Labor Policy in the Philippines Labor Standards

8/12/2019 Labor Policy in the Philippines Labor Standards

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Labor Policy in the Philippinesis specified mainly by the countrysLabor Code of

the Philippinesand through other labor laws. They cover 38 million Filipinos that

belong to the labor force and to some extent, also the overseas workers. They aim

to address Filipino workers legal rights and their limitations with regard to the hiringprocess, working conditions, benefits, policymaking on labor within the company,

activities, and relations with employers.

The Labor Code and other legislated labor laws are implemented primarily by

government agencies, namely,Department of Labor and EmploymentandPhilippine

Overseas Employment Agency.Non-government entities, such as the trade unions

and employers, also play a role in the countrys labor policy by actively ensuring

their proper implementation and on the political level, by lobbying for development or

modification of work-related laws.

General Overview and Statistics[edit]Labor Force[edit]

ThePhilippinesis a country that has one of the biggest available pools of qualified

workers (aged 1564) in the world in absolute terms which ranks 13th largest in the

world behind countries likeVietnam,Japan,andMexico.In 2010 its people qualified

for work had reached 55.5M.

[1]

On its working age groups ratio to the countrys totalpopulation, it ranks 147th[2]at 61%, bordering the middle and bottom third of the

world ranking, by virtue of its relatively large population of elderly and children

combined.

With this large pool of available workers, the Philippines has more than 38M people

that belong to the labor force which is one of the largest in the world almost making

it to the top ten notwithstanding a relatively mediocre participation rate of

64.5%.[1]Thelabor forcehas consistently grown by an average 2% for the past three

years. This labor force is dominated by people that have an educational attainment

below the tertiary level which make up 71%.[1]

Employment[edit]

Out of this labor force 36.2M[3]Filipinos are employed and this number has been

increasing by an average of more than 2% in the last three years. This proportion of
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employed working people in the Philippines constitutes 59%[1]of the population, a

relatively large percentage that belongs to the upper-third in the world ranking. The

Philippines ranks relatively low in its employed worker-to-GDP ratio with only

$8,260[1]which hints about the countrys productivity issues. Nevertheless,

thisGDPper employed worker has been growing by an average of 3% over the last

decade.

Most of these employed workers are in the field ofServices(50%), followed

byAgriculture(34%) andIndustry(15%) with the lowest share.[3]There has been a

considerable employment growth in each of the Services and Industry sector of

about 4% since 2009 while employment in the Agricultural sector has been

fluctuating. A large portion of these employed workers are salary/wage workers and

then followed by self-employed people.

Unemployment and under-employment[edit]

Meanwhile there are about 2.7M Filipinos[3]that are unemployed which constitutes

about 7.4% of the labor force. This is the lowest rate the Philippines enjoys since

1996, before the country suffered from the Asian Financial Crisis.

Afterunemployment ratepeaked in 2000,[1]it has been on a steep decline by an

average of 8.5% each year through to 2010. Out of this unemployed group of

workers, 88% is roughly split between people who at least had a high school or acollege education.[3]

A large proportion of college graduates are nursing graduates whose numbers now

sum up to about 200,000 according to a report byPhilippine Nurses

Association.[4]As of 2011, it is estimated that about 7M are underemployed . It went

back up after it fell in 2010 at 6.5M. Visibly underemployed people, people working

less than 40 hours per week, cover 57% while the rest is made up by Invisible

underemployed people, those who work over 40 hours per week but wants more

hours.[3]

Labor Issues[edit]Output Growth and Employment[edit]
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In the past years, the GDP of the Philippines had grown steadily from 2001 to 2004.

Though there was a slowdown in 2005-2006, there was high growth again in 2006

which was interrupted only by the onset of theglobal financial crisis of 2008-

2009.[5]During these periods of growth, there was a slower pace of growth in

employment. This lagging may be due to the extreme weather disturbances the

country experienced. Considering that a large part of the labor force is employed in

agriculture, this is valid. Another reason is the difference between GDP andemployment with respect to their sectoral structures. Agriculture, forestry and fishing

sector contribute only less than one-fifth (16.8%) in the countrys GDP in 2010

considering that one third (33.2%) of the total employed is working in this sector.This

lagging could also be viewed with distinction to full-time and part-time employment.

