“Subcontracting as many noncore activities as possible is a central element of the new economy. We live in an age of outsourcing. Firms seem to be subcontracting an ever-expanding set of activities, ranging from product design to assembly, from research and development to marketing, distribution and after-sales service. Some firms have gone so far as to become ‘virtual’ manufacturers, owning designs for many products but making almost nothing themselves."
—Financial Times, 31 July 2001, as quoted in Sandor Boyson (2006), “Eras of Enterprise Globalization: From Vertical Integration to Virtualization and Beyond.”
ANALYSTS say the inclusion of the SPI Technologies into the Global Services 100 “signals the arrival of an entirely new set of nations providing software and IT services” in the globally expanding outsourcing industry. At the surface, that only one locally owned outsourcing company made it to the list despite the double-digit growth of the cyberservices industry in the last five years seems to make the story less impressive.
What that story doesn’t say is that many of those on the list—24/7 Customer, Accenture, Affiliated Computer Services, Capgemini, Client Logic, Convergis, Headstrong, IBM, NCO, to name a few—are actually doing business here. That should indicate the Philippines is actually getting to be a major player in the business. In fact, NeoIT, a consulting outfit specializing in business process outsourcing, observes in its latest report that the Philippines, together with Russia, is fast catching up with India in the business, particularly in areas like voice services, finance accounting and information technology. It’s something that the country should nurture and be proud of and, certainly, bringing back the prominence of English in the schools, media, offices, corporate world and the social sectors is among the best ways to ensure the cyberservices sector’s continuing growth.
It’s unfortunate, however, that many decision makers and gatekeepers in the country’s politics, economy, educational system, media, labor unions, and other social institutions don’t seem to have any clear appreciation of this exciting industry yet. Just about a year ago, leaders of some left-leaning unions denounced call center work as “dead-end jobs” and “air-conditioned sweat shops.” Others seem to think that BPO jobs are likely just a fad, like the ubiquitous gulaman and sago stalls that used to dot the street corners. More so because—as the Americans are losing jobs to Indians, Chinese and Filipinos—their legislators are likely to craft laws that would prevent the offshoring of some economic activities to places like ours. The cyberservices industry has been growing close to 50 percent per year in the last five years and it seems to be too good to be true for others. These are the reasons perhaps why important initiatives like the restoration of English as the medium of instruction and even the privately initiated programs like the “English is Cool” campaign don’t seem to get traction. Try watching primetime TV and all one can see are inane melodramas featuring lousy actors spewing out horrible Tagalog lines. Yes, we’ve mangled language so badly that on top of ungrammatical English we have fabricated Tagalog words like “ka-pulisan” and “ka-obispohan” (to refer to the police force and the bishops’ bloc).
What many of us have failed to appreciate is that outsourcing is the logical outcome of the on-going enterprise globalization and therefore we haven’t seen the best of it yet. It’s a part of the natural historical progression kicked off by the continuing breakthroughs in logistics and information technology that we can only afford to ignore at our peril.
Right up to the ’80s, companies resorted to “vertical integration” to achieve economies of scale and capture markets. Car companies like Ford, for instance, owned rubber plantations in the Third World; owned railways, testing laboratories, sawmills, schools, hospitals, airplane hangars, warehouses, radio rooms, and even cemeteries for employees to ensure the continued flow of materials. To bring the goods to the market, they have intermodal transport systems (lorries, locomotives, and ships and ports) that operated seamlessly on a global scale.
By the late ’80s, most of the companies that employed vertical integration couldn’t cope with the onslaught of Japanese companies like Toyota that were employing just-in-time and network-oriented business structures. As the Information Revolution raged and the real-time supply chain management systems matured since the mid-90s, more and more companies realized they could actually make greater profits by outsourcing their “noncore” activities to other firms in India, China and the Philippines that could do these better, faster, at cheaper rates. That’s how the country’s outsourcing industry came to be and many are surprised by its rapid growth. We started to feel their presence only in the last five years and yet it’s now a US$3-billion-a-year service export industry.
There is also this old notion that equates wealth and progress with farms and nature being plowed to produce surplus, of factories mass-producing tangible goods for sale to all corners of the globe. The services sector is considered “intangible” and therefore was not seen as a possible driver of economic growth and progress. But India has proven that with its U$23- billion annual revenue in BPO exports, cyberservices could actually be a major source of growth. In fact analysts say it’s the major reason for its rise as a regional economic power in Asia.Without neglecting its farms and factories, the Philippines could do no less. India and China have been so successful in this business for their own good, such that many global players are looking at the Philippines as an alternative site for offshoring to reduce risk. Philippine decision makers should therefore take advantage of this trend and develop strategies to maximize the gains. And certainly, the industry, the government and the academic institutions should really sit down together to work this strategy out. This is a rare opportunity that we simply cannot afford to pass.
Wednesday, February 07, 2007
Monday, February 05, 2007
"Disconnectedness defines danger"
“Eradicating disconnectedness is the defining security task of our age, as well as a supreme moral cause in the cases of those who suffer it against their will. Just as important, however, by expanding the connectivity of globalization, we increase peace and prosperity planet-wide.”—Thomas Barnett, political and military strategist and author of Pentagon’s New Map: War and Peace in the Twenty First Century
THE Civil Aeronautics Board (CAB) has just announced it is exploring “improved air agreements” with several countries to boost economic growth. Among the countries being considered are South Korea, Canada, Oman, Libya, Russia, Cambodia and Palau. This is a great idea that we should pursue to the utmost. In fact, we should have wide-ranging initiatives that should include most, if not all, our trading partners in the Asia Pacific Region. Why? The reason is summed up in a word: “connectivity.”
According to political scientist Thomas Barnett, the information revolution has brought enormous changes on the emerging financial, technological and logistical architecture of the global economy, the least of which is the increased movement of money, goods, services and ideas.
Increasingly, countries that took pains to understand this phenomenon and took advantage of it are flourishing through rising flows of foreign direct investments, innovative ideas and the mobility of talents. We could count in China, India, Singapore, South Korea, Vietnam, Malaysia and many other fast-growing countries in the Asia-Pacific region as excellent examples.
The Philippines has actually started to benefit from the rising connectivity through labor migration, the inflows of foreign direct investments in electronics, and business process outsourcing. These forces alone have globalized the Philippines to the extent that it has partially decoupled the dynamics of the Philippine economy from the country’s rambunctious politics. More than a decade ago, questions on a presidency’s legitimacy and rumors about military adventurism were enough to cause a crashing bust after a short period of boom and relative calm.
Not anymore. These days, even leaders of business and strategic sectors can make a political statement or comment on issues of governance, without worrying that the seriousness of the subject could hurt the markets. Or that political statements can distract people from productive work.
Apparently there is much more to do these days other than becoming—if one is not that astute—cannon fodder for certain political entrepreneurs whose objectives are not necessarily congruent with the national interest.
Still, we have to do much more if only to bring the benefits of connectivity to the broader segment of society. These days, those who are making a killing from rising connectivity are the urban-based elites and the middle class while the underclass remain at the margins, their wrinkled and expectant faces—in Barnettspeak—pressed against the glass.
This is because our economic planners have not really developed a strategy on how to respond to globalization well. While our core cities are effectively articulated with global cities and the international centers of trade and commerce, our hinterlands remain isolated, economically and culturally, thus heightening economic and social polarization between cities and regions.
This state of affairs is not sustainable. The rapid pace of growth in certain sectors of society amid continuing widespread want and penury may generate a revolution of rising expectations that could eventually prove disruptive.
Modernization per se supposedly creates contentment and calm, but history proves that the process of change, when left to its own devices, could trigger spasms when it’s fueled by stark inequality in wealth and opportunities. That is why policies like the promotion of greater air linkages with other countries, together with other redistributive measures, are so important if we have to achieve a kind of growth that is inclusive and really developmental.
Why is there so much instability in certain parts of Mindanao and the Visayas? Why have some areas of the country become lairs of daydreamers who kill, maim and rape in their struggles for some puritanical utopia?
To a great extent, it’s because of the disconnectedness of these places from the vortex of change, growth and progress. And this disconnectedness is almost literal: no roads through which farmers can bring their produce to the market, no bridges, no electricity, no potable water, no sanitation, irrigation, no schools, no health centers, no cellular phones, no Internet—therefore no chance for their restless young people to dream dreams and aspire to better lives.
In the words of Barnett, disconnectedness “defines danger. Disconnectedness allows bad actors to flourish by keeping entire societies detached from the global community and under their dictatorial control… [It] allows dangerous transnational actors to exploit the resulting chaos to their own dangerous ends.”
Air agreements are good policies simply because they promote reciprocity. An air agreement is a practical measure in a period when the Doha Round of Trade Negotiations is stuck on the ground. But moving a little further actually wouldn’t hurt. In fact, air agreements are a second best policy to an all-out opening of the skies to promote greater competition and efficiency. The idea now really is bringing in more passenger traffic and business and that option is the surest bet.
Of course, we don’t have to stop at opening the skies; we should also open the seas to promote interisland shipping and trade. For a country of more than 7,000 islands, a competitive and vibrant interisland ports and shipping industry that could only be brought about by greater openness and competition is the most sensible thing to have.
In the course of this initiative, we may have to bring in greater participation by the rest to the world in infrastructure development as well as utilities. That way, we may bring progress fast to those dark, isolated corners of the country where people have never known government and service—and thus have no stake in building communities.
Reaching out is not an option. It’s a matter of survival.
THE Civil Aeronautics Board (CAB) has just announced it is exploring “improved air agreements” with several countries to boost economic growth. Among the countries being considered are South Korea, Canada, Oman, Libya, Russia, Cambodia and Palau. This is a great idea that we should pursue to the utmost. In fact, we should have wide-ranging initiatives that should include most, if not all, our trading partners in the Asia Pacific Region. Why? The reason is summed up in a word: “connectivity.”
According to political scientist Thomas Barnett, the information revolution has brought enormous changes on the emerging financial, technological and logistical architecture of the global economy, the least of which is the increased movement of money, goods, services and ideas.
Increasingly, countries that took pains to understand this phenomenon and took advantage of it are flourishing through rising flows of foreign direct investments, innovative ideas and the mobility of talents. We could count in China, India, Singapore, South Korea, Vietnam, Malaysia and many other fast-growing countries in the Asia-Pacific region as excellent examples.
The Philippines has actually started to benefit from the rising connectivity through labor migration, the inflows of foreign direct investments in electronics, and business process outsourcing. These forces alone have globalized the Philippines to the extent that it has partially decoupled the dynamics of the Philippine economy from the country’s rambunctious politics. More than a decade ago, questions on a presidency’s legitimacy and rumors about military adventurism were enough to cause a crashing bust after a short period of boom and relative calm.
Not anymore. These days, even leaders of business and strategic sectors can make a political statement or comment on issues of governance, without worrying that the seriousness of the subject could hurt the markets. Or that political statements can distract people from productive work.
Apparently there is much more to do these days other than becoming—if one is not that astute—cannon fodder for certain political entrepreneurs whose objectives are not necessarily congruent with the national interest.
Still, we have to do much more if only to bring the benefits of connectivity to the broader segment of society. These days, those who are making a killing from rising connectivity are the urban-based elites and the middle class while the underclass remain at the margins, their wrinkled and expectant faces—in Barnettspeak—pressed against the glass.
This is because our economic planners have not really developed a strategy on how to respond to globalization well. While our core cities are effectively articulated with global cities and the international centers of trade and commerce, our hinterlands remain isolated, economically and culturally, thus heightening economic and social polarization between cities and regions.
