labor migration says the term “brain drain” is old-fashioned given the mounting evidence for brain gain and “brain circulation,” a phenomenon described by AnaLee Saxenian, dean of the University of California Berkeley School of Information, as the tendency for skilled migrants to return to their native lands as entrepreneurs and bridges for investments and technological diffusion while maintaining their links with the US.

This is certainly an emerging trend in Ireland, Israel, China and India, and to a limited extent, the Philippines.

But we continue to call it “brain drain” because the diaspora of skilled professionals from the Philippines is likely to get worse before it could get better. The push and pull factors are strong as ever.

On the one hand, the continuing tales of corruption in high places (the latest of which involves the national broadband deal and cyber education project with the Chinese government), low pay and the continuing perception of lack of appreciation by many company managers of local talents, especially in areas like the medical profession, are among the major push factors.

On the other, demographic transitions (more people getting old) in countries like the US, Europe, Australia and Japan, and growing expenditures for health facilities in Middle Eastern countries, are forcing governments in said countries to open their labor markets to Filipino medical professionals (mostly nurses, doctors and medical technicians).

High crude prices are enriching the Gulf States, translating to a flurry of investments in commercial centers, oil rigs and platforms, thus attracting thousands of construction workers, architects, engineers and managers.

And more important, in this age of the knowledge world, even governments are actively seeking talents across cultures, hoping to maintain their economic edge. The governments of the US, Singapore, Canada, New Zealand and Australia are actively recruiting from all over the world, including the Philippines.

All these trends are beneficial to skilled professionals and technical people. The skilled ones now have more options in life. But soon these trends are going to hurt emerging industries that are dependent on the supply of skilled labor, like outsourcing, finance and mining. Give it three years, says one corporate executive, and skilled workers would really be a real problem, unless the private sector and the government could cook up policies to address the problem.

The Philippines is a democracy. We can never stop people from seeking happiness beyond our borders. The only way the country can effectively address the problem, therefore, is by raising the supply of skilled labor for both the local and global labor markets.

Talent war hits the Philippines hard

By David L. Llorito, with Jesse Edep & Louise Francisco (Researchers, BusinessMirror)

When the management of Fairchild Semiconductors, a global electronics firm, offered industrial engineer Manuel Villa, 32, a management job in Singapore three years ago, he didn’t hesitate to grab the offer. Not only was the pay great—five to six times higher than what he is earning in the Philippines—moving to Singapore, he believed, could also open doors for future career advancement.

“The No. 1 factor [for my decision] was exposure—the opportunity to work and be trained in a different culture, in a headquarter-corporate level setting, which should open a lot of other doors for me in the future,” Villa explains. “It will greatly help my marketability should I decide to pursue a position in our US office or other companies, either in Singapore, other countries, or even back home in the Philippines.”

Fairchild has multiple operations in the region, including South Korea, Penang in Malaysia, Suzhou in China and Cebu in the Philippines. Since most of the sites are in Asia, the company decided it was time to set up a regional office.

“Singapore is the central and best location. A group was formed, by picking out specific individuals already working for the company, to form the pioneer team. I was one of those picked and endorsed from the Cebu site,” boasts Villa.

Villa is a typical beneficiary of what human-resource experts describe as the intensifying global “war for talent,” as companies—both local and foreign—fight tooth and nail for skilled workers all over the world. And while the stiff competition for talents is benefiting Filipino professionals, private companies are concerned that the loss of local talent would hamper the competitiveness of the domestic economy as companies find it hard to match the offers from multinationals.

A growing concern
In a study by Grant Thornton International released by the accounting firm Punongbayan & Araullo (P&A), 43 percent of Philippine companies picked the scarcity of skilled labor as the “major roadblock” to their expansion plans. Last year, only 15 percent of Philippine companies complained of the same problem.

With the steady exodus of the country’s best and brightest, it was only a matter of time, the study warned, before local businesses would begin to show signs of strain over the brain drain.

“The results this year clearly reflect the problem that employers across industries are experiencing, which is the draining of our local talent pool,” says P&A’s managing partner and chief executive Greg Navarro. “Even in the accounting practice, we are struggling to compete with foreign firms that see the Philippines as a good resource for highly trained, English-speaking certified public accountants.”

Indeed, official statistics from the Philippine Overseas Employment Administration shows that the country has been practically bleeding talents. Since 2000, the Philippines has been sending an average 79,000 professional and technical workers, 500 managers, 4,000 clerks and 70,000 production workers a year, many of whom are college graduates.

Within the same period, 10,000 nurses have left the country each year for Saudi Arabia, the United Arab Emirates, the United Kingdom, Ireland, the US and other destinations. On average, close to 13,000 caregivers, many of whom have nursing backgrounds, have left the country annually, many of them going to Taiwan, Israel, Canada and the United Kingdom. Japan and South Korea were the favorite destinations for performing artists, averaging 55,000 a year, while IT workers have been leaving at the rate of 300 a year to countries like Saudi Arabia, the US, Malaysia, Singapore and the United Arab Emirates.

The actual deployment of IT workers should be higher as most of them who are now working in countries like Singapore and Malaysia were directly recruited by their would-be employers. Others simply packed their bags and applied directly to companies. It’s so easy to do so because Singapore, being a member of the Association of Southeast Asian Nations, does not require visas from travelers from the Philippines.

“There are many Filipinos here [in Singapore], especially the professionals, middle-income class,” says Villa. “They are into IT and other fields as well, like management, restaurants and hotel-related, engineering, and logistics. Besides domestic helpers, I have met Filipinos working as waiters, department-store personnel, clerks, engineers, managers, academicians, church workers, airline personnel and others more. The Filipino population here has already reached 120,000, and still rising.”

Affecting all sectors
Analysts used to think that the diaspora of professionals only affected a few sectors of the Philippine economy, like seafaring, aviation, engineering, construction and nursing. But in the last three years, it has started to affect almost every sector of Philippine society. The Philippines is sending journalists to Singapore, Saudi Arabia and the United Arab Emirates; engineers and oil-rig workers to Nigeria, Russia and the Gulf states; speech and physical therapists to the US; and mining engineers and geologists to Australia and China. There are now Filipino accountants in Silicon Valley in California, and some are heading for Australia.

According to the Personnel Management Association of the Philippines (PMAP), industries suffering from high turnover rates these days include pharmaceuticals, banking, consumer goods, hotels and restaurants, electronics and semiconductors, and telecommunications and computers. About 33 percent to 59 percent of employees leaving their jobs in these industries, according to a PMAP survey, went abroad.

“In just 12 months, we lost about a dozen human-resource officers to other companies,” says a human-resource officer for a pharmaceutical company.

