PHL labor productivity lags in region

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Workers at the assembly line of Kinpo Electronics factory in Malvar, Batangas. -- REUTERS

By Marissa Mae M. Ramos

PRODUCTIVITY among the Philippines’ employed labor force amounted to $20,671 per worker in 2019, an improvement from the previous year but still lagging behind regional peers such as Malaysia, Thailand, and Indonesia, data from the World Bank’s World Development Indicators database showed.

How efficient is the Philippines’ workforce?

Labor productivity is measured in 2011 international dollars, or the number of an economy’s currency units required to buy the same amount of goods and services in the local market as would a US dollar be able to buy in the United States.

World Bank data showed the country’s labor productivity ratio, as measured by the gross domestic product (GDP) to its total employed population, was 3.8% more in 2019 from $19,918 in 2018. However, the pace of growth was slower than the 4.2% logged in 2018.

The global average GDP per worker was $37,739 (2.7% more than the previous year) and that of the East Asia and the Pacific (EAP) was $34,569 (up 4.6%).

The country’s productivity ratio trailed that of Southeast Asian economies such as Brunei ($170,536), Singapore ($153,852), Malaysia ($60,187), Thailand ($31,007), and Indonesia ($25,805).

On the other hand, it ranked ahead of Myanmar ($14,095 GDP per worker ratio in 2019), Laos ($13,353), Vietnam ($11,757), and Cambodia ($7,334).

In a mobile message, Associated Labor Unions-Trade Union Congress of the Philippines (ALU-TUCP) spokesperson Alan A. Tanjusay attributed the Philippines’ below-average labor productivity in the region to the “poor and inadequate mass transport system,” the “epidemic practice” of hiring workers in the short-term, meager wages, rising taxes, and ”poor compliance and enforcement” of labor laws and regulations.

Employers Confederation of the Philippines (ECoP) President Sergio R. Ortiz-Luis, Jr. noted Filipinos abroad have “high productivity” and were sought after by foreign employers.

“The reason the Philippines is still lagging behind its ASEAN peers is the environment and labor framework in the country… do not encourage higher productivity,” he said in a phone interview, adding the minimum wage left workers “with no incentive to work hard.”

“In a country where job creation should be a priority, less interference, along with more competition, should be encouraged,” he said.

ALU-TUCP’s Mr. Tanjusay said firms should raise wages as well as provide additional perks such as vacation or travel benefits to increase labor productivity. He also called on the government to address the traffic problem, enforce labor laws and keep the prices of basic goods and services “at manageable levels.”

European Chamber of Commerce of the Philippines (ECCP) President Nabil Francis said investors looking for a competitive labor force are attracted to the Philippines’ “young, dynamic, and highly literate workforce.”

“To ensure that the rewards of this demographic sweet spot be realized, the ECCP supports measures that will promote reinforcement of skills and capability development, enactment of an apprenticeship reform bill, and incentivizing enterprises which invest in competitive training and upskilling programs,” he said in a phone message.

For his part, University of Asia and the Pacific Economist Victor A. Abola said that the country “needs to improve our productivity since we’re still below the (regional) average.”

In an e-mail interview, Mr. Abola said the Philippines needs to “improve agricultural productivity” through more irrigation facilities and better Public-Private Partnership (PPP) programs; foster industrial development by providing incentives to train workers and to “bring back experienced and highly skilled engineers and technicians”; improve infrastructure; and “reduce trade deficit” to heighten “domestic resource and labor use.”