This state of affairs is not sustainable. The rapid pace of growth in certain sectors of society amid continuing widespread want and penury may generate a revolution of rising expectations that could eventually prove disruptive.
Modernization per se supposedly creates contentment and calm, but history proves that the process of change, when left to its own devices, could trigger spasms when it’s fueled by stark inequality in wealth and opportunities. That is why policies like the promotion of greater air linkages with other countries, together with other redistributive measures, are so important if we have to achieve a kind of growth that is inclusive and really developmental.
Why is there so much instability in certain parts of Mindanao and the Visayas? Why have some areas of the country become lairs of daydreamers who kill, maim and rape in their struggles for some puritanical utopia?
To a great extent, it’s because of the disconnectedness of these places from the vortex of change, growth and progress. And this disconnectedness is almost literal: no roads through which farmers can bring their produce to the market, no bridges, no electricity, no potable water, no sanitation, irrigation, no schools, no health centers, no cellular phones, no Internet—therefore no chance for their restless young people to dream dreams and aspire to better lives.
In the words of Barnett, disconnectedness “defines danger. Disconnectedness allows bad actors to flourish by keeping entire societies detached from the global community and under their dictatorial control… [It] allows dangerous transnational actors to exploit the resulting chaos to their own dangerous ends.”
Air agreements are good policies simply because they promote reciprocity. An air agreement is a practical measure in a period when the Doha Round of Trade Negotiations is stuck on the ground. But moving a little further actually wouldn’t hurt. In fact, air agreements are a second best policy to an all-out opening of the skies to promote greater competition and efficiency. The idea now really is bringing in more passenger traffic and business and that option is the surest bet.
Of course, we don’t have to stop at opening the skies; we should also open the seas to promote interisland shipping and trade. For a country of more than 7,000 islands, a competitive and vibrant interisland ports and shipping industry that could only be brought about by greater openness and competition is the most sensible thing to have.
In the course of this initiative, we may have to bring in greater participation by the rest to the world in infrastructure development as well as utilities. That way, we may bring progress fast to those dark, isolated corners of the country where people have never known government and service—and thus have no stake in building communities.
Reaching out is not an option. It’s a matter of survival.
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.
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.
Saturday, February 03, 2007
The Philippines and the changing global power equation
A few weeks ago, more than 2,000 leaders from business, politics, academe, media, and civil society will once again meet in
Tuesday, January 23, 2007
Heritage Foundation needs to free itself from ignorance!
WOULD anyone with some literacy in economics and business consider the Philippine economy “mostly unfree” after joining the World Trade Organization and signing all these regional trade and business facilitation agreements? Unlikely, given the standards which the West likes to impose on other people.
One is thus surprised to find out that the Heritage Foundation, a conservative think-tank based in Washington D.C., has ranked the Philippines 97th out of 157 countries in its index on “economic freedom,” a figure that seems to say the people and organizations here are not free to pursue economic activities.
First, a point of clarification: We have nothing against the main thesis of its recent report titled “2007 Index of Economic Freedom.”
Just like its report, we believe that economic development and progress are easily achieved if citizens, entrepreneurs, business organizations and other economic entities in society are unfettered by the dead hand of the State. And it’s not for some uncritical worshipping of market forces’ magic; it’s because the freedom to transact in and withdraw from the market is part of people’s human rights.
Besides, economic growth and the uplift of people’s living standards are better achieved when the State intervenes in areas where it can really do better: providing economic and social infrastructure; ensuring the rule of law, peace and order, and political stability; protecting property rights and regulating activities that have a strong impact on the environment; enhancing people’s human resources; among others. Based on historical experience here in the Philippines, it’s when the State’s tentacles sleazily intertwine with the economic and business spheres that corruption rears its ugly head.
Yet, one must complain about the disservice the foundation committed on the Philippines in using wrong information in making our ranking. Following its wrong assumptions, it concluded that countries like Morocco, Gambia, Zambia, Guyana, Pakistan, Senegal, Sri Lanka, Moldova, Swaziland and Namibia—countries that are not necessarily known for superior virtues in attracting and hosting foreign investments—are ranked better than the Philippines? Heritage arrived at this ranking for the Philippines simply because it did not try to go beyond stereotypes and biases against the country by looking at fresh data and interviewing the right people who know what they’re talking about.
The Index ranks countries worldwide based on 10 variables: business freedom, trade freedom, fiscal freedom, freedom from government, monetary freedom, investment freedom, financial freedom, property rights, freedom from corruption and labor freedom.
On trade freedom, Heritage gave the Philippines only 74.8 percent because, among others, the Philippines supposedly maintains import and export bans, numerous import restrictions, and quotas. Of course, we know that since the Edsa Revolution most of these barriers to trade like export and import bans were abolished and the quantitative restrictions on imports were converted to tariffs. We are among those who imposed the lowest average tariff rates.
On monetary freedom, Heritage complains that the “government is able to influence prices through State-owned enterprises and utilities;” “price controls exist for electricity distribution, water, telecommunications and most transportation services;” and that “price ceilings are usually imposed on basic commodities.”
Except for regulations on fares in nonair-conditioned buses, all these notions about the government influencing prices are hogwash. This probably describes the Philippines 30 years ago, but not these days when it is a signatory to numerous bilateral and multilateral trade and business facilitation agreements.
Heritage also complains about high inflation—6.9 percent—but it used old data from 2003 until 2005. Had Heritage used fresh data, its researchers could have found out that inflation rates has been going down in 2006, culminating in a low 4.3 percent in December 2006.
Do local and foreign investors have less financial freedom? Heritage thinks so. But any person, Filipino citizen or foreign, can attest to the fact that they practically have all the access to most financial services that are available in any typical modern country in the Asia-Pacific region. It also claims that the government requires banks to lend specified portions of their funds to preferred sectors.
Heritage is probably referring to the old agri-agra requirement where banks were supposed to lend 10 percent to 15 percent of their funds to the rural sector. Anyone here knows that it has not really been practiced since the Edsa Revolution. Even during the Marcos era, most of those banks preferred to park their money in high-yielding Treasury bills, one flexible option they were allowed to.
Heritage also condemns the Philippines for inflexibility in employment regulations, meaning it’s so hard to hire and fire. This is curious because labor legislations are probably similar to most countries in Asia-Pacific region. While we have a tripartite wage system that serves as a wage-setting body, companies here are practically free to hire and fire provided due process is observed.
Perhaps, what really damaged the country’s ranking are the low scores (25 percent to 30 percent) Heritage gave to investment freedom, property rights and freedom from corruption. These are highly subjective criteria for which their judgment is likely to be clouded by bias and negative perception.
It complains about restrictions on foreign investments but we all know that such restrictions are actually few and are limited to some service industries like utilities and communications. It also complains about restrictions on foreigners to practice professions here, but we all know that the same restrictions are imposed even in the economically freest countries like the United States and Australia. For instance, can a Filipino doctor practice in Australia or the US? He could only do so if he takes a board examination there and undertake residency and training again. The same thing applies here in the Philippines.
Certainly, corruption is a problem in the Philippines. But it’s the height of exaggeration to say that the Philippines is worse than Uganda, Kazakhstan, Vietnam, Zambia, Zimbabwe, Swaziland, Gambia, Yemen, Laos, Burkina Faso and Mozambique. Our misfortune really is that more than 20 years ago, we had a dictator whose colorful society-page wife possessed 3,000 pairs of shoes. That was good media copy and the stigma simply stuck to us.
In short, we believe in economic freedom but we also hope that “policy entrepreneurs” like the Heritage Foundation could do serious research before they pass judgment on us. The United Nations Development Program (UNDP) produces a global “human development” report each year and it does its business thoroughly and professionally—by, among others, engaging local experts (mostly independent economists and social scientists) who know the hard facts in a particular country. That’s why UNDP always produces a very credible report. An unsolicited advice to Heritage: It should free itself from ignorance before passing judgment on others.
One is thus surprised to find out that the Heritage Foundation, a conservative think-tank based in Washington D.C., has ranked the Philippines 97th out of 157 countries in its index on “economic freedom,” a figure that seems to say the people and organizations here are not free to pursue economic activities.
First, a point of clarification: We have nothing against the main thesis of its recent report titled “2007 Index of Economic Freedom.”
Just like its report, we believe that economic development and progress are easily achieved if citizens, entrepreneurs, business organizations and other economic entities in society are unfettered by the dead hand of the State. And it’s not for some uncritical worshipping of market forces’ magic; it’s because the freedom to transact in and withdraw from the market is part of people’s human rights.
Besides, economic growth and the uplift of people’s living standards are better achieved when the State intervenes in areas where it can really do better: providing economic and social infrastructure; ensuring the rule of law, peace and order, and political stability; protecting property rights and regulating activities that have a strong impact on the environment; enhancing people’s human resources; among others. Based on historical experience here in the Philippines, it’s when the State’s tentacles sleazily intertwine with the economic and business spheres that corruption rears its ugly head.
Yet, one must complain about the disservice the foundation committed on the Philippines in using wrong information in making our ranking. Following its wrong assumptions, it concluded that countries like Morocco, Gambia, Zambia, Guyana, Pakistan, Senegal, Sri Lanka, Moldova, Swaziland and Namibia—countries that are not necessarily known for superior virtues in attracting and hosting foreign investments—are ranked better than the Philippines? Heritage arrived at this ranking for the Philippines simply because it did not try to go beyond stereotypes and biases against the country by looking at fresh data and interviewing the right people who know what they’re talking about.
The Index ranks countries worldwide based on 10 variables: business freedom, trade freedom, fiscal freedom, freedom from government, monetary freedom, investment freedom, financial freedom, property rights, freedom from corruption and labor freedom.
On trade freedom, Heritage gave the Philippines only 74.8 percent because, among others, the Philippines supposedly maintains import and export bans, numerous import restrictions, and quotas. Of course, we know that since the Edsa Revolution most of these barriers to trade like export and import bans were abolished and the quantitative restrictions on imports were converted to tariffs. We are among those who imposed the lowest average tariff rates.
On monetary freedom, Heritage complains that the “government is able to influence prices through State-owned enterprises and utilities;” “price controls exist for electricity distribution, water, telecommunications and most transportation services;” and that “price ceilings are usually imposed on basic commodities.”
Except for regulations on fares in nonair-conditioned buses, all these notions about the government influencing prices are hogwash. This probably describes the Philippines 30 years ago, but not these days when it is a signatory to numerous bilateral and multilateral trade and business facilitation agreements.
Heritage also complains about high inflation—6.9 percent—but it used old data from 2003 until 2005. Had Heritage used fresh data, its researchers could have found out that inflation rates has been going down in 2006, culminating in a low 4.3 percent in December 2006.
Do local and foreign investors have less financial freedom? Heritage thinks so. But any person, Filipino citizen or foreign, can attest to the fact that they practically have all the access to most financial services that are available in any typical modern country in the Asia-Pacific region. It also claims that the government requires banks to lend specified portions of their funds to preferred sectors.
Heritage is probably referring to the old agri-agra requirement where banks were supposed to lend 10 percent to 15 percent of their funds to the rural sector. Anyone here knows that it has not really been practiced since the Edsa Revolution. Even during the Marcos era, most of those banks preferred to park their money in high-yielding Treasury bills, one flexible option they were allowed to.
Heritage also condemns the Philippines for inflexibility in employment regulations, meaning it’s so hard to hire and fire. This is curious because labor legislations are probably similar to most countries in Asia-Pacific region. While we have a tripartite wage system that serves as a wage-setting body, companies here are practically free to hire and fire provided due process is observed.