In 2009 for instance, employment grew by 2.9% despite the slowdown in GDP to

1.1%. But the growth in employment occurred almost entirely among part-time

workers (8.4%) while full-time employment actually fell (-0.5%)..[5]

Labor Productivity[edit]

Total Factor Productivity(TFP), the efficiency in use of both labor and capital, is

important because labor income depends onlabor productivitygrowth. This growth

is the average product of labor which correlates with labors contribution to

enterprise revenue and profits. Improvements in workersreal wagesand earnings is

related to labor productivity growth and not exactly to employment growth.

Improvements in real wages, improves the poverty incidence of the people thus

helping inpovertyreduction. Canlas, Aldaba Esguerra argues that policymakersshould have a good understanding of the sources of TFP because sustainable

growth comes from rising TFP growth. One key factor is educated labor, which has

the capacity to invent, innovate, and master new techniques. At the long run, it is

important to educate the population and invest in human development and research

and development to improve TFP. But there should be care in this issue as there is
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the so-called job mismatch which will be discussed later. Canlas, Aldaba, Esguerra

advise that to raise TFP growth,monetary policyandfiscal policyshould stabilize a

predictable environment for the private sector.[6]

Underemployment, Overseas Employment[edit]With the declining earnings, people are looking for additional hours of work

(underemployed), or going abroad (overseas employment) or choose to be self-

employed. This also shows how they are not content with the quality of employment.

The self-employed are actually indifferent between the wage employment and self-

employment that they decided to be on their own.[6]This makes them, together with

the unpaid family workers, part of the vulnerable employment and its earnings is

weak compared to the wage one. On the other hand, they can beoverseas Filipino

workers.In 2009, it was reported that 1.423 million Filipinos were deployed

overseas.[5]This mitigates the unemployment problem but also poses moral hazard

problems, reducing labor force participation in the family.[6]

Youth Unemployment, Job and Skill Mismatch, EducatedUnemployed[edit]

In 2010, half of the 2.9 million unemployed Filipinos were age 15-24.[5]More than

half of the unemployed youth are such due to lack of job opportunities, lack of skills

and the competition with older ones. This lack of training and skills andincompetence may be due to poor education, which shows that indeed, education

must be improved.[6]On the other hand, theres the job and skill mismatch. Even

with the high unemployment rate, there are actually jobs that are not filled because

there are no applicants who have the right qualifications.[5]The improvement of

education must be well-thought so that it corresponds with what the labor market

needs. There must be attention given to the technical and vocational education of

labor. The government should cooperate with the private sector for better

information regarding the labor demand.[6]From this job mismatch problem also

arises the educated unemployed. In 2010, the unemployment rate among the

college educated is about 11%. Some are having difficulty in finding appropriate job

for the degree they have. Others on the other hand, have higher reservation wages

and can afford to wait for better opportunities.[5]
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Balance between workers welfare and employment generation[edit]

In the past decades, the Philippines experienced that having policies that are biased

on workers welfare and protection may hinder employment creation. Sound policies

that improves the condition of employment and workers welfare without resultinginto too much increase in labor costs would be better. The consequences of a rigid

labor market due to undue intervention may result in lower investments and thus,

slower growth.[6]

Labor Code in the Philippines[edit]

The Labor Code of the Philippines is the current law governing employment

practices and labor relations in the Philippines. It also identifies the rules and

standards regarding employment such as pre-employment policies, labor conditions,wage rate, work hours, employee benefits, termination of employees, and so

on.[7]Under the regime of then dictator [Ferdinand Marcos], it was promulgated in

May 1. 1974 and took effect November 1, 1974, six months after its promulgation.[8]

Pre-Employment Policies[edit]

Minimum Employable Age[edit]

The minimum age for employment is 15 years old and below that age is not allowed.