Even the public sector is increasingly being affected by the war for talent. The country’s weather bureau and the Mines and Geosciences Bureau are losing weather forecasters and geologists to the private sector here and abroad. The Department of Science and Technology (DOST) is hard hit as well. Sources from the DOST reveal that out of almost 3,000 scientists with PhDs in various scientific disciplines, almost 500 have already left the country in the last few years.

Even the military has not been spared from this phenomenon. Sources from the Philippine Army say the Australians are currently recruiting Filipino soldiers.

“They [the Australians] know that Filipino soldiers are well-trained in the different occupational specialties—infantry, cavalry, armor, signal, engineer, etc.—which makes them competent and efficient and can communicate or verbalize very well,” says an Army officer who doesn’t want to be identified. “The Armed Forces of the Philippines is using American military doctrines, and it is compatible with Australian military doctrines.”

The military officer adds that the Australians are luring Filipino soldiers with citizenship offers. Filipino soldiers are also being recruited because of their exposure in asymmetrical warfare or counterinsurgency operations. “For several decades, our soldiers have been fighting the NPA [New People’s Army], secessionists and terrorist groups. The Australians do recognize this Filipino talent,” the officer says, adding that Filipino soldiers who once served as United Nations peacekeepers “established connections during their tour of duty and after they retire or resign, they join the US or UN as civilian contractuals.”

Peter Goellnicht, principal migration officer of the Australian embassy here in Manila, however, denies that Australia is recruiting soldiers from the Philippine Armed Forces. In an interview, however, he admits that he is aware of “a couple” of former Filipino soldiers who were granted visas on the strength of their professional qualifications as soldiers.

Drivers of the global talent war
Noel de Luna, country manager of Mercer Consulting, a global human-resource company, attributes this increasing competition for workers in the Philippines to demographic changes in the US and the Asia-Pacific.

“There’s a war for talent out there because China is growing so fast and its population is aging,” says de Leon. “Japan also has an aging population. If you look at the demographic profile, its working population has been going down since five years ago. But the trend about rising demand for skilled workers is really Asia-Pacific-wide.”

In a region-wide survey by Mercer Consulting this year, de Leon reveals that 50 percent to 77 percent of companies in Japan, South Korea, China, Hong Kong, Taiwan, Singapore, Malaysia, Thailand, Indonesia, Vietnam, Australia and New Zealand have expressed hiring intentions even as many of them are experiencing double-digit attrition rates.

“And where are they going to get new talents? Naturally, many of them would recruit from the Philippines,” says de Leon.

Besides demographic factors, the larger forces of globalization seem to be the bigger explanation. In a paper entitled “Global Competition for Skilled Workers and Consequences,” Manolo aAbella, a Bangkok-based labor-migration expert formerly connected with the International Labor Organization, says that the raging war for talent results from the growth of global supply chains as liberalization of trade policies has made it possible for transnational companies to move production to cheaper locations.

“The emergence of these global production structures have been everywhere, accompanied by greater movements or transfers of technical and managerial personnel,” says Abella. “Another important development has been the growth of informal as well as flexible forms of employment, opening markets for foreign workers willing to enter occupations or sectors abandoned by natives.”

Still another factor is the rapid expansion of the knowledge economy and the demand it has created for a ready supply of young IT professionals, he adds.

According to economist Dieter Ernst, senior research fellow of the East-West Center based in Honolulu, the trend towards “downsizing” among American firms, is also a major factor. Ernst explains that because many American companies operate on a very lean staff, they have to scramble for specialized skills once demand from buyers shifts to new products that require new technologies.

“For many high-tech companies, competing for scarce global talent has become as major concern,” says Ernst. “As a result, global sourcing for knowledge workers now is an important global manufacturing and supply chain strategies. The goal is to diversify and optimize a company’s human-capital portfolio through aggressive recruitment in global labor markets.”

But what’s adding fire to the global talent war is that countries, especially those suffering from low population and labor-force growth, are engaged in systematic recruitment in response to the growing skills scarcity. The US, Canada, Australia and Singapore are among the most aggressive.
Canada and Australia have been offering permanent residence and citizenship as incentives for skilled migrants. Through its H1-B visa, Americans have been luring IT workers to Silicon Valley. Middle-East countries like Saudi Arabia and the United Arab Emirates have been giving temporary admission to skilled engineers, welders, pipe fitters, accountants, journalists, and advertising people from the Philippines and other Asian countries. Australia has also been using its universities as “academic gates” for attracting skilled migrants from all over the world.

Singapore has an office, Contact Singapore, that actively recruits talents from all over the world, offering incentives to would-be immigrants to become permanent residents and eventually become citizens.

“The government does encourage permanent residents with good standing to stay,” says Villa. “They extend all of the basic services they offer to their citizens, including medical services, wherein the social system will help you pay only a fraction of the medical costs. There are tax exemptions—tax rebate payouts—if the government performs well and has a budget surplus.”

Winners and losers
Certainly, skilled workers like Villa are the main beneficiaries of this global competition. Because of the increasing scarcity of talents, vulnerable companies are upgrading pay scales for their skilled workers in an effort to stave off staff piracy from other companies.

Patrick Marquina, an associate consultant for Watson Wyatt, a human-resource firm, notes that this year, 148 companies in manufacturing, business-process outsourcing, banking and other industries operating in the Philippines have raised their pay scales by an average of 9.21 percent, almost three times over the country’s inflation rate. Rising pay scales, Marquina explains, are particularly high in outsourcing and IT-related businesses.

Mercer-Philippines, another human-resource outfit, confirms the trend in a similar survey. Floriza Molo, information product solutions business leader, said 180 companies involved in the consumer, computer and telecommunications, pharmaceutical and other industries have, in the past year, increased their pay scales by an average of 8.13 percent and forecasted an 8.34-percent pay hike in 2007.

“In the Philippines, the scarcity of skilled workers has led to continuous increase in compensation and benefits for all the industries,” says Molon. “Though most companies remain conservative in giving increases, overall national competitiveness has driven local companies to compete with multinationals to be more aggressive in terms of base pay and giving premium to the employee.”

Analysts and corporate executives are worried that the continuing diaspora may hurt the country’s prospects for development. A critical mass of native people, Abella explains, is necessary to create new knowledge and technologies that are essential for progress.

“Experience has richly shown that human capital, rather than natural-resource endowments, is the key to economic development,” says Abella. “The current competition for the highly skilled has naturally raised alarms that it will further aggravate the problems of developing countries in creating a critical mass of professionals and technical workers needed to raise productivity.”