Perhaps, what really damaged the country’s ranking are the low scores (25 percent to 30 percent) Heritage gave to investment freedom, property rights and freedom from corruption. These are highly subjective criteria for which their judgment is likely to be clouded by bias and negative perception.
It complains about restrictions on foreign investments but we all know that such restrictions are actually few and are limited to some service industries like utilities and communications. It also complains about restrictions on foreigners to practice professions here, but we all know that the same restrictions are imposed even in the economically freest countries like the United States and Australia. For instance, can a Filipino doctor practice in Australia or the US? He could only do so if he takes a board examination there and undertake residency and training again. The same thing applies here in the Philippines.
Certainly, corruption is a problem in the Philippines. But it’s the height of exaggeration to say that the Philippines is worse than Uganda, Kazakhstan, Vietnam, Zambia, Zimbabwe, Swaziland, Gambia, Yemen, Laos, Burkina Faso and Mozambique. Our misfortune really is that more than 20 years ago, we had a dictator whose colorful society-page wife possessed 3,000 pairs of shoes. That was good media copy and the stigma simply stuck to us.
In short, we believe in economic freedom but we also hope that “policy entrepreneurs” like the Heritage Foundation could do serious research before they pass judgment on us. The United Nations Development Program (UNDP) produces a global “human development” report each year and it does its business thoroughly and professionally—by, among others, engaging local experts (mostly independent economists and social scientists) who know the hard facts in a particular country. That’s why UNDP always produces a very credible report. An unsolicited advice to Heritage: It should free itself from ignorance before passing judgment on others.
Tuesday, January 16, 2007
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.
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.
Monday, January 08, 2007
Geology is a hot profession in the Philippines
YES, the miners, geologists and mining engineers in this country are leaving en masse. The sooner our policymakers in both the private and public sectors realize the gravity of this situation, the better.
The country badly needs these people especially at this time. Geologists scour the mountains, the plains, rivers and the ocean floor to find the minerals, oil and natural gas needed by mankind for survival, growth and progress.
The world is riding a minerals boom owing to rising demand from the Asia-Pacific Region, particularly China and India. This boom is propping up a lot of economies throughout the region. Australia, a major exporter of coal and iron ore, is growing fast because of this boom. And if the Philippines wants to ride this growth bandwagon to boost the Philippine economy, we better have enough of these mining professionals home.
Of course, prices of fossil fuels have been high since the last three years. The Organization of Petroleum Exporting Countries (Opec) thought all along that crude oil costing beyond $28 a barrel could break the back of the global economy. Late last year, the crude prices reached as high as $75 a barrel and the global economy remained strong. That means Opec and other major producers are likely to try maintaining high prices.
What this means is that finding our own oil or its substitute like natural gas remains a paramount concern. The Philippines right now is a minor player in the petroleum industry. That’s because for so long we have neglected investments in oil and gas exploration. Again, we can only gain headway if we have enough geoscientists in the country.
Besides needing them for lucrative economic sectors, we also need geologists to determine where the geohazards are. The country is prone to natural calamities like volcanic eruptions and landslides; specific and accurate information about these dangerous places are necessary to prevent or, at least, mitigate these disasters. And most of all, the information generated by geologists on the nature of the soils and rock formation beneath are the foundations with which engineers and builders make their decisions. Without geologists or geoscientists, engineers and architects wouldn’t have any idea whether or not the structures they designed and build would collapse once the quake or the strong winds come.
That’s how important geologists are and yet they are leaving in droves. These days many of the geoscientists at the Mines and GeoSciences Bureau and the Philippine Institute for Volcanology and Seismology (Phivolcs) are gone, either temporarily or permanently. Right now, many companies that invested in the government’s 24 priority mine projects are into exploration and development. Managers of these companies are experiencing an acute lack of geologists and mining engineers. Worse, only three schools—University of the Philippines, Mapua University and Adamson University—teach geology and even the teachers and professors are being lured away by high-paying jobs abroad, particularly in China, Indonesia, Guyana, Mongolia, Saudi Arabia, Australia, Canada, Thailand, Vietnam, Bulgaria and Papua New Guinea.
“We have come to a point where we get paranoid about sending our geologists to conferences. We have this constant fear they are not going to return,” said one mining executive. That’s how acute the problem is and it’s likely to get worse three or four years from now when many of the new mining investments start production.
Well, the good news is this: Filipino geologists are so good that global companies are so eager to hire them. Unlike geology graduates from rich countries, Filipino geologists are used to working in “Third-World” conditions. Filipino geoscientists write and speak good English, a major advantage. This is important because they are supposed to regularly inform their company’s board of directors about their field activities, and good language skills are extremely necessary—especially when writing technical stuff. And they work so hard. In fact, from 1980 until 1990 alone, 69 Filipino geologists are credited to have made 40 major discoveries worldwide worth $469 billion.
Local companies are addressing the problem by throwing money at Filipino geologists. There is talk that smart fresh geology graduates right now can get as much as P120,000 a month. And yet, the diaspora has not abated. Other countries like Australia are also throwing money around just to get good people, but are offering more: citizenships for Filipino geologists and many others. Having everybody screaming for more geoscientists is bidding up the prize money so they could have their own fill of geoscientists to run their own companies.
This problem will only get worse before it gets better. The Philippines could not possibly win this bidding war for talents. Besides, geology as hard science is a difficult and expensive course. Unlike nursing where someone who is not afraid to see blood could probably enroll, only students who loves mathematics, chemistry and physics are likely to survive geology’s rigors. More so because students are always trekking up and down mountains and valleys as part of their laboratory courses. Obviously, it doesn’t have the glamour of information technology courses whose graduates are bound to wear coat and ties and work in air-conditioned offices.
Nevertheless, we could probably institute measures to help ensure a stable supply of geoscientists. For instance, to keep the good professors home, the Chamber of Mines and private companies should explore engaging the participation of the faculty and staff of UP, Adamson and Mapua in their research and development, as well as in the exploration stages of their operations. That would provide additional incentives for these talents to remain in the universities. They could also have tie-ups for visiting professorships. Opportunities for travel and professional exchanges would help ensure that local talents maintain their edge.
To raise enrollment, mining companies and the Chamber of Mines should also offer scholarships to smart high-school students. In the last five years, science high schools have been proliferating all over the country. The private sector should approach these schools for possible recruits into the geology departments of our universities. High-school students are probably not aware of the opportunities in the geosciences. An extensive information-dissemination campaign would go a long way in solving the problem.
The country badly needs these people especially at this time. Geologists scour the mountains, the plains, rivers and the ocean floor to find the minerals, oil and natural gas needed by mankind for survival, growth and progress.
The world is riding a minerals boom owing to rising demand from the Asia-Pacific Region, particularly China and India. This boom is propping up a lot of economies throughout the region. Australia, a major exporter of coal and iron ore, is growing fast because of this boom. And if the Philippines wants to ride this growth bandwagon to boost the Philippine economy, we better have enough of these mining professionals home.
Of course, prices of fossil fuels have been high since the last three years. The Organization of Petroleum Exporting Countries (Opec) thought all along that crude oil costing beyond $28 a barrel could break the back of the global economy. Late last year, the crude prices reached as high as $75 a barrel and the global economy remained strong. That means Opec and other major producers are likely to try maintaining high prices.
What this means is that finding our own oil or its substitute like natural gas remains a paramount concern. The Philippines right now is a minor player in the petroleum industry. That’s because for so long we have neglected investments in oil and gas exploration. Again, we can only gain headway if we have enough geoscientists in the country.
Besides needing them for lucrative economic sectors, we also need geologists to determine where the geohazards are. The country is prone to natural calamities like volcanic eruptions and landslides; specific and accurate information about these dangerous places are necessary to prevent or, at least, mitigate these disasters. And most of all, the information generated by geologists on the nature of the soils and rock formation beneath are the foundations with which engineers and builders make their decisions. Without geologists or geoscientists, engineers and architects wouldn’t have any idea whether or not the structures they designed and build would collapse once the quake or the strong winds come.
That’s how important geologists are and yet they are leaving in droves. These days many of the geoscientists at the Mines and GeoSciences Bureau and the Philippine Institute for Volcanology and Seismology (Phivolcs) are gone, either temporarily or permanently. Right now, many companies that invested in the government’s 24 priority mine projects are into exploration and development. Managers of these companies are experiencing an acute lack of geologists and mining engineers. Worse, only three schools—University of the Philippines, Mapua University and Adamson University—teach geology and even the teachers and professors are being lured away by high-paying jobs abroad, particularly in China, Indonesia, Guyana, Mongolia, Saudi Arabia, Australia, Canada, Thailand, Vietnam, Bulgaria and Papua New Guinea.
“We have come to a point where we get paranoid about sending our geologists to conferences. We have this constant fear they are not going to return,” said one mining executive. That’s how acute the problem is and it’s likely to get worse three or four years from now when many of the new mining investments start production.
Well, the good news is this: Filipino geologists are so good that global companies are so eager to hire them. Unlike geology graduates from rich countries, Filipino geologists are used to working in “Third-World” conditions. Filipino geoscientists write and speak good English, a major advantage. This is important because they are supposed to regularly inform their company’s board of directors about their field activities, and good language skills are extremely necessary—especially when writing technical stuff. And they work so hard. In fact, from 1980 until 1990 alone, 69 Filipino geologists are credited to have made 40 major discoveries worldwide worth $469 billion.
Local companies are addressing the problem by throwing money at Filipino geologists. There is talk that smart fresh geology graduates right now can get as much as P120,000 a month. And yet, the diaspora has not abated. Other countries like Australia are also throwing money around just to get good people, but are offering more: citizenships for Filipino geologists and many others. Having everybody screaming for more geoscientists is bidding up the prize money so they could have their own fill of geoscientists to run their own companies.
This problem will only get worse before it gets better. The Philippines could not possibly win this bidding war for talents. Besides, geology as hard science is a difficult and expensive course. Unlike nursing where someone who is not afraid to see blood could probably enroll, only students who loves mathematics, chemistry and physics are likely to survive geology’s rigors. More so because students are always trekking up and down mountains and valleys as part of their laboratory courses. Obviously, it doesn’t have the glamour of information technology courses whose graduates are bound to wear coat and ties and work in air-conditioned offices.
Nevertheless, we could probably institute measures to help ensure a stable supply of geoscientists. For instance, to keep the good professors home, the Chamber of Mines and private companies should explore engaging the participation of the faculty and staff of UP, Adamson and Mapua in their research and development, as well as in the exploration stages of their operations. That would provide additional incentives for these talents to remain in the universities. They could also have tie-ups for visiting professorships. Opportunities for travel and professional exchanges would help ensure that local talents maintain their edge.
To raise enrollment, mining companies and the Chamber of Mines should also offer scholarships to smart high-school students. In the last five years, science high schools have been proliferating all over the country. The private sector should approach these schools for possible recruits into the geology departments of our universities. High-school students are probably not aware of the opportunities in the geosciences. An extensive information-dissemination campaign would go a long way in solving the problem.
Monday, December 25, 2006
The way forward for the Philippines in 2007
WHAT is governance but the judicious use of power—the ability to achieve certain economic, social and political ends—and authority or legitimacy to use such power? And yet, if there’s one factor that’s really preventing the country’s economy from growing faster and creating more jobs, it’s this widening deficit in authority that’s buffeting this administration.
Certainly, we need to add to and improve infrastructure; we need more investments in human resources. We need a lot more to enhance the economy’s competitiveness. But on top of that we need to have a credible government and political leaders and institutions respected by the public and the investors. For most of the year, this country is hobbled by this problem. It seems we are the only country whose leaders are always being regarded with suspicion and contempt by the global community.
