Tuesday, August 22, 2006

Distress signals from the job ads

THE results of BusinessMirror’s Jobs Ads Index for July seem to provide mixed signals, something that the country’s leaders, both from the private and public sectors, should take heed of and do something about.

On the one hand, the 36-percentage jump in the Jobs Ads Index seems to indicate that business confidence, at least in the short-term, is up. Certainly, business managers are not likely to put job advertisements out there if they feel demand or overall business prospects are dim. When one expects higher volumes of business, one would likely seek more people to hire.

The top 10 job advertisers include cyberservices (e.g. call centers, back office operations, engineering design, software development, medical transcription, animation, among others); construction and engineering; manufacturing; wholesale and retail; health and social work; transportation, storage and communication; and mining and quarrying.

What sort of skills and occupational types are required by these industries? The six major ones—by rank from highest to lowest—are professional and technical people, clerical, production-related workers, sales people, administrative and managerial and service workers.

On the surface, this statistical pattern seems to indicate that broad-based growth is probably in the offing.

On the other hand, a major component for the surge in the Jobs Ads Index is global demand for Filipino labor, a trend that could surely accelerate brain drain in the Philippines.

Are the other countries harvesting the country’s skilled labor and professional class? That seems to be one of the implications of the rising share of job advertisements in local media and job sites. In June about 30 percent of the job advertisements in the Philippines were for overseas work. In July, the share of overseas jobs rose to 35 percent.

Certainly, that’s good because people do get options in life. The country’s 5-percent gross domestic product growth rate has not been good enough to soak up joblessness. The vibrancy of the global job market therefore would somehow ease the pressure from the high rate of joblessness in the country. Imagine a scenario where a significant chunk of those 8 million discontented—mostly from the ranks of middle class and skilled professionals—stay within the country’s borders, while no one from abroad is pumping in more than US$12 billion into the economy. Then one can see how overseas employment has prevented the country from sliding into utter social and political implosion.

This economic strength, however, will eventually hurt the local economy once a certain threshold is reached. What that threshold is, of course, is the big question. Right now, there are more than 8 million Filipinos abroad. That’s equivalent to about 10 percent of the total Philippine population and probably close to 15 percent of the country’s labor force. We keep on sending our talents abroad and we will wake up one day to find there are not enough skilled and technical people around to hire for crucial expansion programs and projects by local businesses. For how long can the Philippine economy keep sending out its best and brightest?

Of course, the basics of labor supply and demand says that once local industries feel the crunch, they are likely to raise wages, thus preventing people from leaving or attracting those who have left. With rising wages, the middle class and skilled professional and technical class could now afford to dream of a better future even if they stay. This perspective is certainly optimistic and ignores the fact that such a phenomenon would mean the loss of much economic opportunity for the country. In the last five years, major job creators in the country have been the global sectors like the business process outsourcing and electronics. These are footloose industries whose main reason for existence here is the availability of a large pool of skilled labor. Once everybody thinks there is no longer room for expansion due to the skills crunch, new players are likely to look elsewhere.

Local business makers need not have to wait for the magic of supply and demand to do something. Certainly, the problem of diaspora lies in economics, but much of its solution lies in compassion and common sense. For far too long, the country’s policy on wages had involved mostly politically-driven increases on minimum pay once inflation rates approach the double-digit rate. Since the pay scales of most professionals and technical people are usually a little higher than the minimum wages, they have not benefited from the pay raises, thus resulting in distortions. That policy environment means that in the last decade the pay scales of most professionals and skilled workers have been declining in real terms; and for most of them, the uncomfortably narrow disparities between their shrinking incomes and those of the usually-protected minimum-wage workers has added to the disillusion and compulsion to leave.

This is not to argue for a legislated wage for the professional class here. But obviously the need of the moment is for local managers to have a paradigm shift of sorts. Local managers are used to looking at their workers, including the professional and technical ones, as dispensable cost items. Now, they should start looking at them as partners in business. They should invest in their training, pay them based on their real worth, and institute career-tracking for each. That way, both business managers and their skilled people could afford to dream together. And they will dream here.

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