RP workers least productive among original ASEAN members

By Bernadette S. Sto.Domingo
Published on the September 4, 2007 issue of the BusinessWorld

COUNTRIES IN SOUTHEAST Asia and the Pacific, the Philippines included, were the least labor productive in Asia, with not enough employment opportunities being created in the region, the International Labor Office (ILO) said in its latest “Key Indicators of the Labor Market.”

The executive summary of that report described labor productivity in Southeast Asia and the Pacific as “stagnant,” compared to the rest of Asia.

It said productivity, measured in US dollars as output per person employed, in the region was much slower than other regions, posting an average annual increase of just 1.6% between 1996 and 2006.

And in Southeast Asia, the Philippines posted the lowest productivity in 2005 among the five original members of the Association of Southeast Asian Nations.

The study showed workers in the Philippines added $7,271 in value to the economy in 2005, compared to a $9,067 average for “Southeast Asia and the Pacific.”

The average for the eight Southeast Asian markets surveyed was $14,062.25 for 2005.

Value added per worker in the Philippines’ Southeast Asian neighbors varied widely. Philippine workers’ output was better than: $2,853 in Cambodia; $4,541 in Myanmar; and $4,809 in Vietnam. But workers in the Philippines fared poorly compared to counterparts in the four other original ASEAN members, namely: $9,022 in Indonesia; $13,915 in Thailand; $22,112 in Malaysia; and $47,975 in Singapore.
Labor productivity in South Asia averaged $7,531 in 2005. Productivity in the four markets in that region measured as follows: $3,315 in Bangladesh; $6,587 in India; $8,247 in Pakistan; and $11,323 in Sri Lanka.

Rene E. Ofreneo, executive director of Fair Trade Alliance and former dean of the University of the Philippines School of Labor and Industrial Relations, said the Philippines needs a strategic road map for productivity upgrading.

“We have embraced globalization in a rather aimless way, unlike other neighboring countries in East Asia. We need a clear industrial vision. We need to invest in the industry particularly in technology, new machinery, factories, etc.,” he said in an interview.

He said the government and the private sector should be more decisive on the issue of smuggling, dumping of excess goods in the country, recalibrating trade liberalization commitment, as well as acquiring new technology.

Kilusang Mayo Uno spokesperson Prestoline Suyat, for his part, said productivity of Filipino workers had been improving, citing studies by the Labor department’s National Wages and Productivity Commission. “Our concern is while Filipino workers’ productivity increased by 4.4% in 2006 from 2005, wages are still very low. That’s why we’re pushing for legislated wage increase across the board — across the country — to compensate for the high productivity,” he said.

The report quoted ILO Director-General Juan Somavia as saying: “The huge gap in productivity and wealth is cause for great concern. Raising the productivity levels of workers on the lowest incomes in the poorest countries is the key to reducing the enormous decent work deficits in the world.”

The report, published every other year, facilitates the comparison of key elements of national labor markets. It contains a core set of 20 labor market indicators including type, status and levels of employment, remuneration and characteristics of jobseekers. ILO said the latest edition provides more insight to the important role of decent and productive work as a vehicle for poverty reduction.

The study, however, said the percentage of working poor in Southeast Asia and the Pacific almost halved, to 13.6% in 2006 from 22.1% in 1996, while the reduction in the share of vulnerable employment — when a worker is at risk of falling back into poverty — was also down 5.7 percentage points to 59.2%, placing the region ahead of South Asia with 78.2% but behind East Asia with 56.2%.

Increases in productivity are mainly the result of companies combining capital, labor and technology better. A lack of investment in people (training and skills), equipment and technology can lead to an underutilization of the productive potential of labor and so perpetuate poverty.

“Development in Southeast Asia & the Pacific has been less impressive than in East Asia. Nevertheless, the region has profited from the economic boom in China and India and the good economic performance of most developed economies in recent years,” the report said.

The ILO said about 1.5 billion people in the world — or one-third of the working-age population — are “potentially under-utilized.” This new estimate of labor underutilization is comprised of the 195.7 million unemployed people in the world and nearly 1.3 billion working poor who live with their families on less than $2 per day per person.

In addition to the under-utilized labor force, ILO said a large number of people — about one-third of the working-age population worldwide — do not participate in labor markets at all.

For the last 10 years, it said this inactivity rate had remained much higher for women than for men, with only two out of 10 men of working age inactive, compared to five out of 10 women.

  1. I agree, we need to invest in some other industries. Technology, programming, development, internet, engineering. I don’t know why the government is not looking at new industries. Our fellow Filipinos who excels in these fields are working for other countries.

    It’s really sad.

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