From OFW to Pinoy Expat: analyzing the Malu Fernandez controversy

Global talent has never been more mobile, thanks to changes at the national, regional and international levels which have eased their flow across borders. Many countries, developed as well as developing, have designed policies and programs to attract talented people as students, temporary workers and immigrants. —Gerry Rodgers, Director, International Institute for Labour Studies, International Labor Organization

Ex·pa·tri·ate (n): somebody who has moved abroad; a citizen who has left his or her own country to live in another, usually for a prolonged period.—MSN Encarta Online Dictionary

WHY don’t we discard the term “OFWs” and use “Filipino Expat” instead?

“Filipino expat” is a neutral term used by most countries in the world, and free from the harsh and bitter narratives that characterized the evolution of the descriptor for the hardworking overseas Filipino.

The use of the term OFW (overseas Filipino workers)—and the social narratives behind it—may have gone out of date, and may account for why the blogosphere blazed in sheer hatred and venom when a certain Malu Fernandez denigrated Filipinos working abroad and typologized class stratification in Philippine society in terms of Jo Malone-versus-Charlie/Axe.

It’s possible that many OFWs now are wearing Bulgari or Gucci or Poison by Christian Dior or Chanel No. 5, hence the global moral outrage. In fact, what the matapobres in this world failed to realize is that the composition of expatriate Filipinos working abroad has slowly but surely undergone a profound transformation.

For decades we were sending many unskilled workers all over the world, after those heady days of the ’70s when the cream of our construction workers were tapped by Saudi Arabia and other Middle Eastern countries to build their infrastructure.

But then there was the wave of entertainers, mainly to Japan, and the domestic help—with many of the unskilled ones going to the Middle East and many of the college -graduate types, such as teachers—landing in Asia (primarily Singapore and Hong Kong) and Europe (Italy and Spain).

Unfortunately, besides the downside of labor export in terms of losing some critical skills for nation-building, the past decades were also littered with stories of abuse, primarily because of labor systems that were skewed in host countries. It was only in recent years, thanks to pressure from multilateral organizations, that host countries have worked more closely with labor exporters like the Philippines to substantially reform their work and wage systems.

These days, the share of skilled professionals (including those in the health field, such as nurses), technicians, managers, investors, engineers and accountants, among others, to the overall number of people leaving for work abroad are rising—partly owing to a deliberate, initially criticized state policy early this year to set floor wages for deployed domestic help in a bid to prevent labor importers from targeting uneducated, hence easily exploitable, workers.

Hence, if one looks at the distribution of Filipino expatriates abroad, one wouldn’t be surprised to have workers wearing varied types of fragrances, from the cheapest to the most expensive, befitting their economic status. .

This observation may find resonance in the fact that nearly half of the buyers of condominiums and properties in the prime areas of Makati and Fort Bonifacio, as well as in cities outside Metro Manila, are expatriate Filipinos. Why is the property sector on the upswing these days? Why are bookstores, boutiques and gadget shops selling expensive stuff proliferating? It’s the money from expatriate Filipinos. There is no longer any basis for the matapobres to look down on expat Filipinos anymore. Not that they were ever justified to do so anyway.

The typical narrative about the OFW is Angelo de la Cruz, that scrawny desert-truck driver begging for Philippine officials to bring the troops home so his captors would spare his life. It could also be Flor Contemplacion, the maid convicted for murder of a fellow Filipino maid in Singapore.

Their narratives—even when they were still called OCWs or overseas contract workers—are stories of privation and hopelessness, tales that particularly recurred during the ’70s and the early ’90s. From the perspective of the media covering the Philippines and even from many among us, the term OFW has come to be associated with images of despair and backwardness.

These narratives, however, have started to get obsolete since the late ’90s as more and more Filipino professionals and skilled labor are joining the global labor markets. Horror tales of maids getting raped are still there, but stories about successes of professionals abroad has also become prominent.

For every story about abused maids, there are several others about hotshot engineers, doctors, nurses, information technology professionals, accountants and bank managers making it big in the global scene. It’s now a mixed picture, one that won’t fit into the simplistic Jo Malone-versus-Axe class struggle format of Malu Fernandez.

There are many reasons for this phenomenon that goes beyond the usual Filipino-as-economic-refugee thesis. A significant part of this new trend is caused by global dynamics.

For instance, demographic change in advanced countries has prompted rising demand for medical and other professionals, and the Filipinos responded to this opportunity quite well. High crude prices brought riches to oil- and gas-producing countries. They are recycling these petrodollars in exploration and development, as well as the construction of rigs and oil platforms, and are hiring an increasing number of Filipino engineers, architects, geologists, mining engineers and skilled construction workers. That explains the double-digit growth of remittances each month in the last three years.

The rise of the knowledge economy is probably the most important factor. Global companies operating from Asia to Africa have realized that in this brave new world, competitiveness requires smart employees with good ideas in between their ears. Making money now is more about applying ideas to produce value; and it’s so easy to achieve that goal by bringing together critical masses of bright heads from various cultures. To produce graduates with “the global culture,” universities across the globe are recruiting professors from different countries to ensure “cultural diversity.”

It’s not only companies that are massively recruiting people; some countries, in fact, consider it part of their “national interest” to recruit people from various cultures. Countries like the United States, Canada, Australia, Singapore and New Zealand are among the most aggressive recruiters.

The world has changed—courtesy of globalization—and it’s making much of our biases, assumptions and perspectives about Filipinos working abroad obsolete. It’s time for us to appreciate and acknowledge this trend.

(Note: I originally wroted this piece as editorial for BusinessMirror, 10 Sept 2007)

The wage conundrum in the Philippines

AS expected, some labor groups slammed the P12 wage hike granted by the National Capital Region-Regional Tripartite Wages and Productivity Commission, with one describing it as “nothing but alms,” and another saying it’s only good to pay for noodles and eggs. What the workers need, the militants say, is an additional P125 daily-wage increase.

And as usual, the board defended its position by saying that a P125 daily-wage raise would be disastrous to the economy. It would throw more workers off their jobs, said Labor Secretary Arturo Brion.

Expect this wage issue to metamorphose into a morality play in the next few days, with some organized groups painting employers as greedy capitalists squeezing the blood off workers. And employers, especially exporters, saying that many of them are about to close shop because of the strong peso and that a new round of wage increase, therefore, would simply doom their business.

We have been hearing these story lines in the last half century. And it’s likely that we will hear about these things again next year, unless policymakers learned to look at the issue from a broader perspective and deal with the real problem that is causing this annual exercise of a virtual class struggle.

One of the larger considerations here is the comparative wage rates in Asia. At the current wage levels, minimum pay in Metro Manila is close to $8 a day, against Thailand’s $6.35, Beijing’s $3.43, Indonesia’s $3.25 and Vietnam’s $1.27.

What these figures suggest is that an unwarranted increase in local wages would simply turn off investors some more. This consideration is important because, in reality, at the root of this incapacity of many firms to pay higher wages is the small size of the Philippine economy itself.