Consider SWS’s survey on net satisfaction rating. Since October 2004, GMA’s presidency has been suffering from a negative satisfaction rating. In simpler terms, the majority of the people are dissatisfied with her leadership in ways not seen since the Edsa Revolution. Presidents Corazon Aquino, Fidel Ramos, and Joseph Estrada had their own worst nightmares, but their satisfaction and trust ratings never dipped this low.
Survey numbers from Pulse Asia show that half of Filipinos simply do not trust the President.
They are critical of her on six major issues: criminality, political killings, workers’ pay, poverty, graft and corruption and inflation—the bread and butter issues of governance. When one fails to address these issues effectively, what is one’s to govern?
GMA’s problem is staying there for the sake of being able to finish her term. In this brave new world of globalization and information revolution, political power is diffusing to various political and economic players like corporations, interest groups, civil society organizations, and the Church. Hence, increasingly, political elites worldwide are finding the need to build political alliances with these various players to get things done one project at a time. GMA’s political isolation makes this hard. That explains why her programs and projects can’t seem to take off. Why, even Congress doesn’t pass the annual budget.
In her last State of the Nation Address, she announced huge budget expenditures for her “super regions” program, but until now, the lethargic bureaucracy hasn’t started moving. Her pet projects and legislative programs are stuck through the policymaking machinery, with allies taking pains to appear “independent” these days.
The year 2007 could mark her out as a lame-duck president, an administration with power sans authority. But if she still has energy to govern this country, she could probably recover by reaching out to various social and political groups.
This is important because 2007 is fraught with dangers for the economy. El Niño is a looming threat. As seen in the past three quarters, poor performance from the farm sector usually drags down the entire economy. The manufacturing sector, despite high expectations from electronics, has slowed down in the third quarter even as dollar remittances kept flowing. Not enough jobs are created despite the continuing growth of the outsourcing sector. And lately, inflation has started to manifest weaker demand, a probable indicator of rising lack of consumer confidence.
We can’t blame the people because in the last four quarters, the government did not show economic leadership. The administration simply tried to survive politically by hanging on to power at all cost. The economy went on “autopilot,” relying mainly on the initiatives of the private sector, overseas workers, and just everybody else who tried to live and survive.
The economy cannot go on like this in 2007. To achieve a higher growth level, the government will have to make the move. Reaching out to various social groups and forging alliances with them for a common growth agenda for 2007 is difficult but the government could probably initiate four major initiatives as confidence-building measures.
First—and the most strategic one—GMA should stop talking politics and truly focus on the economy. She should put an end to all political gambits that proved unpopular in 2006, including Charter change. Cha-cha has been a political lightning rod, attracting all sorts of criticisms from various groups. You take away Cha-cha, you stop talking politics, and you will have time to focus energies and resources on the economy.
Second, the immediate passage of the 2007 budget should be a priority. The passage of the budget would not only provide funds for major government programs and projects but also would signal the government’s seriousness about the economy. In 2006, the failure to pass the budget was a source of recriminations about how the government is (mis)managing the economy. People generally thought the failure to pass the budget was a deliberate move by the government to have the flexibility to squander money for elections.
Third, the government should put flesh and blood on the so-called super regions initiative. We really haven’t seen any tangible details of that plan since the President announced that initiative. The National Economic and Development Authority (Neda) and the Office of the President should come clean on this and start the ball rolling.
And fourth, the government should launch a major initiative on education. It can jumpstart the process by bringing together the House and the Senate to pass a law bringing back English as the medium of instruction in all levels of the educational system. It could also announce a streamlining of the school curriculum to give it more focus on the English language, science and mathematics. Such could probably involve certain policy reforms, including higher financial incentives for language, math and science teachers; teacher-training programs; and the opening up of education to foreign participation.
Countries like Malaysia, Indonesia, Thailand, and Singapore have been attracting a lot of world-class universities and there’s no reason why the Philippines can’t do the same to boost the country’s educational institutions. A serious student loan program is an investment in human resource. In this age of globalization and information technology, investment in human resources seems to be the fastest way to progress.
Four things, for a start. Christmas is over, let’s get to work.
Certainly, we need to add to and improve infrastructure; we need more investments in human resources. We need a lot more to enhance the economy’s competitiveness. But on top of that we need to have a credible government and political leaders and institutions respected by the public and the investors. For most of the year, this country is hobbled by this problem. It seems we are the only country whose leaders are always being regarded with suspicion and contempt by the global community.
Consider SWS’s survey on net satisfaction rating. Since October 2004, GMA’s presidency has been suffering from a negative satisfaction rating. In simpler terms, the majority of the people are dissatisfied with her leadership in ways not seen since the Edsa Revolution. Presidents Corazon Aquino, Fidel Ramos, and Joseph Estrada had their own worst nightmares, but their satisfaction and trust ratings never dipped this low.
Survey numbers from Pulse Asia show that half of Filipinos simply do not trust the President.
They are critical of her on six major issues: criminality, political killings, workers’ pay, poverty, graft and corruption and inflation—the bread and butter issues of governance. When one fails to address these issues effectively, what is one’s to govern?
GMA’s problem is staying there for the sake of being able to finish her term. In this brave new world of globalization and information revolution, political power is diffusing to various political and economic players like corporations, interest groups, civil society organizations, and the Church. Hence, increasingly, political elites worldwide are finding the need to build political alliances with these various players to get things done one project at a time. GMA’s political isolation makes this hard. That explains why her programs and projects can’t seem to take off. Why, even Congress doesn’t pass the annual budget.
In her last State of the Nation Address, she announced huge budget expenditures for her “super regions” program, but until now, the lethargic bureaucracy hasn’t started moving. Her pet projects and legislative programs are stuck through the policymaking machinery, with allies taking pains to appear “independent” these days.
The year 2007 could mark her out as a lame-duck president, an administration with power sans authority. But if she still has energy to govern this country, she could probably recover by reaching out to various social and political groups.
This is important because 2007 is fraught with dangers for the economy. El Niño is a looming threat. As seen in the past three quarters, poor performance from the farm sector usually drags down the entire economy. The manufacturing sector, despite high expectations from electronics, has slowed down in the third quarter even as dollar remittances kept flowing. Not enough jobs are created despite the continuing growth of the outsourcing sector. And lately, inflation has started to manifest weaker demand, a probable indicator of rising lack of consumer confidence.
We can’t blame the people because in the last four quarters, the government did not show economic leadership. The administration simply tried to survive politically by hanging on to power at all cost. The economy went on “autopilot,” relying mainly on the initiatives of the private sector, overseas workers, and just everybody else who tried to live and survive.
The economy cannot go on like this in 2007. To achieve a higher growth level, the government will have to make the move. Reaching out to various social groups and forging alliances with them for a common growth agenda for 2007 is difficult but the government could probably initiate four major initiatives as confidence-building measures.
First—and the most strategic one—GMA should stop talking politics and truly focus on the economy. She should put an end to all political gambits that proved unpopular in 2006, including Charter change. Cha-cha has been a political lightning rod, attracting all sorts of criticisms from various groups. You take away Cha-cha, you stop talking politics, and you will have time to focus energies and resources on the economy.
Second, the immediate passage of the 2007 budget should be a priority. The passage of the budget would not only provide funds for major government programs and projects but also would signal the government’s seriousness about the economy. In 2006, the failure to pass the budget was a source of recriminations about how the government is (mis)managing the economy. People generally thought the failure to pass the budget was a deliberate move by the government to have the flexibility to squander money for elections.
Third, the government should put flesh and blood on the so-called super regions initiative. We really haven’t seen any tangible details of that plan since the President announced that initiative. The National Economic and Development Authority (Neda) and the Office of the President should come clean on this and start the ball rolling.
And fourth, the government should launch a major initiative on education. It can jumpstart the process by bringing together the House and the Senate to pass a law bringing back English as the medium of instruction in all levels of the educational system. It could also announce a streamlining of the school curriculum to give it more focus on the English language, science and mathematics. Such could probably involve certain policy reforms, including higher financial incentives for language, math and science teachers; teacher-training programs; and the opening up of education to foreign participation.
Countries like Malaysia, Indonesia, Thailand, and Singapore have been attracting a lot of world-class universities and there’s no reason why the Philippines can’t do the same to boost the country’s educational institutions. A serious student loan program is an investment in human resource. In this age of globalization and information technology, investment in human resources seems to be the fastest way to progress.
Four things, for a start. Christmas is over, let’s get to work.
Sunday, December 24, 2006
Is the Philippine economy hollowing out?
FORGET about gross domestic product growth rates. Forget about export statistics. Forget about improving fiscal balance. Instead, focus attention on the latest labor force survey. If we want to understand how we really fared in 2006, and what we could do in 2007 to make a difference, the labor force survey is the one that could tell us the real score. The rest of the statistics would be a mirage.
The October labor force survey (LFS) says that unemployment rate has improved a little from 7.4 percent in October last year to 7.3 percent in the same period this year. That 0.1-percentage point improvement is nothing to sneeze at since it meant there were 312,000 more people with jobs. Also, the underemployment rate has improved from 21.2 percent to 20.4 percent. In absolute terms there were more than 200,000 workers less satisfied in their jobs.
These seem to be interesting statistics, except that when we look at the bigger picture we can see that the improvement in the jobless rate is significantly influenced by the fact that there were fewer people joining the labor force. In October last year, the labor force participation rate was almost 65 percent; it’s 64 percent in October this year. This seems to indicate that a significant number of Filipinos opted not to work either because they don’t expect to find work or that they don’t have the qualifications to meet industry requirements. In other words, the bus ride felt a little bit comfortable simply because more people did not take the ride.
Certainly, the drop in underemployment suggests that many of those who got better jobs this year are those who are already working. They simply moved to whatever better jobs the economy has created, thus crowding out fresh entrants and those who are less skilled.
This explains why there were only 310,000 incremental jobs created within the survey period, not even enough to soak up 312,000 more people who joined the labor force. The name of the game in the labor market these days is “qualification” and those who got the incremental jobs necessarily are those who are with skills and practical experience.
The labor force survey also showed certain distressing signals that government planners should look at carefully. For instance, in October this year, there were 64,000 less entrepreneurs while unpaid workers rose by an additional 167,000. That means some of those who were listed as “employed” when the National Statistics Office knocked on peoples’ doors were working—without pay.
In the last three quarters, agriculture and the manufacturing sectors were doing quite well. But it’s a surprise that these sectors have declining employment numbers. The farms had lost 7,000 jobs while the factories had 31,000 less jobs. About 79,000 artisans (trades and related jobs) lost their businesses while 20,000 operators of plants and machines, as well as 21,000 laborers, lost their jobs.
Is the Philippine economy hollowing out? These figures seem to suggest just that. Whatever incremental jobs were created within the survey period came largely from the services sector (a total of 305,000 jobs). Major contributors of incremental jobs are real estate (79,000 jobs), private households (67,000), government agencies, including public administration and defense (48,000), hotels and restaurants (42,000), and financial intermediation (35,000). What this trend suggests is that the jobs created are concentrated in the cities—specifically Metro Manila, Cebu, Davao and other major secondary urban areas—while the countryside is losing jobs! And these jobs are largely grabbed by the more educated or skilled people.
These trends should worry us all because we are seeing the worsening polarization of incomes, economic opportunities and wealth in the country. We could see this polarization at various levels.
First, the cities are economically expanding while the countryside is stagnating. With this trend we can only foresee that premature rural-urban migration will worsen, thus stretching urban services to the limits. Do we wonder why we can’t seem to address urban congestion?