Persons of age 15 to 18 can be employed given that they work in non-hazardousenvironments.[9]

Overseas Employment[edit]

As for overseas employment of Filipinos, foreign employers are not allowed to

directly hire Philippine nationals except through board and entities authorized by the

Secretary of Labor. Travel agencies also cannot transact or help in any transactions

for the employment or placement of Filipino workers abroad. Once Filipinos have a

job in a foreign country, they are required to remit or send a portion of their incometo their families, dependents, and/or beneficiaries in the Philippines.[9]

Regulation on Conditions of Employment[edit]

Minimum Wage Rate[edit]
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Theminimum wagerate for Non-Agriculture employees established under Wage

Order No. NCR 15 is P404 per day, but in May 9, 2011, a (cost of living allowance)

of P22 per day was added to P404 wage, making the minimum wage P426 as of the

current date. COLA was also added to the previous P367 minimum wage for the

following sectors: Agriculture, Private Hospitals (with bed capacity of 100 or less),

and manufacturing establishments (with less than 10 workers), leaving the sectors

with P389 as minimum wage.[10]

Regular Work Hours and Rest Periods[edit]

The Labor Code set the regular hours of work per day to be no more than 8 hours

and not exceeding 5 days a week. Health personnel such as nurses, pharmacists,

midwives, paramedical technicians, physicians, and more, are exempted to the 5

days working limit if their services are deemed necessary, but with an additional

compensation of 30% of their regular wage rate.[9]

Short duration of rest periods are to be included in the working hours except meal

times which can be of longer duration. Employers can give 30 minutes up to 1 hour

of meal time per day, but are not accounted for the working periods.[9]

Rest Days[edit]

All employees have the right to have a 24 consecutive hours of rest day after every6 days of work. Employers are responsible for determining and scheduling the rest

day of employees except only if the employee prefers a different day based on

religious grounds. However, the employer may require an employee to work during

his/her rest day in cases of emergencies, special circumstances at work in which

employees are seriously needed, to prevent losses or damage to any goods or to

the employer, and other cases that have reasonable grounds.[9]

Nightshift Differential and Overtime[edit]

Employees are also given additional wages for working in night shifts. The night shift

starts from 10 oclock in the evening until 6 oclock in the morning, and employees

will receive 10% more of his/her regular wage rate. Overtime work for employees

(beyond 8 hours) is allowed and workers shall be paid with his/her regular wage plus
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an additional 25% of the regular wage per hour worked or 30% during holidays or

rest days.[9]

Household helpers[edit]

Household helpers, or maids, are common in the Philippines. Household helpers are

those that deliver services at the employers home, attending to the employers

instructions and convenience. The minimum wage of household helpers is P800 per

month for some cities in metro manila, while a lower wage is paid to those outside of

metro manila. However, most household helpers receive more than the minimum

wage; employers usually give wages ranging from P2,500 and above per month. On

top of that, employers are required to provide food, sanitary lodging, and a just

treatment to the household helper.[9]

Post-Employment[edit]

Termination by Employer[edit]

The employer has the right to terminate an employee due to the following reasons:

serious misconduct or disobedience to the employer, neglect of duties or

commission of a crime by the employee, and such causes the gives the employer a

just case to terminate the service of the employer.[9]

Retirement[edit]

The retirement age for an employee depends on the employment contract. Upon

retirement, the retired employee should be given his/her benefits according to the

agreement or contract between the employer and the employee. However, if there is

no existing retirement plan or agreement for the employee, he/she may retire at the

age of 60, given that he/she has served the employer for 5 years, and shall be given

a retirement pay of at least half a months salary for every year of service ( 6 months

of work given is considered as 1 whole year for the retirement pay).[9]

Labor Market Institutions[edit]Government[edit]

ThePhilippine governmentgreatly affects the Labor market through its policies and

interventions. It plays a role in job creation through generating a formidable
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environment for investment; in ensuring the workers welfare through policies like the

Labor Code; in improving the education of the labor; in informing regarding the jobs

available to match the skills of the people; in implementing expansionary fiscal and

monetary policies to reduce unemployment rate. Though, there must be care in

using fiscal and monetary policies because it may result in high inflation rate in the

long-run.[6]Below are some government agencies concerned with the labor market.