Despite the significant growth rates we have achieved in the last few years, the Philippine economy and its capacity to create jobs has been generally weak. More so because the new creators of jobs, specifically outsourcing, are in the services sector that needs highly skilled graduates who are normally paid rates higher than the minimum-wage rates.

It’s obvious that minimum-wage workers are probably concentrated in the industry sector, which, by some indications, are fast shedding jobs already—owing to a lot of factors, including poor infrastructure, a strong peso, strong competition from China and Vietnam, and rapid technological change.

To survive, many companies have relocated to China while others are restructuring their cost structures to stay afloat. You put a drastic wage increase in their equations and it’s likely that they are just going to fold up or simply adopt more labor-saving devices.

This is not to deny the need for decent wages in the Philippines. In fact, we need them here. But the reality is that the performance of companies and industry sectors are uneven.

Certainly, firms in electronics, mining, outsourcing, banking, and wholesale and retail are probably doing good. But other firms, especially small and medium enterprises in the manufacture and export of furniture and fixtures, as well as food, are probably ailing owing to the strong peso and other factors.

It means that while other firms could absorb the wage rates, others are not likely to do so, and go under. The ideal policy approach, therefore, is an arrangement that would consider these different business conditions.

A collective bargaining agreement is one option. But then again, only about 4 percent of the country’s work force is organized, and this is due to several factors. Our unions are either lousy organizers who are not adapting effectively to winds of change, or are crowding out each other in the same sites. These days, more than half a million workers are in the “new economy,” and yet unions have not made inroads into their ranks.

Because of this weak presence within the labor sector, labor unions are focusing their efforts on petitions for state-mandated wage hikes to project relevance. But these are measures that ultimately hurt the labor sector, mainly because of their one-size-fits-all approach.

One school of thought says, though, that besides being unable to cope with the impact of globalization in the workplace, some labor leaders have limited their ambitions to landing party-list seats in the House of Representatives.

Of course, the bulk of the labor sector is employed in the small and medium enterprises, many of which are mom-and-pop operations that are not suitable to union organizing. If that observation is true, then we know that the issue about low income for workers and the rest of us Filipinos is really all about economic growth—or lack of it.

Higher, sustained and broad-based growth is the only thing that could ultimately soak up joblessness. Hence, the government should hurry on growth-oriented strategies, which should involve reforms in policies and resource allocation in education, trade, infrastructure development and social services.

That may sound like a vague set of proposals with long- term impact. True. Most of the reforms workers want are those that actually would have an immediate impact. For instance, close to half of workers’ wages are used on food purchases. But trade reforms (say, lower tariff for rice, corn, sugar and wage goods) that would cheapen food, therefore, would go a long way in expanding workers’ purchasing power.

There are so many other policy handles that the government could use to help workers in a way that won’t destroy their jobs as a wholesale wage increase would. Creativity is the key. And the patience to help all stakeholders understand that in a fast-changing world, the usual formulas sometimes just won’t work the same way anymore. (Note: I originally prepared this as editorial for BusinessMirror, Aug 8 2007)

You may read a related post:
Alternatives to legislated wage fixing

A winter of discontent for our weathermen and what can we do about it

FIRST, it was doctors becoming nurses to take jobs abroad. Then, pilots, geologists, mining engineers and information technology professionals seeking greener pastures beyond the borders. Now, weather forecasters are also leaving the country in search of a better—pardon the pun—climate.

Now, this one should really hurt because weather forecasters provide a very essential—nay strategic—public good: that of providing weather data and forecasts. A lot of life-and-death decisions are made both by the private and the public sector based on these data and forecasts. Information about typhoons, storms and floods save thousands of lives.

They also help producers, government planners and private business minimize the negative impact of natural disasters. Weather and climate data help soldiers and cops in the fight against terrorists and communists. They help exporters, importers, logistics firms and shipping companies plan the movement of goods and services. And of course, these services are getting important by the day as we suffer, with the rest of the world, the effects of climate change.

The literature on global warming says that increasingly, weather and climate all over the world will be less predictable. That spells danger for the country, and only a good weather-forecasting capability can help us cope with these changes.

But since our weather forecasters are being lured by talent poachers abroad, it’s crucial to confront this problem squarely now. The solution is simple but the country’s policymakers, both from the public and private sectors, need to have a change in mindset, a paradigm shift.

At the outset, it’s clear that our weather forecasters need more material rewards for their skills and we may have to give it to them. Since this country pretends to be a democracy where individual pursuit of happiness is paramount, no one should even think about physically preventing them from leaving. That is their right. But before anyone in our midst accuses them of greed, “materialism” and “lack of patriotism,” let’s put this problem in broader context.

The problem of weather forecasters leaving the country simply reflects Philippine society’s lack of appreciation of scientific talent and science in general. Many scientists work in government agencies providing services and promoting national development. Strategic activities like defense, weather forecasting, research and development, crop protection, plant breeding, biotechnology are only among the few examples. They are a special people who push the frontiers of knowledge.

They are special because they are among the brightest in our midst; people who spend long hours in laboratories and workshops to generate information, knowledge, and technologies that are vital to development and progress; and their supply is normally scarce. They are virtual gems, treasured in many countries in the world.

Not in the Philippines. For long, policymakers have been treating scientists like ordinary people with ordinary needs. Take note how the salary-standardization program has prevented them from getting wages substantially higher than those of janitors and security guards. Most agencies they are working for are poorly funded.

The budget of the Department of Science and Technology, for instance, has practically stayed the same in the last several years. That is why we find many scientists in these agencies doing excruciatingly demoralizing administrative and armchair “research.”

No wonder, most of them dream of moving abroad, temporarily or permanently, so they can really do what they love: honest-to-goodness scientific research and some dignity of being a “scientist.” It is sad to note that in just one DOST agency, at least 40 of its scientists and researches have gone abroad or have joined private companies last year.

But can a poor country like the Philippines really match the offers abroad? Where can it get the money?

Local decision makers keep raising this issue, but they entirely miss the concept of “purchasing-power parity.” A dollar can actually buy more goods and services here than it could in places like Singapore and the US because of differences in living standards.

So if government policymakers want to raise the weather forecasters’ pay, they don’t really have to match the offers abroad dollar-for-dollar. All they have to do is to figure out that parity or the minimum levels by which our weather forecasters and scientists could feel some dignity while serving their country well.

That means, they can spend long hours in the laboratory without fretting over a leaking roof at home, the next tuition installment for their children or the health insurance of their family. Or about having to catch the MRT because, for all the long years of service, they can’t even afford a second-hand car.

For meteorologists, for instance, we should immediately put together a training program, or even a scholarship program, for aspiring scientists. This can be done pretty easily—granted policymakers take immediate action—since we could actually train forecasters from many applied science disciplines. Many forecasters actually came from engineering. This training program should be a continuing process so those who leave for greener pastures can easily be replaced.