Second, economic expansion is felt by the relatively well-off. Notice how the middle-class is largely grabbing whatever quality jobs were created during the survey period. This means that while government economic planners were yakking about the benefits of outsourcing and the booming electronics industry, the ranks of slum dwellers who can’t partake of the emerging economic bounty are swelling. Do we wonder why the numbers of those who say they experienced hunger are rising?
What’s happening right now is the result of government neglect in terms of providing crucial economic infrastructure. In an effort to produce better statistics on “fiscal balance,” the government deliberately withheld investments on roads, bridges and ports, among others. And yet, these government bureaucrats actually hired tens of thousands more of people despite the fact that government agencies were not implementing any major economic projects.
Naturally, the country’s farmers and factories suffered. Because of problems like lack of decent infrastructure, rising production costs forced them to lay off workers. Owner-cultivators also employed fewer farm hands. One is left to imagine how poverty in the countryside these days must be worsening.
The solution? This administration should start getting those social and economic infrastructure projects moving, as promised, in the last State of the Nation Address. There are so many other things to do but starting right there would be a big step in the right direction.
The October labor force survey (LFS) says that unemployment rate has improved a little from 7.4 percent in October last year to 7.3 percent in the same period this year. That 0.1-percentage point improvement is nothing to sneeze at since it meant there were 312,000 more people with jobs. Also, the underemployment rate has improved from 21.2 percent to 20.4 percent. In absolute terms there were more than 200,000 workers less satisfied in their jobs.
These seem to be interesting statistics, except that when we look at the bigger picture we can see that the improvement in the jobless rate is significantly influenced by the fact that there were fewer people joining the labor force. In October last year, the labor force participation rate was almost 65 percent; it’s 64 percent in October this year. This seems to indicate that a significant number of Filipinos opted not to work either because they don’t expect to find work or that they don’t have the qualifications to meet industry requirements. In other words, the bus ride felt a little bit comfortable simply because more people did not take the ride.
Certainly, the drop in underemployment suggests that many of those who got better jobs this year are those who are already working. They simply moved to whatever better jobs the economy has created, thus crowding out fresh entrants and those who are less skilled.
This explains why there were only 310,000 incremental jobs created within the survey period, not even enough to soak up 312,000 more people who joined the labor force. The name of the game in the labor market these days is “qualification” and those who got the incremental jobs necessarily are those who are with skills and practical experience.
The labor force survey also showed certain distressing signals that government planners should look at carefully. For instance, in October this year, there were 64,000 less entrepreneurs while unpaid workers rose by an additional 167,000. That means some of those who were listed as “employed” when the National Statistics Office knocked on peoples’ doors were working—without pay.
In the last three quarters, agriculture and the manufacturing sectors were doing quite well. But it’s a surprise that these sectors have declining employment numbers. The farms had lost 7,000 jobs while the factories had 31,000 less jobs. About 79,000 artisans (trades and related jobs) lost their businesses while 20,000 operators of plants and machines, as well as 21,000 laborers, lost their jobs.
Is the Philippine economy hollowing out? These figures seem to suggest just that. Whatever incremental jobs were created within the survey period came largely from the services sector (a total of 305,000 jobs). Major contributors of incremental jobs are real estate (79,000 jobs), private households (67,000), government agencies, including public administration and defense (48,000), hotels and restaurants (42,000), and financial intermediation (35,000). What this trend suggests is that the jobs created are concentrated in the cities—specifically Metro Manila, Cebu, Davao and other major secondary urban areas—while the countryside is losing jobs! And these jobs are largely grabbed by the more educated or skilled people.
These trends should worry us all because we are seeing the worsening polarization of incomes, economic opportunities and wealth in the country. We could see this polarization at various levels.
First, the cities are economically expanding while the countryside is stagnating. With this trend we can only foresee that premature rural-urban migration will worsen, thus stretching urban services to the limits. Do we wonder why we can’t seem to address urban congestion?
Second, economic expansion is felt by the relatively well-off. Notice how the middle-class is largely grabbing whatever quality jobs were created during the survey period. This means that while government economic planners were yakking about the benefits of outsourcing and the booming electronics industry, the ranks of slum dwellers who can’t partake of the emerging economic bounty are swelling. Do we wonder why the numbers of those who say they experienced hunger are rising?
What’s happening right now is the result of government neglect in terms of providing crucial economic infrastructure. In an effort to produce better statistics on “fiscal balance,” the government deliberately withheld investments on roads, bridges and ports, among others. And yet, these government bureaucrats actually hired tens of thousands more of people despite the fact that government agencies were not implementing any major economic projects.
Naturally, the country’s farmers and factories suffered. Because of problems like lack of decent infrastructure, rising production costs forced them to lay off workers. Owner-cultivators also employed fewer farm hands. One is left to imagine how poverty in the countryside these days must be worsening.
The solution? This administration should start getting those social and economic infrastructure projects moving, as promised, in the last State of the Nation Address. There are so many other things to do but starting right there would be a big step in the right direction.
Monday, December 18, 2006
Towards a green Christmas
GLOBAL warming is here with us, and it’s useless to debate the extent to which it’s going to change our lives in the near or distant future. The important thing is to change the ways we celebrate Christmas and the New Year.
Since “Christianity” started taking root in these Fiesta Islands, we have been celebrating Christmas and the New Year in successive orgies of bacchanalian excess that would put the Romans to shame. Millions of Filipinos ate, drank and were so merry many of them died of hypertension, cholesterol overload, and cardiac arrest from nights of stressful alcohol-laden bliss. And many got literally blown off to bits by firecrackers so huge they literally look like those improvised explosive devices used by insurgents in Iraq.
From what is supposedly a solemn affair about the Savior who came as a humble child in the manger, we have transformed Christmas into a seasonal paganistic overkill.
No, we are not concerned with morality here. Different strokes for different folks. We are concerned more with the fact that, while we are destroying our own health through frenzied overfeeding, we are destroying the planet as well by hastening global warming.
Consider this: On the 25th and the December 31st, many among us are shooting hundreds of thousands of tons of firecrackers, thus sending huge volumes of sulfur and other air pollutants high up into the atmosphere. The smog lingers in the air for days after the festivities, as if we had just burned millions of hectares of our rainforest in wildfires.
After the smog clears, we can see clearly the gigantic piles of garbage in streets coming from the gift wrappers, nonbiodegradables like discarded water bottles, styrofoam packs, plastics, spoiled food, and other stinking refuse. Much of the waste ends up getting burned in the dumps, thus causing even more pollutants and carcinogens. The rest of the garbage in the streets are scattered by feral cats and stray dogs and these clog the sewer pipes, thus causing floods and the spread of leptospirosis when the rains come. The original sin, ours, of starting all this mindless bacchanalian feasting is not exactly the act of people who are supposed to be responsible stewards of God’s creation.
If we want to celebrate Christmas in a truly “Christian” way, therefore, we must learn to celebrate it in a truly “sustainable” way. We can do this by reducing our carbon footprints and there are a thousand and one ways.
For instance, we can reduce the volume of waste by giving gifts sans the usual wrappers. Those gift wrappers are superfluous. People who receive gifts usually tear the wrappers away and throw them into the trash bin. Ultimately, they end up in the dumps or in the piles of garbage in the streets where they are burned—again, emitting noxious chemicals.
So giving gifts without the wrappers is one surefire solution. That way we can also save money. The recipients will surely understand if we just explain the principle behind it. Come to think of it, the Magi actually didn’t wrap their gifts when they went to see Jesus at the manger.
In these days of the Internet, sending “virtual” gifts, e-cards, and e-mail is a perfectly accepted way to connect with our friends and loved ones. Electronic cards are free. That way, we don’t have to burn so much cash. In reality, enjoying Christmas with people who are dear to us is not really about the material things we send and receive. It may sound mushy but it’s a timeless truth: it’s all about the idea that our loved ones are thinking of us in this season of good cheer.
Yes, we should maximize the use of the Internet to connect with friends. With the advent of broadband, we don’t need to drive to a friend’s or relative’s house. We can always do teleconference or e-chat. Or send a text message. We could leave the car at home during the Simbang Gabi. No driving means less traffic congestion, less burning of fossil fuel, less emission of ozone-depleting substances.
Christmas is when people seem to get afflicted with a certain travel madness. They travel to and fro and circle and shop as if there is no tomorrow. As a result, the streets leading to the malls, shopping centers and restaurants are always congested. Clogged streets do not only fray the nerves, they also force drivers to burn lots of fossil fuel. Lessening travel demand certainly is sustainable. Nevertheless, if we couldn’t help it, we may have to plan our trips well. Carpooling is an option. Or we could use public transport. Or better still, we shop online.
And most of all, we should avoid shooting fireworks. There are certainly other creative ways to make noise than burning sulfur and other harmful chemicals that poison the air.
A “green Christmas” may sound like taking away the fun from Christmas. It surely does sound like that but it’s only a matter of redefining our perspective. Global warming—manifested increasingly each day in unpredictable weather and destructive droughts and storms and other “inconvenient truths”— is a real issue all must confront squarely. Who knows, by pursuing a green Christmas, we may yet bring back the true spirit of the season, the original idea about the Messiah who came upon the world to save us from ourselves.
Since “Christianity” started taking root in these Fiesta Islands, we have been celebrating Christmas and the New Year in successive orgies of bacchanalian excess that would put the Romans to shame. Millions of Filipinos ate, drank and were so merry many of them died of hypertension, cholesterol overload, and cardiac arrest from nights of stressful alcohol-laden bliss. And many got literally blown off to bits by firecrackers so huge they literally look like those improvised explosive devices used by insurgents in Iraq.
From what is supposedly a solemn affair about the Savior who came as a humble child in the manger, we have transformed Christmas into a seasonal paganistic overkill.
No, we are not concerned with morality here. Different strokes for different folks. We are concerned more with the fact that, while we are destroying our own health through frenzied overfeeding, we are destroying the planet as well by hastening global warming.
Consider this: On the 25th and the December 31st, many among us are shooting hundreds of thousands of tons of firecrackers, thus sending huge volumes of sulfur and other air pollutants high up into the atmosphere. The smog lingers in the air for days after the festivities, as if we had just burned millions of hectares of our rainforest in wildfires.
After the smog clears, we can see clearly the gigantic piles of garbage in streets coming from the gift wrappers, nonbiodegradables like discarded water bottles, styrofoam packs, plastics, spoiled food, and other stinking refuse. Much of the waste ends up getting burned in the dumps, thus causing even more pollutants and carcinogens. The rest of the garbage in the streets are scattered by feral cats and stray dogs and these clog the sewer pipes, thus causing floods and the spread of leptospirosis when the rains come. The original sin, ours, of starting all this mindless bacchanalian feasting is not exactly the act of people who are supposed to be responsible stewards of God’s creation.
If we want to celebrate Christmas in a truly “Christian” way, therefore, we must learn to celebrate it in a truly “sustainable” way. We can do this by reducing our carbon footprints and there are a thousand and one ways.
For instance, we can reduce the volume of waste by giving gifts sans the usual wrappers. Those gift wrappers are superfluous. People who receive gifts usually tear the wrappers away and throw them into the trash bin. Ultimately, they end up in the dumps or in the piles of garbage in the streets where they are burned—again, emitting noxious chemicals.
So giving gifts without the wrappers is one surefire solution. That way we can also save money. The recipients will surely understand if we just explain the principle behind it. Come to think of it, the Magi actually didn’t wrap their gifts when they went to see Jesus at the manger.
In these days of the Internet, sending “virtual” gifts, e-cards, and e-mail is a perfectly accepted way to connect with our friends and loved ones. Electronic cards are free. That way, we don’t have to burn so much cash. In reality, enjoying Christmas with people who are dear to us is not really about the material things we send and receive. It may sound mushy but it’s a timeless truth: it’s all about the idea that our loved ones are thinking of us in this season of good cheer.