Department of Labor and Employment(DOLE)[edit]

Founded on December 8, 1933, DOLE is the government agency overseeing the

labor market of the Philippines. It is tasked to implement the Labor Code and other

labor and employment-related policies of the government. They have different

programs for job generation, skills training for workers, job fairs and placements, for

overseas workers, and others that helps enhance the labor market of the

Philippines.[11]

Bureau of Labor and Employment Statistics (BLES)[edit]

Under the DOLE, BLES gathers data and research regarding the labor market.

These statistics are important in making sound policies (Aldaba, Canlas,Esguerra).

One example of data is that regarding job vacancies. One reason of vacancies in

spite of unemployment is that people do not know where to look for the right job.

BLES gather information on vacancies and applicants and submit this to DOLE for

dissemination.[3]

Technical Education and Skills Development Authority(TESDA)[edit]

TheTechnical Education and Skills Development Authority(TESDA), under the

supervision of DOLE, is the government agency mandated to oversee the

development of technical education and skills development (TESD) of the labor

force of the Philippines. TESDA aims to train skilled workers especially on technical

and vocational services in which our country is lacking.[12]

Philippine Overseas Employment Agency (POEA)[edit]

The POEA is DOLE's arm that administers to the overseas employment of Filipino

workers. It aims to ensure and protect the migrant workers' rights and welfare. It is
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also tasked to promote, develop and supervise the government's overseas

employment program.[13]

Labor Unions[edit]

Trade or Labor unions in the Philippines are organizations sanctioned by LaborCode of the Philippines as an acknowledgment of Filipino workers freedom to self-

organize. Trade unions aim to promote enlightenment among Filipino workers

concerning their wages, hour of work, and other legal rights.[9]They aim to raise

awareness on their obligations as union members and employees, as well.

Moreover they serve as legitimate entities that negotiate with employers in policy-

making with regard to terms and conditions of employment. These negotiations

formally take place in the process of Collective Bargaining Agreement.

Trade unions are granted with a right to go on a strike,[9]a temporary stoppage of

work by the employees when there is a labor dispute. Labor disputes are defined as

situation when there are controversies surrounding negotiations and arranging of the

terms and condition of employment. The union, however, must file a notice of strike

or the employer must file a notice of lockout with the Ministry. But when a strike or

lockout is deemed to compromise national interests or interests of the Filipino public

(for instance, the case of health workers), the Secretary of Labor and Employment

has the authority to prohibit it and deliberately enforce resumption of regularoperations.

In the Philippines, TUCP (Trade Union Congress of the Philippines)is the largest

union and confederation of 30 labor federations in the country which come from a

wide range of sectors.[14]As of 2009, there are a total of 34,320 unions with consist

of members summing up to 2.6 million.[15]

Employers confederation[edit]

In the Philippines, there are also employers conferderation in order to lobby theprotection of firm owners; this confederation represents the business sector and