Let’s face it; we are in the age of globalization, where national borders are meaningless. There’s an ongoing war for talent all over the world, particularly in the Asia-Pacific Region, and scientists are rational beings who respond to economic incentives. That’s a fact of life in a world that is—to use Thomas Friedman’s term—getting flatter by the day.

Certainly, the question of where to get the money is a valid, albeit a minor question. The more relevant question is: Do we badly need them? If the answer is yes, then we have already solved the problem. If we think we really need them here, we will mobilize resources for them. We will put our money where our heart is. There are actually lots of unproductive expenditures in the government from where to draw those resources.

On a broader front, there is really a need for a greater appreciation of our scientists. These people are globally mobile, often interacting with peers worldwide through seminars and fellowships. Hence, many of them know how miserable their standards of living are compared to their counterparts in, say the Asia-Pacific Region. Thus, they are the most vulnerable to recruitment by foreign companies that not only offer generous pay but also access to topnotch research facilities, tools and working environment.

If we can attend well to our scientists’ needs, we will send market signals to our bright students in science high schools that hard sciences actually pay materially. Then we can attract more of them to the science profession and ease the scarcity of scientists and technical people. If young kids see that science is cool, we will stop hearing complaints about “brain drain” and skills shortage. Right now, many of these science high-school graduates are taking nursing, mostly egged on by families looking to get dollars abroad. But this need not go on forever. (Note: The original version of this piece was written as editorial for BusinessMirror, 23 March 2007)

The Philippines and labor migration: a country in denial?

THIS country is in denial and its “modern-day heroes” are the victims of this mental dishonesty.

Each year, overseas Filipino workers send home more than $14 billion, thus propping up the Philippine economy. They have been doing this for more than three decades, and there’s a surfeit of literature to show that sending them there was a deliberate move to shore up the Republic.

In fact, the late foreign affairs secretary Blas F. Ople, who was described, in his role as the labor minister under Marcos, as the architect of the labor export policy—was paid tribute just last Monday when the President inaugurated the National Reintegration Center for OFWs at the Blas F. Ople Development Center in Intramuros. For all the criticism later heaped on the “indiscriminate” sending of workers abroad, the labor export policy had actually served the country well when Mr. Ople first thought it up in the ’70s, as it provided the country a source of good jobs for its skilled workers and foreign exchange at a time when it was needed.

And yet, surprise of surprises—it turns out now that the State denies that the Philippines is promoting overseas employment as a means to sustain economic growth.

Since the days of the Marcos dictatorship, the state has constructed an elaborate mesh of laws, bureaucracies, regulations, procedures and promotions programs for those who seek jobs abroad. And yet Republic Act 8042, better known as the Migrant Workers and Overseas Act of 1995, says “the State does not promote overseas employment as a means to sustain economic growth and achieve national development.”

Even more surprises: our own intellectuals are in denial. These days, an old terminology is being resuscitated and blamed by some practitioners of the Dismal Science as the cause of the country’s failure to industrialize. The surging flow of dollars to the economy, these people say, is causing the “Dutch Disease”—referring to the rapid appreciation of the peso, rendering the local industrial and agricultural sectors less competitive.

The “disease” arose from the Dutch experience in the ’60s following the discovery of oil in the North Sea. The surge of dollar revenues from oil flooded the Dutch economy, causing a rapid rise of its currency, and the collapse of many of its industries that couldn’t compete with cheaper imports. Naturally, many were jobless.

Now, some analysts are using the Dutch experience to allude to the local context. Do these people seriously want to project OFWs as a negative factor since their dollars sent here are causing the appreciation of the peso, squeezing the exporters profits and preventing industrialization?

It gets worse: some wonder if the country would have been better off without the OFWs. In a recent conference on international labor migration, one of these Dismal Science practitioners speculated that had not a single Pinoy left the country for an overseas job, we could have achieved a “real revolution” that could have ushered in “real reforms” like “real land reform” and better debt management.

Sure. Easy to say that now, when our leaders can boast about being able to pay foreign debts in advance, and the central bank cites an unprecedented level of 4.7 months’ worth of imports in the GIR. Or when OFW money is propping up every single sunshine industry in town and reviving traditional, dying sectors.

Meanwhile, not to be outdone, sociologists recently coined the term “the culture of migration” to describe the tendency of some families to base career decisions on the dynamics of supply and demand for jobs in the global marketplace.

Yet this much is clear: many of those who left the country felt “the system” has failed them. Rather than be a baggage to society, they decided to be part of the solution in the only way they know how: work their butts off in foreign lands and send money back home. For a long time, “experts” kept saying their remittances stabilize the economy. And yet they are still being blamed for causing “Dutch Disease!”

It’s this attitude of “denial” lately that must account for policy recommendations like taxing the OFW remittances and exacting a levy on countries that hire our nurses, as if we are the only ones “exporting” manpower. It’s a policy recommendation that will surely kill the goose that lays the golden eggs.

Seriously, will the Philippines really be better off without the OFWs? Are they really causing a Dutch disease in these parts? Is the “culture of migration” bad? Let’s answer these points one by one.

First, those who believe the country may have been better off without OFW remittances should know that the only group that ever really had the capability to mount a “real revolution” are the communists. History and experience in similar countries show past Marxist uprisings to be dismal economic failures, not to mention the violence engendered: i.e, of the revolution eating its own children. Our neighbors Malaysia and Indonesia, which had bad experiences in communist insurgencies in the ’50s and ’60s, would likely shun the idea of having a “Marxist state” in the neighborhood, and may be tempted to support movements for either secession or Islamic revolution à la Afghanistan. These "intellectuals" should be careful what they wish for.

Second, are OFW monies causing Dutch disease? Certainly, the rapid rise of remittances boosts the peso, in turn squeezing exporters’ profits. But a deeper look shows the rising peso is directly related to poor infrastructure, high energy cost and the crisis of confidence owing to lack of political stability. There are not enough investors so fewer people need the dollars. It’s really as simple as that. The OFW phenomenon is partly a consequence of lack of competitiveness and not the other way around.

Finally, a “culture of migration” is not necessarily bad. Contrary to popular belief that OFWs just waste their money on conspicuous consumption, recent empirical studies say they actually invest their money in houses and lots, farms, health and education. If you doubt, listen to the Bangko Sentral guys, who’ve been describing them as increasingly “finance-savvy,” or the PSE and the Treasury, which hold road shows for equity picks and retail bonds.

If indeed, OFWs are causing Dutch disease, certainly we could always tell them to park their dollars abroad. Of course, they will send most of their dollars because their families need the money for the children’s education and health—services their government has underprovided. But if they indeed stopped sending, that would also create problems for the financial system.