Yes, we should maximize the use of the Internet to connect with friends. With the advent of broadband, we don’t need to drive to a friend’s or relative’s house. We can always do teleconference or e-chat. Or send a text message. We could leave the car at home during the Simbang Gabi. No driving means less traffic congestion, less burning of fossil fuel, less emission of ozone-depleting substances.
Christmas is when people seem to get afflicted with a certain travel madness. They travel to and fro and circle and shop as if there is no tomorrow. As a result, the streets leading to the malls, shopping centers and restaurants are always congested. Clogged streets do not only fray the nerves, they also force drivers to burn lots of fossil fuel. Lessening travel demand certainly is sustainable. Nevertheless, if we couldn’t help it, we may have to plan our trips well. Carpooling is an option. Or we could use public transport. Or better still, we shop online.
And most of all, we should avoid shooting fireworks. There are certainly other creative ways to make noise than burning sulfur and other harmful chemicals that poison the air.
A “green Christmas” may sound like taking away the fun from Christmas. It surely does sound like that but it’s only a matter of redefining our perspective. Global warming—manifested increasingly each day in unpredictable weather and destructive droughts and storms and other “inconvenient truths”— is a real issue all must confront squarely. Who knows, by pursuing a green Christmas, we may yet bring back the true spirit of the season, the original idea about the Messiah who came upon the world to save us from ourselves.
Wednesday, December 13, 2006
Monster on the loose!
ON December 12, the National Statistics Office (NSO) released the latest numbers on merchandise exports, saying the Philippines sold more than US$39 billion of tangible products to the rest of the world from January to October, up 16 percent from the numbers in the same period last year.
That’s certainly good news because, when we look at the NSO report more closely, our export growth was broad-based. Electronics grew by more than double digits (11 percent), but so did other sectors like manufactures, copper cathodes, petroleum, woodcrafts and furniture, bananas, processed tropical fruits, tuna, iron agglomerates, gold and copper concentrates.
But who really has heard about that good news? Not many. And that’s because most people’s minds these days are focused on the commotions and scandalous behaviors at the House of Representatives as the gang of Speaker Jose de Venecia Jr. tried, but failed, to ram through Charter change through the constituent assembly. Not even the cries of Typhoon Reming victims in Bicol could drive them to pause and ponder how they are ruining the country’s growth prospects this year and the next. Now they are trying to revive the corpse once more through the Con-con.
Such antics at the House somehow mirror the current bifurcation of the Philippine society at its worst, a social chasm that has been hampering the country from economically moving faster. We seem to have a Janus-faced society that is so conflicted we can’t figure out which face to show, the nice or happy face or the monster riding roughshod on our hopes and dreams.
On one hand, we have in our midst the people—private business, entrepreneurs, office workers, farmers, civil society groups—who are just so sick and tired of dirty and brazen politics, and are hoping that somehow, their leaders would come to their senses and stop doing anything that would threaten the economy’s prospects. They represent the nice and happy faces of our society. These are the people who are aware of their surroundings and of the fact that the rest of the world is moving on headstrong toward progress. The people, therefore, are hoping that somehow, these “political leaders,” who act like spoiled brats and rotten teenagers, would mature and start working for the common good.
On the other hand, we have “political leaders” who are so disconnected from the pulse of the nation, so remote and isolated from the wishes and aspirations of the people that they actually don’t give a heck whether or not we are headed to perdition. For them, what seems to matter most is political survival and it matters not that the economy, meaning the living standards of the people, might be derailed. They are the monsters whose obsession for power is matched only by their brazenness.
In the last several quarters, the happy face of this country has actually tried to manifest in decent gross domestic product growth rates, rising exports, stable factory capacity and utilization, a “strong peso,” rising remittances and domestic demand, improving finances, exuberant stock markets, and enthusiastic call centers. Somehow, the monsters in our midst lied low to give us an improving reputation as hosts to outsourcing. Lately, there have even been encouraging talks about the Philippines becoming a “knowledge-processing” center in Asia-Pacific.
Now we know at this time that efforts of the people, the happy struggling faces of our society, are not enough to lift us all from poverty and pervasive joblessness unless the rulers do their share of the work. What has been doing well all along was largely the external sector, whose dynamism is beyond the country’s control and influence. We have come to realize that our current exports growth, rise of call centers and the billion-dollar remittances are not enough to lift us to the levels of development achieved by our neighbors.
Thus, the people, especially the private business sector, have been saying that it’s time now for the country’s ruling elite to rise up and do their mandated work and clear all the logjams that have been hampering economic growth: lack of absorptive capacity, red tape, inefficiency, incompetence and plain lack of vision.
But so isolated are these people from the wishes of the larger society that they heard the message wrong. Instead of seeing the improving numbers as a chance to ratchet up growth, they instead started embarking on another political misadventure through the Con-ass, a sinister project that would further infuriate and polarize the entire society.
Why are they so insensitive to the wishes of the people? Why are they so blind to the desires of the private sector for stability and continuity? Why are they so brazen to challenge the patience of the people?
After the House retreated from the Con-ass, the administration became isolated. But we fear that they have already done great damage to the economy and its near-term prospects.
The administration is so embarrassed about its humiliation in the Con-ass that it had to cancel the Asean summit to avoid Asean delegates seeing all the rambunctious and scandalous antics of politicians in the House of Representatives. That Malacañang had to blame a typhoon for the cancellation has made it all the more ridiculous.
But there is a huge price to pay for that: our image as an investment destination, and the competence of the country’s leadership. It would be bad enough that we lose our face, but it would be worse that the jobs are not going to be created for lack of investor confidence.
And the worst scenario is that, with an angered citizenry that has lost respect for the current political leadership, we might see yet again mammoth demonstrations, street confrontations, and utter chaos that, in the past, had given us an image of a nice, resilient people governed by insensitive politicians behaving like monstrous, rotten teenagers.
That’s certainly good news because, when we look at the NSO report more closely, our export growth was broad-based. Electronics grew by more than double digits (11 percent), but so did other sectors like manufactures, copper cathodes, petroleum, woodcrafts and furniture, bananas, processed tropical fruits, tuna, iron agglomerates, gold and copper concentrates.
But who really has heard about that good news? Not many. And that’s because most people’s minds these days are focused on the commotions and scandalous behaviors at the House of Representatives as the gang of Speaker Jose de Venecia Jr. tried, but failed, to ram through Charter change through the constituent assembly. Not even the cries of Typhoon Reming victims in Bicol could drive them to pause and ponder how they are ruining the country’s growth prospects this year and the next. Now they are trying to revive the corpse once more through the Con-con.
Such antics at the House somehow mirror the current bifurcation of the Philippine society at its worst, a social chasm that has been hampering the country from economically moving faster. We seem to have a Janus-faced society that is so conflicted we can’t figure out which face to show, the nice or happy face or the monster riding roughshod on our hopes and dreams.
On one hand, we have in our midst the people—private business, entrepreneurs, office workers, farmers, civil society groups—who are just so sick and tired of dirty and brazen politics, and are hoping that somehow, their leaders would come to their senses and stop doing anything that would threaten the economy’s prospects. They represent the nice and happy faces of our society. These are the people who are aware of their surroundings and of the fact that the rest of the world is moving on headstrong toward progress. The people, therefore, are hoping that somehow, these “political leaders,” who act like spoiled brats and rotten teenagers, would mature and start working for the common good.
On the other hand, we have “political leaders” who are so disconnected from the pulse of the nation, so remote and isolated from the wishes and aspirations of the people that they actually don’t give a heck whether or not we are headed to perdition. For them, what seems to matter most is political survival and it matters not that the economy, meaning the living standards of the people, might be derailed. They are the monsters whose obsession for power is matched only by their brazenness.
In the last several quarters, the happy face of this country has actually tried to manifest in decent gross domestic product growth rates, rising exports, stable factory capacity and utilization, a “strong peso,” rising remittances and domestic demand, improving finances, exuberant stock markets, and enthusiastic call centers. Somehow, the monsters in our midst lied low to give us an improving reputation as hosts to outsourcing. Lately, there have even been encouraging talks about the Philippines becoming a “knowledge-processing” center in Asia-Pacific.
Now we know at this time that efforts of the people, the happy struggling faces of our society, are not enough to lift us all from poverty and pervasive joblessness unless the rulers do their share of the work. What has been doing well all along was largely the external sector, whose dynamism is beyond the country’s control and influence. We have come to realize that our current exports growth, rise of call centers and the billion-dollar remittances are not enough to lift us to the levels of development achieved by our neighbors.
Thus, the people, especially the private business sector, have been saying that it’s time now for the country’s ruling elite to rise up and do their mandated work and clear all the logjams that have been hampering economic growth: lack of absorptive capacity, red tape, inefficiency, incompetence and plain lack of vision.
But so isolated are these people from the wishes of the larger society that they heard the message wrong. Instead of seeing the improving numbers as a chance to ratchet up growth, they instead started embarking on another political misadventure through the Con-ass, a sinister project that would further infuriate and polarize the entire society.
Why are they so insensitive to the wishes of the people? Why are they so blind to the desires of the private sector for stability and continuity? Why are they so brazen to challenge the patience of the people?
After the House retreated from the Con-ass, the administration became isolated. But we fear that they have already done great damage to the economy and its near-term prospects.
The administration is so embarrassed about its humiliation in the Con-ass that it had to cancel the Asean summit to avoid Asean delegates seeing all the rambunctious and scandalous antics of politicians in the House of Representatives. That Malacañang had to blame a typhoon for the cancellation has made it all the more ridiculous.
But there is a huge price to pay for that: our image as an investment destination, and the competence of the country’s leadership. It would be bad enough that we lose our face, but it would be worse that the jobs are not going to be created for lack of investor confidence.
And the worst scenario is that, with an angered citizenry that has lost respect for the current political leadership, we might see yet again mammoth demonstrations, street confrontations, and utter chaos that, in the past, had given us an image of a nice, resilient people governed by insensitive politicians behaving like monstrous, rotten teenagers.
Monday, December 11, 2006
Read the people's lips: no short cuts!
NOW that Con-ass is dead, will the government please do the real business of governing?
In the last several years, the residents in Malacañang have been pretending to govern while putting out political fires. Now it has to do it for real because the stakes are high for the Philippine economy. We are approaching 2007 and that year might yet be a crossroad for us Filipinos.
In the last several months, international institutions have been saying positive things about the Philippines. For instance, the World Bank, traditionally conservative about our growth prospects, has predicted a better figure for the country’s gross national product. We just had our upgrade from Moody’s to stable. Revenue collections are improving. Tourism arrivals are improving. And investments, although loose change by Chinese standards, have started to breach a billion-dollar mark. And for sometime last month, the stock market was brimming with exuberance.
But lately, dangers signs are appearing in the horizon. Typhoons have ravaged the country’s agricultural production areas and the manufacturing sector—based on the third quarter economic performance—is slowing down. El Niño has started to rear its ugly head. And the inflation rate, normally a positive sign when it’s slow, has declined uncomfortably for too long, indicating a strong likelihood that people are not buying. December is normally a season of good cheer but we don’t seem to see retailers jumping up and down like monkeys. It seems like consumers, the main pillar of the Philippine economy, are holding on to their money.
