Philippines has to IMPROVE labor efficiency

[james_chaw]

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‘Philippines has to improve labor efficiency’

Wednesday, October 5, 2011

ASIDE from existing labor policies, moves by legislators might aggravate the Philippines’ position when it comes to labor market efficiency, an official warned.

Guillermo Cruz, co-chair of the National Competitiveness Council, said that while the Philippines moved up 10 ranks from 85 to 75 in the World Economic Forum’s competitiveness rankings, it remains low on labor market efficiency.

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Cruz said that cannot be taken lightly.

Labor market efficiency, according to the WEF report, is described as the flexibility of the labor market to shift its workers from one economic activity to another rapidly and at a low cost.

It is also measured by the wage fluctuations, worker incentives and equity in the business environment.

For Cruz, the situation is worsened by moves of legislators that tend to get a big chunk of media coverage.

“Trying to be popular can hurt the cause of the labor sector even more,” Cruz said, adding that in these days of social media, news spreads faster and the coverage is wider.

He fears that moves by legislators can become unproductive for the economy.

He warned that the measure to put limitations on the number of hired contractual employees could actually work against the cause of labor. He said that while the measure was meant to encourage security of tenure, he warned that companies would be careful about hiring more workers.

Another suggestion that he felt ruins prospects for labor is the four-day work week, calling it “incredibly insane.”

Cruz pointed out that investors track down competitive rankings and that our rankings have an impact on our attractiveness as a destination for investment and tourism.

The World Economic Forum’s global competitiveness index for 2011 to 2012 ranks the Philippines 75th out of 142 countries.

It trails behind its counterparts in Southeast Asia, with Singapore ranking second, Malaysia in 21st place, Thailand 39th, Indonesia 46th and Vietnam 65th. The only other Asean country behind the Philippines is Cambodia, which ranked 97th.

Aside from labor market efficiency, economies are measured on its institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, technological readiness, financial market development, market size, business sophistication and innovation.

Cruz said the country’s labor market efficiency ranks among the bottom 20 percent of the world at 113 out of 142 countries.

Another aspect that Cruz feels is often ignored is brain gain. He explained that the country is so used to exporting labor that there is no clear option for workers to return to the country and use their talents, newly acquired knowledge and networks to have a career at home.

Another problem he sees is that most business would say that the education sector is not producing the right level of skills required of its graduates. (MEA)

Published in the Sun.Star Cebu newspaper on October 05, 2011.

[eezychair]

I have to agree with this. It is really not wise to 'legislate wage increases' as some our honorable members of the house of representative want to do simply to gain 'pogi' points with the labor sector. And to think that they even considered the 4 day workweek?! Insane is an understatement.

On the other hand, in order to increase the efficiency of labor, companies should invest more in modernizing their production lines. This may be happening with larger multinationals, but for medium sized manufacturing companies, owners usually are content with what they currently have (which may include machines older than themselves). If anything, the first thing they usually reduce when the going gets rough is their number of workers. Worse, some even reduce wages just to maintain profit margins.

Improving labor efficiency can be achieved quicker IF both management/owner AND employees work on it TOGETHER.

[james_chaw]

Improving labor efficiency can be achieved quicker IF both management/owner AND employees work on it TOGETHER.

Easier said than done. Labi na kung unionized na ang workers? patay! ang Union nay mag dagan sa companya nga wla mana silay kahibalo sa pagpadagan ug negosyo.

Also, Owners of manufacturing companies aren't necessarily "content" with the machinery that they have. It's just that the cost of acquiring new machinery is prohibitive in terms of cost and you'd have to think how long it would take for you to regain the cost and start seeing a profit again.