Another option is to raise the savings rate to lessen the pressures for exchange appreciation. But raising the savings rate would also mean we may have to introduce more competition in the banking sector. Do our leaders have the balls to institute reforms in the banking system?

The ultimate solution really is for the country’s leaders to boost competitiveness of the manufacturing sector. There is no secret to this. Tried-and-tested solutions include investments in efficiency-enhancing infrastructure, reforms and investments in education, and a stable political system.

But then, these things seem hard. Far easier, it seems, to focus on pat analyses, like blaming the OFWs, the only sector that ever really did something concretely good for the economy. (Note: I wrote this piece as editorial for the BusinessMirror, 12 March 2007)

SHIFTING CAREERS: More and more employees are looking to join the ever-growing BPO sector

By David L. Llorito, Louise M. Francisco and Debbie J. Pepito
Research Staff /BusinessMirror, 6 February 2007

For years Xandy, a former human resource officer for a publishing firm, thought she could tolerate the whimsical policies put upon by the bosses. But when top management started bullying her into firing an employee whose only fault was having been born in the Year of the Tiger, she knew it was time to go.

That’s why she’s so happy for being given the option of joining the medical transcription field, one of the fastest-growing business process outsourcing (BPO) sectors in the country in the last five years.

“I was so frustrated. For 15 years, I felt I was like a fish out of water,” Xandy shares. “Now, I work at my own pace provided that I meet all deadlines set by the clients. I work at home. I do not have to commute to and from work daily. No traffic, less pollution, less stress. The best part: there’s no boss breathing down my neck every minute.”

But there’s a trade-off. She says she hasn’t been to the Mall of Asia, St. Francis Square, Market! Market!, Podium and other interesting places where her friends hang out. “Talk about zero social life,” she says. “I work during Christmas and New Year. I guess I have sacrificed a lot but I have no regrets.”

Since shifting careers from human resources to medical transcription she felt her quality of life has vastly improved. She gets between P70,000 and P100,000 a month, significantly higher than what she was getting working as human-resource practitioner. She also has more time to attend to her growing number of pet dogs.

Second chance
Xandy is one of the growing number of career shifters who, frustrated in their previous work, are finding new careers in the BPO business. Called cyberservices by government planners, this industry covers a wide range of activities such as call centers, medical transcription, litigation support, back-office operation or shared services, engineering design, software development and animation. According to recent government data, cyberservices now employ about 250,000 and generates more than $3 billion in service export revenues.

Dada Desembrano, operations manager of Phibi.com, a call-center startup with 65 employees, says about 20 percent of her employees are career shifters. “We have employees who were former nurses, sales workers, physical therapists, English teachers and even dentists,” she says.

A career shifter herself, Desembrano used to manage a Subway franchise in Kuwait. But she got homesick and decided to go home in 2000. Not even the high pay (around P70,000 net) and other perks could persuade her to continue her stint as overseas Filipino worker (OFW). “There’s really no place like home,” she swears.

Back home, she immediately took a job as long-distance operator with the Philippine Long Distance Telephone Co. with a salary of P15,000 a month. After discovering that call-center agents in general receive higher pay and enjoy fast career mobility, she resigned to become a call-center agent. In 2003 she was promoted to supervisor with a P25,000 net pay. Three years later, she rose up the ranks again to become operations manager, getting at least P60,000 basic pay. And in September 2006, she and her friends formed their own company. By the end of 2007, she expects to employ 250 workers.

Despite the increasing scarcity of call-center agents and BPO workers, Desembrano is not worried. “Contrary to popular belief, I actually don’t have problems recruiting staff. This is because these days, there is a growing perception that the career path in the outsourcing industry is quite good. Besides, there would always be career shifters who are lured by better career prospects,” she explains.

Grace Zata, managing director of the Corporate Executive Search Inc., a human-resource outfit, agrees, citing a friend, who used to be an account manager in a multinational advertising agency but quit when she got married and had six children. When she decided to resume her career, she could not find any job in advertising anymore.

“I think call centers provide jobs for that particular segment who are articulate in English but for some reason [such as age, lack of college degree and/or experience, and even sexual orientation] cannot find jobs,” Zata says.

She also mentions her cousin, who is almost 50 and “a bum for many years.” He did not finish college and used to work as a DJ in a radio station. “He got work as an agent and after one year has been promoted to team leader. The call centers have opened the door for career shifters as well as some people who previously could not find jobs,” Zata says.

Top new employer
By 2010, the industry expects the total number of BPO workers to reach more than a million with service export revenues of more than $12 billion. So far, this projection seems to be holding quite well. Since June 2006, the BusinessMirror research staff has been monitoring job advertisements in the three major newspapers—Manila Bulletin, Philippine Daily Inquirer and Philippine Star—and three online jobsites—www.jobstreet.com, www.jobsdb.com.ph and www.bestjobs.ph—and found out that about 27 percent of the 199,000 job advertisements from June to December 2006 were for cyberservices.

In terms of ranking, cyberservices occupy the top spot, followed by construction and engineering; manufacturing; wholesale and retail; hotels, resorts and restaurants; media and entertainment; transportation, storage and communication; financial intermediation; health and social work; and advertising and promotions. Consistently, job ads from the cyberservices sector have been growing at double-digit rates from its base in June in the last five months, an indication of the growth in job creation in the sector.

Every year, the country’s colleges and universities produce about 400,000 graduates. For the industry to grow into a million workers by 2010, the industry needs to recruit an average of 200,000 additional workers each year, a figure some industry experts say is probably not achievable. Even if the industry achieves half that target, recruiting about 100,000 new workers each year for the industry would mean that a significant number will have to come from career shifters.

At present, many BPO companies don’t have specific programs to attract career shifters. They simply take them as they come.

“Practically all [our agents] are fresh-graduate recruits as our strategy has always been to backfill at the entry level with new graduates,” said Chris Duncan-Webb, president of the AIG Business Processing Services Inc. “We prefer fresh graduates. For us there is really no great advantage in hiring career shifters. It is much easier to assimilate new graduates into our culture than import from other companies with a different culture.”

He adds: “We shall continue our policy of recruiting new graduates although occasionally we will recruit career shifters if they fit our profile. I am not sure if the number of career shifters applying will increase but I think probably so because BPO is a new and exciting industry.”

So far, the industry doesn’t have statistics on the number of career shifters in outsourcing. But based on anecdotal evidence and interviews, there appears to be a growing number of people who are attracted by its dynamism, for varying reasons.

For Debbie who has just left journalism for a managerial post at a call center, the reason appears to be economic. She needs the money to help pay for her sister’s studies. “At this moment, the decision is not really about the pursuit of happiness. Between journalism and this call-center job that pays a lot higher, the choice is clear. It’s the most logical thing to do,” she explains.