Why? Political uncertainty related to Charter-change campaigns by the administration and its allies at the House of Representatives should really be the reason. When Speaker Jose de Venecia Jr. tried to railroad Charter change through the constitutional assembly in the wake of the Supreme Court rejection of the “people’s initiative” months ago, many people (many of whom stayed apolitical in the last several years) were jolted out of their political slumber. Had de Venecia and his gang pushed through with their antics despite popular opposition, they could have had another “revolution” in our midst, an event that would have killed whatever respect the world has for us Filipinos.
From the start, JDV and his manipulators in Malacañang should have realized that Con-ass didn’t really have an iota of a chance to succeed. For one, its acronym really stinks, something that sounds like a brazen con game straight out of some despicable trapo’s ass. Second, the haste with which they rammed it through the House of Representatives tells us they are up to something that we ordinary people don’t know. Or maybe they are really desperate to push a certain agenda, making them even more dangerous.
Of course, we all know that Malacañang dwellers dread the coming May election as it will produce a Senate that is totally dominated by the opposition. With an opposition-dominated Senate, it would be much easier for the many balimbing in the House of Representatives to shift allegiance away from the ruling party as they, more than ever, have the greater chance of getting a conviction for President Arroyo in the Senate. So Joe de Venecia huffed and puffed but he had to back off when they saw the dark clouds of public opinion in the horizon brewing dangerously like a supertyphoon about to sweep off Malacañang from it foundations.
It’s a good thing that JDV and Malacañang backed off from Con-ass; but there are indications it’s just a tactical retreat, and it would help us right if they would start burying it in the dumps of history.
Certainly, people are sick and tired of the convenient and short-sighted shortcuts that characterized Philippine politics in the last decade. After all the mess that came in the wake of the extra-constitutional means with which former President Joseph Estrada was removed from power, the people—including the Church—have certainly matured politically by ignoring attempts in the past to topple Mrs. Arroyo’s government through yet another extra-constitutional means. And certainly it maddens them that Mrs. Arroyo herself would seem to resort to the same sleazy shortcuts just to push for a Con-ass amid popular resentment.
Read the people’s lips: no short-cuts!
If JDV and GMA want to change the Constitution badly, they should do so using the right and constitutionally mandated procedures. Certainly, there are archaic provisions in the Constitution that need to be updated (like allowing more competition in utilities, media, banking, shipping, port operations, retail, among others, we would effectively deal with monopolies), but we have to do it the right way, through open debates, in a truly transparent and democratic way. We reform while ensuring that the beneficiaries of such changes are the people and not the current crop of politicians who are a party to the current state of paralysis and incompetence.
Certainly, JDV’s and GMA’s defeat should be painful. But they can redeem themselves by refocusing their energies on the economy. As we have pointed out earlier, we are at the crossroads; what they do in the next two or three years would define much how our economy would perform and where this country will go. If they would do further stupid political mistakes in the next few months (like reviving Con-ass in other forms), the creeping political uncertainty would gain momentum, thus derailing the economy in 2007 and beyond. But if it is stopped and officials started to exercise prudence, we might yet come out of 2006 and 2007 with better economic numbers.
As they lick their political wounds, GMA, JDV and their minions could do this country some good if they work together to focus their minds, energies, and resources on the Philippine economy. We haven’t seen anything tangible since the President promised to spend billions for the “super-regions.” We have not seen anything tangible since the President held an investment summit with the local and foreign chambers of commerce and industry. We haven’t seen any gains in terms of mobilizing government resources to pursue infrastructure development. Now that all their political gambits were check-mated by the people at every corner, they should have more time to really look at the Philippine economy and do their jobs.
In the last several years, the residents in Malacañang have been pretending to govern while putting out political fires. Now it has to do it for real because the stakes are high for the Philippine economy. We are approaching 2007 and that year might yet be a crossroad for us Filipinos.
In the last several months, international institutions have been saying positive things about the Philippines. For instance, the World Bank, traditionally conservative about our growth prospects, has predicted a better figure for the country’s gross national product. We just had our upgrade from Moody’s to stable. Revenue collections are improving. Tourism arrivals are improving. And investments, although loose change by Chinese standards, have started to breach a billion-dollar mark. And for sometime last month, the stock market was brimming with exuberance.
But lately, dangers signs are appearing in the horizon. Typhoons have ravaged the country’s agricultural production areas and the manufacturing sector—based on the third quarter economic performance—is slowing down. El Niño has started to rear its ugly head. And the inflation rate, normally a positive sign when it’s slow, has declined uncomfortably for too long, indicating a strong likelihood that people are not buying. December is normally a season of good cheer but we don’t seem to see retailers jumping up and down like monkeys. It seems like consumers, the main pillar of the Philippine economy, are holding on to their money.
Why? Political uncertainty related to Charter-change campaigns by the administration and its allies at the House of Representatives should really be the reason. When Speaker Jose de Venecia Jr. tried to railroad Charter change through the constitutional assembly in the wake of the Supreme Court rejection of the “people’s initiative” months ago, many people (many of whom stayed apolitical in the last several years) were jolted out of their political slumber. Had de Venecia and his gang pushed through with their antics despite popular opposition, they could have had another “revolution” in our midst, an event that would have killed whatever respect the world has for us Filipinos.
From the start, JDV and his manipulators in Malacañang should have realized that Con-ass didn’t really have an iota of a chance to succeed. For one, its acronym really stinks, something that sounds like a brazen con game straight out of some despicable trapo’s ass. Second, the haste with which they rammed it through the House of Representatives tells us they are up to something that we ordinary people don’t know. Or maybe they are really desperate to push a certain agenda, making them even more dangerous.
Of course, we all know that Malacañang dwellers dread the coming May election as it will produce a Senate that is totally dominated by the opposition. With an opposition-dominated Senate, it would be much easier for the many balimbing in the House of Representatives to shift allegiance away from the ruling party as they, more than ever, have the greater chance of getting a conviction for President Arroyo in the Senate. So Joe de Venecia huffed and puffed but he had to back off when they saw the dark clouds of public opinion in the horizon brewing dangerously like a supertyphoon about to sweep off Malacañang from it foundations.
It’s a good thing that JDV and Malacañang backed off from Con-ass; but there are indications it’s just a tactical retreat, and it would help us right if they would start burying it in the dumps of history.
Certainly, people are sick and tired of the convenient and short-sighted shortcuts that characterized Philippine politics in the last decade. After all the mess that came in the wake of the extra-constitutional means with which former President Joseph Estrada was removed from power, the people—including the Church—have certainly matured politically by ignoring attempts in the past to topple Mrs. Arroyo’s government through yet another extra-constitutional means. And certainly it maddens them that Mrs. Arroyo herself would seem to resort to the same sleazy shortcuts just to push for a Con-ass amid popular resentment.
Read the people’s lips: no short-cuts!
If JDV and GMA want to change the Constitution badly, they should do so using the right and constitutionally mandated procedures. Certainly, there are archaic provisions in the Constitution that need to be updated (like allowing more competition in utilities, media, banking, shipping, port operations, retail, among others, we would effectively deal with monopolies), but we have to do it the right way, through open debates, in a truly transparent and democratic way. We reform while ensuring that the beneficiaries of such changes are the people and not the current crop of politicians who are a party to the current state of paralysis and incompetence.
Certainly, JDV’s and GMA’s defeat should be painful. But they can redeem themselves by refocusing their energies on the economy. As we have pointed out earlier, we are at the crossroads; what they do in the next two or three years would define much how our economy would perform and where this country will go. If they would do further stupid political mistakes in the next few months (like reviving Con-ass in other forms), the creeping political uncertainty would gain momentum, thus derailing the economy in 2007 and beyond. But if it is stopped and officials started to exercise prudence, we might yet come out of 2006 and 2007 with better economic numbers.
As they lick their political wounds, GMA, JDV and their minions could do this country some good if they work together to focus their minds, energies, and resources on the Philippine economy. We haven’t seen anything tangible since the President promised to spend billions for the “super-regions.” We have not seen anything tangible since the President held an investment summit with the local and foreign chambers of commerce and industry. We haven’t seen any gains in terms of mobilizing government resources to pursue infrastructure development. Now that all their political gambits were check-mated by the people at every corner, they should have more time to really look at the Philippine economy and do their jobs.
Thursday, December 07, 2006
Global warming creates uncertainties for the Philippine economy
ARE we prepared for the new reality fostered by global warming? That’s a big question we should ponder as we count our losses, bury our dead and try to get back on our feet after Typhoons Reming and Milenyo.
It’s a material question since it seems we haven’t seen the last of these supertyphoons that pack winds strong enough to peel off roofs and destroy much of our budding hopes for a better future. It’s a new reality that we need to confront squarely if we want to sustain the economic momentum of the last three years.
Prior to Milenyo, observers said the Philippine economy was “on the mend” and cited the upgrades in sovereign rating, the all-time highs in the stock market, the double-digit growth rates in exports, and the improving tax collection of the government. In fact, before the supertyphoons, top Neda officials were walking around with PowerPoint presentations projecting the economy as headed for a continuous climb to a 5.5-percent to 6.2-percent growth rate this year.
Neda was confident of attaining such growth targets as the economy, its top officials kept saying, has new growth drivers—electronics, outsourcing, crop production and agro-processing, livestock and poultry, aquaculture, furniture and fixtures, transport equipment, mining, hotels and restaurants, medical tourism, construction, and shipbuilding.
The PowerPoint slides were convincing: in the last few years the numbers indeed were improving. Investments were breaching the one-billion-dollar mark, tourist arrivals were growing at double-digit rates and foreign currency reserves kept posting record highs, the peso has been gaining strength, and the national government deficit has been improving significantly from more than 4 percent of GDP to about 2 percent this year.
Then came supertyphoons Milenyo, Paeng and Reming. Suddenly everything changed. Coming after Neda’s announcement the industry sector slowed down in the third quarter, Reming’s fury highlighted the possibility that the economy is probably losing steam and could no longer achieve the growth targets.
The statistics, specifically the monthly integrated survey of selected industries (Missi), had been showing these negative signs all along, yet government planners ignored them and regaled themselves with the other numbers that seemed to be doing well.
But Reming was a reality check, unmasking the vulnerability of such growth, forcing the government to accept the targets are a tall order. Sales of manufactures, said the usually optimistic Donald Dee, president of the Philippine Chamber of Commerce and Industry, are tepid even as we approach Christmas. And this is likely to worsen as the farms lost much buying power to the forces of nature.
The government just released the November inflation rate confirming the continuing slide of the consumer price index. That’s nice, except that it confirms Donald Dee’s observation about weak sales in the run-up to Christmas. Besides, electricity, gas and water, the consumer price index on most items, especially food, beverages, and tobacco; clothing; services; and miscellaneous manufactures are sliding. It could mean people are not buying, either because they don’t have much money or they feel so uncertain they’d rather save for a rainy day.
We’re back to reality and we better be prepared for the worst. If talk about global warming is accurate, we could expect more crazy weather (e.g. increasing frequency of supertyphoons followed by withering dry spells) that could ruin the technocrats’ planning models. There’s probably no more Milenyo or Reming very soon, but we all know that an El Niño is already under way.
What does Philippine Atmospheric Geophysical and Astronomical Services Administration (Pagasa) say about this? “Based on the latest observations and international forecast models, intensification of the El Niño episode is expected during the next three months and will likely continue through April to June 2007.”
There you go. We are going from the supertyphoon to another dry spell. While that may not cost so much lives and limbs, it might hobble the economy further through low agricultural growth, and trigger another water crisis in Metro Manila as previous storms failed to fill the dams that store water for the metropolis. Are we prepared for this?
Global warming may have introduced a new source of uncertainty for the economy. Neda may have to revisit its plans and programs to see if it’s still attuned with the times.