employers in the country. The most known of which is the Employers Confederation

of the Philippines. ECOP is leading in being the voice of the employers in labor

management and socioeconomic development.[16]Last September 27, 2011, ECOP

had a dialogue with Labor secretary,Rosalinda Baldozregrading different issues on
http://en.wikipedia.org/wiki/Labor_policy_in_the_Philippines#cite_note-POEA-13http://en.wikipedia.org/wiki/Labor_policy_in_the_Philippines#cite_note-POEA-13http://en.wikipedia.org/wiki/Labor_policy_in_the_Philippines#cite_note-POEA-13http://en.wikipedia.org/w/index.php?title=Labor_policy_in_the_Philippines&action=edit&section=30http://en.wikipedia.org/w/index.php?title=Labor_policy_in_the_Philippines&action=edit&section=30http://en.wikipedia.org/w/index.php?title=Labor_policy_in_the_Philippines&action=edit&section=30http://en.wikipedia.org/wiki/Labor_policy_in_the_Philippines#cite_note-Labor_Code-9http://en.wikipedia.org/wiki/Labor_policy_in_the_Philippines#cite_note-Labor_Code-9http://en.wikipedia.org/wiki/Labor_policy_in_the_Philippines#cite_note-Labor_Code-9http://en.wikipedia.org/wiki/Labor_policy_in_the_Philippines#cite_note-Labor_Code-9http://en.wikipedia.org/wiki/Labor_policy_in_the_Philippines#cite_note-Labor_Code-9http://en.wikipedia.org/wiki/Labor_policy_in_the_Philippines#cite_note-Labor_Code-9http://en.wikipedia.org/wiki/Trade_Union_Congress_of_the_Philippineshttp://en.wikipedia.org/wiki/Trade_Union_Congress_of_the_Philippineshttp://en.wikipedia.org/wiki/Trade_Union_Congress_of_the_Philippineshttp://en.wikipedia.org/wiki/Labor_policy_in_the_Philippines#cite_note-TUCP-14http://en.wikipedia.org/wiki/Labor_policy_in_the_Philippines#cite_note-TUCP-14http://en.wikipedia.org/wiki/Labor_policy_in_the_Philippines#cite_note-TUCP-14http://en.wikipedia.org/wiki/Labor_policy_in_the_Philippines#cite_note-Crisostomo-15http://en.wikipedia.org/wiki/Labor_policy_in_the_Philippines#cite_note-Crisostomo-15http://en.wikipedia.org/wiki/Labor_policy_in_the_Philippines#cite_note-Crisostomo-15http://en.wikipedia.org/w/index.php?title=Labor_policy_in_the_Philippines&action=edit&section=31http://en.wikipedia.org/w/index.php?title=Labor_policy_in_the_Philippines&action=edit&section=31http://en.wikipedia.org/w/index.php?title=Labor_policy_in_the_Philippines&action=edit&section=31http://en.wikipedia.org/wiki/Labor_policy_in_the_Philippines#cite_note-ECOP-16http://en.wikipedia.org/wiki/Labor_policy_in_the_Philippines#cite_note-ECOP-16http://en.wikipedia.org/wiki/Labor_policy_in_the_Philippines#cite_note-ECOP-16http://en.wikipedia.org/wiki/Rosalinda_Baldozhttp://en.wikipedia.org/wiki/Rosalinda_Baldozhttp://en.wikipedia.org/wiki/Rosalinda_Baldozhttp://en.wikipedia.org/wiki/Rosalinda_Baldozhttp://en.wikipedia.org/wiki/Labor_policy_in_the_Philippines#cite_note-ECOP-16http://en.wikipedia.org/w/index.php?title=Labor_policy_in_the_Philippines&action=edit&section=31http://en.wikipedia.org/wiki/Labor_policy_in_the_Philippines#cite_note-Crisostomo-15http://en.wikipedia.org/wiki/Labor_policy_in_the_Philippines#cite_note-TUCP-14http://en.wikipedia.org/wiki/Trade_Union_Congress_of_the_Philippineshttp://en.wikipedia.org/wiki/Labor_policy_in_the_Philippines#cite_note-Labor_Code-9http://en.wikipedia.org/wiki/Labor_policy_in_the_Philippines#cite_note-Labor_Code-9http://en.wikipedia.org/w/index.php?title=Labor_policy_in_the_Philippines&action=edit&section=30http://en.wikipedia.org/wiki/Labor_policy_in_the_Philippines#cite_note-POEA-13


10/10

labor like the Pregnant Women Workers Act, impact of too many holidays on

business, wages, ongoing review of DOLE Department Order No. 18-02, and

employment and competitiveness. ECOP stressed that DOLE should consider the

business community when issuing policies.[17]
http://en.wikipedia.org/wiki/Labor_policy_in_the_Philippines#cite_note-ECOP_Dialogue_with_Labor_Secretary-17http://en.wikipedia.org/wiki/Labor_policy_in_the_Philippines#cite_note-ECOP_Dialogue_with_Labor_Secretary-17http://en.wikipedia.org/wiki/Labor_policy_in_the_Philippines#cite_note-ECOP_Dialogue_with_Labor_Secretary-17http://en.wikipedia.org/wiki/Labor_policy_in_the_Philippines#cite_note-ECOP_Dialogue_with_Labor_Secretary-17

Documents

Labor Policy in the Philippines Labor Standards