For Bowden, a team manager for a back-office operations firm, his decision to leave teaching is about proving himself even though it would mean getting reduced pay. “I already knew that I was good at teaching. I wanted to see if I could make it in a different field. I like this job; it’s dynamic. I learn new things every day,” he says.

For former banking employee Cherry Angela Solis, who is now a training officer at Ambergris Solutions, another call center and financial services firm, the work environment is what really matters.

“The work environment is very progressive,” she says. “Business practices and technology from abroad are implemented here. The organizational structure is rather flat, which gives plenty of opportunities to move up. Moreover, an employee doesn’t need to wait for an official appointment to get promoted. He/she can apply for the post aspired for. Many of the managers are young, and have equally progressive/fresh management style. They encourage direct interactions with subordinates. The company’s work ethic for managers requires them to provide support to their subordinates. Also, the work environment is fun and informal, while remaining professional in terms of delivering results.”

According to Tet Bachmann who heads a Filipino-owned call-center business in Pasig, hiring career shifters, provided they are given proper training, could have distinct advantages.

“My team leader is a career shifter [from sales and marketing in real estate]. We had one first-time working mom. I don’t think we hired anyone who was a fresh graduate. Three came from food/service industry,” Bachmann says. “One of our agents who did well for one campaign used to be a food server at McDonald’s. I think that people with prior experience in sales or customer service would be good hires for a call center.”

Effect on other firms
Because shifting to a BPO career seems to be a new trend, human-resource experts can’t seem to agree on whether or not it will accelerate in the next few years or on how will it impact the corporate economy.

On one hand, Zata thinks this trend will probably have a limited effect.

“I would think that people who have reasonably good jobs will not want to become agents,” says Zata. “If they are articulate and confident, normally they have good prospects and will probably not shift. But those who move industry [or shift] are those with technical skills for specialized accounts and are paid very well. They are not really career shifters though, in the strict sense of the word.”

Reyes of Optimus, on the other hand, believes the impact will probably be broad-based and will hit small and medium enterprises the hardest.

“I think career shifters to the call centers and BPO industries would come from small- and medium-scale businesses who cannot afford to pay high wages and provide attractive benefits packages like the big companies,” says Reyes. “If this trend accelerates, and it may, if the number of fresh graduates qualified for call centers/ BPOs diminish, it will make things more difficult for the SMEs.”

For Reyes, what is certain is that human-resource managers will now be challenged to put up long-term programs that will encourage the traditional values of company loyalty, sense of belongingness, team spirit, sense of mission and commitment to what the company stands for.

“Some companies, though, don’t mind having a high turnover; this does keep the manpower costs low since the longer an employee stays, the higher will be the costs of keeping him/ her,” says Reyes.

How this trend unfolds in the next few years, no one knows. Nevertheless, the Commission on Information and Communications Technology (CICT) seems to be betting on career shifters to meet the country’s job targets in the cyberservices industry. In back-office operations or shared services, for instance, CICT estimates that more than 40,000 career shifters are going to join the cyberservices industry from 2006 until 2010. CICT also expects career shifters to make up 30 percent of new employees in the medical transcription business from 2006 to 2010.

It’s probably a low estimate considering that based on the latest labor force survey, the country’s underemployment rate stands at 20 percent. That translates to more than six million people who are underpaid, disgruntled, and thus are ripe recruits for BPO work.

“There are a lot of career shifters coming from P&G, Avon and the like. That will continue as we offer very high [salary] packages,” says Mitch Locsin, executive director of Business Processing Association of the Philippines.

Alternatives to legislated wage fixing

DO workers need better wages? Definitely. But do we have to do legislate it? Not necessarily.

The debate vis-à-vis the wage rise proposal by Congress seems to be framed that way. But that may be peripheral to the bigger issue of whether or not the legislative wage-setting is still relevant to the economy’s need for sustained growth and development at this time. We use the term “at this time” because it is clear that minimum wage setting is a framework that was established in an era that is no longer with us. Policy makers should appreciate that before they ever make up their minds about legislating wages.

Legislative wage fixing was conceived in the era of import substitution following World War II. Thinking that the best way to nurture local industries is through protectionism, policymakers then showered factories with all sorts of goodies including blanket tariff protection for “infant industries.” Because industries are not exposed to the dynamics of foreign competition, many of our so-called local industries became monopolistic, many of them selling products and services at exorbitant prices. Today, a refrigerator or a washing machine or a color TV set is cheaper than a cellular phone; those days only the really rich families could afford those amenities. That’s how companies then made a killing. And because they enjoyed unnaturally high mark-ups then, what better way to force them to share the bounty than through a legislated minimum wage?

That’s how it was then: we had a protected manufacturing sector enjoying high state subsidy and protection and a labor aristocracy that was protected by tenure and wage levels set by Congress. The unintended effect of course was that as mandated wages rose, companies minimized the hiring of workers by buying labor-saving machines. It was cheaper to do so because government then actually encouraged such behavior by offering fiscal incentives (such as duty-free importation of machines, plant and equipment) to companies buying such machines from Japan, America, and Europe. The ranks of the jobless rose, but the inconvenient symbiosis between the protected industries and the labor aristocracy persisted until globalization hit hard—since the 90s when the government of President Corazon Aquino instituted tariff reforms that coincided with our joining the World Trade Organization.

With Congress doing the labor unions’ jobs of agitating for higher wages and better work place relations, the ranks of organized labor hardly grew as the formal sector stagnated and many entrepreneurs went underground to evade wage laws.

As import liberalization started to bite into the balance sheets in the late 80s, many companies felt that the politicized wage fixing was untenable and agitated for reforms. Companies then reasoned out that wage fixing was hurting their global competitiveness. As more wage order violations and related breaches were reported, the labor sector also became restless, particularly during the leadership of then labor secretary Augusto Sanchez. Labor unrest forced President Aquino to fire Sanchez and replace him with Franklin Drilon, who instituted the tripartite approach to wage negotiations within the context of the regional wage boards. That system, until now, works as the labor front has quieted in the last two decades. Since wage rise discussions are done in low-key manner, the process doesn’t attract politicians who tend to grandstand. Ever heard of investors complain of labor unrest as deterrents to investments? Not anymore.

The law on regional tripartite wage fixing does not prevent Congress from legislating wage increases. Nevertheless, resorting to such option right now may politicize the process once more, especially since the country is approaching an election season. But this in itself is a peripheral issue; the bigger one is that such a policy action may even hurt the working class that it purports to serve. Why? The main reason is economics.