The greater variability of weather suggests we may have to work harder to boost the manufacturing sector by lowering tariffs for their inputs and the cost of electricity. We may have to enhance economy-wide competitiveness by introducing more competition in shipping and port operations, telecommunications, and banking. We should strengthen outsourcing and cyberservices by restoring English as the medium of instruction and beefing up general education. We need to train more skilled workers in engineering and construction to meet rising demand for these workers here and abroad.
Neda periodically prepares the regional physical framework plan on which all programs and projects are based. The Neda staff must revise them to highlight danger zones and strengthen the framework for coordination in disaster management.
The government may have to reorient programs toward drought-resistant crops, the use of efficient irrigation systems (like drip irrigation) and the deployment of shallow tube wells in strategic agricultural zones. Over the medium and long term, the Department of Agriculture and the Department of Science and Technology will have to focus research to these.
Most of all, we need to get serious with our environmental programs, including reforestation, watershed protection and the preservation of water bodies. Simple lip service and a business-as-usual attitude will not do.
For almost a decade, policy analysts have talked of the need to use economic instruments (e.g. variable levies, charges and taxes) to provide incentives for responsible behavior among consumers. For instance, the National Water Resources Board should reflect the true cost of water by detailing expenses in water-source development and charging a variable fee based on water level at the Angat and La Mesa dams. If water is cheap on rainy days and gets expensive as the dry season wears on, people will be forced not to use potable water to irrigate their lawns and wash their cars.
At bottom, adjustment requires something of each one, the government especially. But the cost of inaction will be worse. (Photo credit: http://images.epilogue.net/users/dearden/Global_Warming.jpg)
It’s a material question since it seems we haven’t seen the last of these supertyphoons that pack winds strong enough to peel off roofs and destroy much of our budding hopes for a better future. It’s a new reality that we need to confront squarely if we want to sustain the economic momentum of the last three years.
Prior to Milenyo, observers said the Philippine economy was “on the mend” and cited the upgrades in sovereign rating, the all-time highs in the stock market, the double-digit growth rates in exports, and the improving tax collection of the government. In fact, before the supertyphoons, top Neda officials were walking around with PowerPoint presentations projecting the economy as headed for a continuous climb to a 5.5-percent to 6.2-percent growth rate this year.
Neda was confident of attaining such growth targets as the economy, its top officials kept saying, has new growth drivers—electronics, outsourcing, crop production and agro-processing, livestock and poultry, aquaculture, furniture and fixtures, transport equipment, mining, hotels and restaurants, medical tourism, construction, and shipbuilding.
The PowerPoint slides were convincing: in the last few years the numbers indeed were improving. Investments were breaching the one-billion-dollar mark, tourist arrivals were growing at double-digit rates and foreign currency reserves kept posting record highs, the peso has been gaining strength, and the national government deficit has been improving significantly from more than 4 percent of GDP to about 2 percent this year.
Then came supertyphoons Milenyo, Paeng and Reming. Suddenly everything changed. Coming after Neda’s announcement the industry sector slowed down in the third quarter, Reming’s fury highlighted the possibility that the economy is probably losing steam and could no longer achieve the growth targets.
The statistics, specifically the monthly integrated survey of selected industries (Missi), had been showing these negative signs all along, yet government planners ignored them and regaled themselves with the other numbers that seemed to be doing well.
But Reming was a reality check, unmasking the vulnerability of such growth, forcing the government to accept the targets are a tall order. Sales of manufactures, said the usually optimistic Donald Dee, president of the Philippine Chamber of Commerce and Industry, are tepid even as we approach Christmas. And this is likely to worsen as the farms lost much buying power to the forces of nature.
The government just released the November inflation rate confirming the continuing slide of the consumer price index. That’s nice, except that it confirms Donald Dee’s observation about weak sales in the run-up to Christmas. Besides, electricity, gas and water, the consumer price index on most items, especially food, beverages, and tobacco; clothing; services; and miscellaneous manufactures are sliding. It could mean people are not buying, either because they don’t have much money or they feel so uncertain they’d rather save for a rainy day.
We’re back to reality and we better be prepared for the worst. If talk about global warming is accurate, we could expect more crazy weather (e.g. increasing frequency of supertyphoons followed by withering dry spells) that could ruin the technocrats’ planning models. There’s probably no more Milenyo or Reming very soon, but we all know that an El Niño is already under way.
What does Philippine Atmospheric Geophysical and Astronomical Services Administration (Pagasa) say about this? “Based on the latest observations and international forecast models, intensification of the El Niño episode is expected during the next three months and will likely continue through April to June 2007.”
There you go. We are going from the supertyphoon to another dry spell. While that may not cost so much lives and limbs, it might hobble the economy further through low agricultural growth, and trigger another water crisis in Metro Manila as previous storms failed to fill the dams that store water for the metropolis. Are we prepared for this?
Global warming may have introduced a new source of uncertainty for the economy. Neda may have to revisit its plans and programs to see if it’s still attuned with the times.
The greater variability of weather suggests we may have to work harder to boost the manufacturing sector by lowering tariffs for their inputs and the cost of electricity. We may have to enhance economy-wide competitiveness by introducing more competition in shipping and port operations, telecommunications, and banking. We should strengthen outsourcing and cyberservices by restoring English as the medium of instruction and beefing up general education. We need to train more skilled workers in engineering and construction to meet rising demand for these workers here and abroad.
Neda periodically prepares the regional physical framework plan on which all programs and projects are based. The Neda staff must revise them to highlight danger zones and strengthen the framework for coordination in disaster management.
The government may have to reorient programs toward drought-resistant crops, the use of efficient irrigation systems (like drip irrigation) and the deployment of shallow tube wells in strategic agricultural zones. Over the medium and long term, the Department of Agriculture and the Department of Science and Technology will have to focus research to these.
Most of all, we need to get serious with our environmental programs, including reforestation, watershed protection and the preservation of water bodies. Simple lip service and a business-as-usual attitude will not do.
For almost a decade, policy analysts have talked of the need to use economic instruments (e.g. variable levies, charges and taxes) to provide incentives for responsible behavior among consumers. For instance, the National Water Resources Board should reflect the true cost of water by detailing expenses in water-source development and charging a variable fee based on water level at the Angat and La Mesa dams. If water is cheap on rainy days and gets expensive as the dry season wears on, people will be forced not to use potable water to irrigate their lawns and wash their cars.
At bottom, adjustment requires something of each one, the government especially. But the cost of inaction will be worse. (Photo credit: http://images.epilogue.net/users/dearden/Global_Warming.jpg)
Tuesday, December 05, 2006
Solving the jobs-skills mismatch puzzle
ASK human resource practitioners and they will swear the jobs are there but employers are having a difficult time finding the right kind of people. The problem, they say, is a mismatch between jobs offered and the skills provided by the country’s educational system, a weird sort of scarcity amid plenty that is being accentuated by the rapid growth of business-process outsourcing, and the globalization of the Philippine labor market.But how could we bridge this widening chasm? First, we need to bridge our understanding of the jobs-skills mismatch and objective condition on the ground.
Many policymakers seem to assume that schools tend to produce ivory-tower intellectuals and artists who will starve because they are not what employers need. The schools, they say, should encourage “employable skills”—short hand for worker bees trained in vocational and technical (VocTech) education; warm bodies who fiddle, tinker and produce concrete saleable products and not those woozy-headed thinkers who agonize over the meaning of life. The schools, they say, should cut emphasis on liberal education and focus on “hard” physical sciences and VocTech.
These views stem from our martial- law hangover when Ferdinand Marcos imposed the National College Entrance Examination to screen out and channel more people into one- or two-year courses. But do these old notions about the skills-jobs mismatch still stand?
The answer is no. BusinessMirror’s job ads monitoring (JAM) project, now on its fifth month, shows that the world is no longer what it used to be. This much is obvious in the October JAM report, where employers in three major national newspapers and three major online jobsites posted almost 35,000 advertisements for jobs.
The top 20 advertisers, from the highest to the lowest, are: cyberservices; construction and engineering; human resource/manpower firms; manufacturing; wholesale and retail; hotels, restaurants and resorts; financial intermediation; transportation, storage and communication; health and social work; education; personal, community and social services; real estate and renting; business consulting; mining and quarrying; advertising and promotions; extraterritorial bodies; and agriculture, fishery and forestry.
And what sort of skills do they require? Again, in descending order: professional and technical, clerical, production and related workers, administrative and managerial, sales workers, and service workers.
These numbers indicate that employers require skilled people, most of them highly schooled. Data seem to suggest that employers need both those who tinker and produce concrete stuff and those who think and produce intangible knowledge-rich products and services.
The recent study by the Personnel Management Association of the Philippines (PMAP) supports this paper’s JAM findings. In a study that covered fast-growing industries like pharmaceuticals, banking, consumer goods, hotels and restaurants, semiconductor, information technology, telecommunications, retail, and call centers, employers say they want people who have good communications skills, with strong analytical and conceptual skills, and have initiative.
These preferred basic competencies perfectly sound like those “soft” skills from a good liberal education. Certainly, the country needs more programmers, engineers, architects, physicists, welders and pipe fitters, but the workplace these days demands no less than a good liberal or general education for these people of the hard sciences to make a difference.
This new information on skills mismatch suggests that universities don’t have to junk their liberal and social sciences. In fact, the real issue seems to be how to strengthen it to compliment the hard sciences and the VocTech.
Gone are the days when all that engineers or chemists had to do was dazzle people with designs, numbers and formulas. Now they need to have leadership and social sophistication as well. They need to have self-confidence, assertiveness, flexibility and maturity; a global perspective and awareness of their social milieu, in contrast to the old notion of technical guys as introverted, remote number crunchers.
So, do our schools have what it takes to produce the workers demanded by the new, transformed and globalized workplaces? The evidence so far is mixed. While we have several centers of excellence providing quality education, the overall verdict seems to say the schools don’t produce enough “employable” graduates. Not even the VocTech school, according to PMAP, as their graduates are not doing good in the labor market either despite the rising demand for workers here and abroad. In the last six months, 80 percent of the job advertisements in construction and engineering were for overseas placements. Yet, according to the POEA, the Philippines could only fill half the job orders each year, a proof that those VocTech schools are not providing the required skills either.
What we see here therefore is not just a problem of mismatch, but a complete disconnect of the educational system with the dynamics of the labor market.
Solutions? Experts in the last tripartite human resource summit hosted by PMAP suggested greater industry-academe tie-up, especially in curriculum development. That’s fine, but it may not be enough to bring this country out of its low-growth equilibrium. If we want world-class education that could make this country the dragon economy we always dreamt of, we need a strategic look at how we fund the education of our children; and to look at education as an investment on the country’s future.
We are not talking of giving more money to the Commission on Higher Education. The idea is to set up a huge fund for a student loan program similar to those in the United States and Australia. Australians, for instance, have the so-called Higher Education Contribution System (HECS), lately renamed HELP or Higher Education Loan Program, where students borrow money from the government to be repaid once they are gainfully employed.
They could use such money to enroll in whatever school they want. To ensure that schools provide quality services—and weed out diploma mills—independent bodies should develop and provide benchmark information to the public, like a school ranking index to denote quality, to guide students’ decisions. This information system will pressure schools to innovate and improve as the annual ranking or index would penalize lousy providers by not enrolling in their schools.
Sometimes, policymakers wonder why it’s so easy for the best and brightest to leave for foreign shores. Economics certainly is the reason. But it’s also because many of them feel “the system” doesn’t care enough to invest in their future. A student loan program could meet this problem. And bridge the gap between the rich and the poor that, over history, has been causing their deep social fissures and hampering our efforts toward progress.
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