In the last decade or two, the work place, transformed by the Information Revolution, has suddenly changed. Knowledge has become the key ingredient of growth; and along with services, it has emerged the most dominant growth drivers. This structural transformation suggests that labor demand is largely focused on those who have adequate or even specialized skills. This is clearly revealed by our Research Staff’s job ads monitoring project where the bulk of the ads for work are accounted for by managerial and administrative; professional and technical; and clerical jobs. Do we wonder why we often hear about jobless growth? That’s one major reason.

That brings us to the question whether or not the nationwide legislated wage increase across the board would ultimately serve the interest of the working class. Our own take is that yes, it will indeed benefit those who are in the formal sector, specifically those in companies that can afford the higher wages. But there are only a few of them, as more than 90 percent of companies are small and medium. But overall, the proposed legislated wage hike, especially at the P125 level, might even work against the interest of the working class, especially the unskilled ones, as the wage rise would further make labor more expensive at a time when managers and employers are largely looking for knowledge workers.

Right now, the best option really is to maintain the regional tripartite regional wage-fixing approach in place since the Edsa Revolution. Better still, those companies that can really afford to give higher wages may have to negotiate with their own workers at the plant level without attracting the intervention of politicians and bureaucrats. That of course presumes that labor unions are not lazy to organize their ranks and are doing their homework.

Of course, the drive for better bottom line suggests that many companies are not going to be generous. But policy makers could still remedy the situation by allowing the market forces to drive up wages. How? By going for growth-oriented policies (more infrastructure investments, strengthening the educational system, effective skills training program, improved job market information system, career counseling for high schools and fresh graduates, scholarship programs for the poor, lower tariff for food products like milk, greater investments in mass transit that lowers the cost of transport, among many others).

Notice how workers in cyberservices don’t have to agitate for higher wages at all, and yet companies are offering them signing bonuses ranging from P15,000 to P30,000. Companies need them so badly that they are willing to pay even before workers started working. Notice how the 400,000 workers in the electronic sector are not picketing their company gates yet companies pay them well because they know how hard it is to replace those pirated.

Of course, factors like “macroeconomic stability” do contribute a lot to preserving workers’ incomes. When the inflation rate is low and stable, purchasing power is maintained; there is no need to raise wage levels.

There are a thousand and one ways to raise workers living standards. Obsessing with the too-pat, oversimplified approach of legislated wage fixing could hurt more of them than it would benefit some.

Reinventing the labor union

AS expected, labor organizations nationwide—especially those associated with the left shade of the political spectrum—came out in droves for the Labor Day march, shouting the usual demands, issuing the same statements, and waving the same old yellow-red banners. And predictably, the President of the country went out on TV proclaiming the usual platitudes about workers and some “nonwage” benefits.

A day after, workers are back to the salt mines, to their usual struggling lives as if nothing has happened or will happen, the passionate marches in the streets notwithstanding. For generations, they have been repeating the same routine every Labor Day until the comemorations seem to have lost their meaning.

This week’s Labor Day celebration, however, is somewhat different, signifying that fresh winds of change are currently blowing on the labor movement. No, we can’t see those creeping changes from the usual marches and breast-beating. The signs are in the recent jobs fair held by the Trade Union Congress of the Philippines (TUCP) at the Quezon City Hall as its way of celebrating the workers’ day, and the day before that, another one sponsored by the Manila city authorities in collaboration with private business at the Luneta Park. Asked about their novel way of celebrating Labor Day, TUCP spokesman Alex Aguilar said: “For us, the priority is Trabaho Muna [Work first]… It’s not because we belong to organized labor that we will only focus our energies on organized labor. I think we should also address the needs of those looking for jobs. Remember, we have three million people who have no work.”

This is a refreshing change in perspective from the labor movement that for long had largely focused attention on the country’s organized labor—the labor aristocracy. It’s been called a “labor aristocracy” because the number of workers that these unions represents hardly make up 4 percent or less of the country’s work force. It’s from this attitude that sprung anti-economic growth and anti-business statements of many labor organizations, denouncing foreign investors as “exploitative,” opposing labor policy reforms aimed at making the labor market supply and demand less rigid, conducting crippling do-or-die workers’ strikes, and lobbying Congress for nationwide across-the-board wage increases that benefit only a minute percentage of the working class (the union members) and injured hundreds of thousands of small and micro enterprises that make up the backbone of the economy.

This change in perspective, therefore, would suggest that more labor leaders are now more receptive of progrowth policies that create more jobs, that they no longer look at capital as the “enemy of the working class,” and that labor could actually be a partner of entrepreneurs in building a better and prosperous Philippines.

TUCP, of course, has always been a “moderate union” whose activism has always been tempered by economic and social realities, albeit it has been subjected to some unflattering remarks in the Marcos past, if only because its leaders were always there at the official celebrations of Labor Day. But we believe that other unions may actually have to take cues from it because of globalization, a potent economic and social force that is now currently shaping the workplace and is marginalizing labor unions in general. In the Philippines, globalization has been associated with several trends that are slowly making labor unionism less relevant to the new types of workers.

One could cite three major currents that are affecting the labor movement.

One, liberalization of global trade suggests that factories, more than ever, are dead serious about efficiency and competitiveness, thus forcing them to maintain lean and mean operations. These companies achieve this efficiency by computerization, downsizing, outsourcing, and by focusing on their core competences. Many have relocated away from Metro Manila to special economic zones in Calabarzon and secondary urban centers where the environment are less ideal for labor organizing. Given the rigidity of the country’s labor policies, these companies would rather focus on recruiting and holding on to skilled workers—empowered workers who have less need of services from labor centers.

Two, in the last decade, economic growth has largely been buttressed by the rapid growth of the service sector, specifically banking, telecommunications, outsourcing, and business services. These types of economic activities require urban-based and tech-savvy workers whose idea of “job security” is something that comes from their education and training and not the collective bargaining agreement.

Three, a significant percentage of the country’s labor force that are contributing significantly to the economy are overseas workers—nurses, aircraft mechanics, pilots, health professionals, caregivers, ship crews—and are beyond the reach of the traditional labor organizations.

How labor organizations reinvent themselves to cope with these undercurrents to remain relevant to the working class would depend largely on how they would adapt to these new labor dynamics. Essentially, increasing the base of the working class locally through economic growth and job expansion is one approach. So are providing skills training and job placement programs for workers, for instance, nurses and seafarers. They may also consider engaging poverty reduction as well as the development of small and medium enterprises. These are not the usual stuff that labor organizations do. But then again, this is a brave new world where they need to try new things to stay relevant to the needs of the less fortunate whose interest they deem to serve. Otherwise, unions might just drift into obscurity.

As singer-songwriter Bob Dylan would put it:

The line it is drawn, the curse it is cast
The slow one now, will later be fast
As the present now, will later be past
The order is rapidly fadin'.
And the first one now will later be last
For the times they are a-changin'.