Labor policy in the Philippines

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Labor Policy in the Philippines is specified mainly by the countrys Labor Code of the
Philippines and through other labor laws. They cover 38 million Filipinos who belong to the labor
force and to some extent, as well as overseas workers. They aim to address Filipino workers legal
rights and their limitations with regard to the hiring process, working conditions, benefits,
policymaking on labor within the company, activities, and relations with employees.
The Labor Code and other legislated labor laws are implemented primarily by government agencies,
namely, Department of Labor and Employment and Philippine 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.

Contents
[hide]

1General overview and statistics

o 1.1Labor force
o 1.2Employment
o 1.3Unemployment and under-employment
2Labor issues
o 2.1Output growth and employment
o 2.2Labor productivity
o 2.3Underemployment, overseas employment
o 2.4Youth unemployment, job and skill mismatch, educated unemployed
o 2.5Balance between workers' welfare and employment generation
3Labor Code of the Philippines
o 3.1Pre-employment policies
3.1.1Minimum employable age
3.1.2Overseas employment
o 3.2Regulation on conditions of employment
3.2.1Minimum wage rate
3.2.2Regular work hours and rest periods
3.2.3Rest days
3.2.4Nightshift differential and overtime
3.2.5Household helpers
o 3.3Post-employment
3.3.1Termination by employer
3.3.2Retirement
4Labor market institutions
o 4.1Government
4.1.1Department of Labor and Employment (DOLE)
4.1.2Bureau of Labor and Employment Statistics (BLES)
4.1.3Technical Education and Skills Development Authority (TESDA)
4.1.4Philippine Overseas Employment Agency (POEA)
o 4.2Labor unions
o 4.3Employers' confederation
5See also
6References
7External links
General overview and statistics[edit]
Labor force[edit]
The Philippines is 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
like Vietnam, Japan, and Mexico. In 2010 its people qualified for work had reached 55.5M. On its
[1]

working age groups ratio to the countrys total population, it ranks 147th at 61%, bordering the
[2]

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%. The labor force has consistently grown by an
[3]

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%. [3]

Employment[edit]
Out of this labor force 36.2M Filipinos are employed and this number has been increasing by an
[4]

average of more than 2% in the last three years. This proportion of employed working people in the
Philippines constitutes 59% of the population, a relatively large percentage that belongs to the
[3]

upper-third in the world ranking. The Philippines ranks relatively low in its employed worker-to-GDP
ratio with only $8,260 which hints about the countrys productivity issues. Nevertheless,
[5]

this GDP per employed worker has been growing by an average of 3% over the last decade.
Most of these employed workers are in the field of Services (50%), followed by Agriculture (34%)
and Industry (15%) with the lowest share. There has been a considerable employment growth in
[4]

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 that are unemployed which constitutes about 7.4% of the
[4]

labor force. This is the lowest rate the Philippines enjoys since 1996, before the country suffered
from the Asian Financial Crisis. After unemployment rate peaked in 2000, it has been on a steep
[6]

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 a college education. [4]

A large proportion of college graduates are nursing graduates whose numbers now sum up to about
200,000 according to a report by Philippine Nurses Association. As of 2011, it is estimated that
[7]

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. [4]

Labor issues[edit]
Output growth and employment[edit]
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 the global financial crisis of 2008-2009. During these periods of growth, there was a
[8]

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 and employment 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%).". [9]

Labor productivity[edit]
Total Factor Productivity (TFP), the efficiency in use of both labor and capital, is important because
labor income depends on labor productivity growth. This growth is the average product of labor
which correlates with labors contribution to enterprise revenue and profits. Improvements in
workers real wages and 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 in poverty reduction. Canlas, Aldaba Esguerra argues that policymakers should 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 the so-called job mismatch which will be discussed later. Canlas, Aldaba, Esguerra
advise that to raise TFP growth, monetary policy and fiscal policy should stabilize a predictable
environment for the private sector.[10]

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. This makes them,
[10]

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 be overseas Filipino workers. In 2009, it
was reported that 1.423 million Filipinos were deployed overseas. This mitigates the unemployment
[11]

problem but also poses moral hazard problems, reducing labor force participation in the family. [10]

Youth unemployment, job and skill mismatch, educated unemployed [edit]

In 2010, half of the 2.9 million unemployed Filipinos were age 15-24. More than half of the
[11]

unemployed youth are stuck due to lack of job opportunities, lack of skills and the competition with
older ones. This lack of training and skills and incompetence may be due to poor education, which
shows that indeed, education must be improved. On the other hand, theres the job and skill
[10]

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. The improvement of education must be
[11]

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. From this job mismatch problem also
[10]

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. [11]

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 resulting into 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. [10]

Labor Code of the Philippines[edit]

Main article: Labor Code of the Philippines
The Labor Code of the Philippines governs 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. Under the regime of the President [Ferdinand Marcos], it was promulgated in May 1. 1974
and took effect November 1, 1974, six months after its promulgation. [12]

Pre-employment policies[edit]
Minimum employable age[edit]

The minimum age for employment is 18 years old and below that age is not allowed. Persons of age
15 to 18 can be employed given that they work in non-hazardous environments. [13]

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 income to their families, dependents, and/or beneficiaries in the
Philippines. __fv|date=February 2017}}
[13]

Regulation on conditions of employment[edit]

Minimum wage rate[edit]

Minimum wage rates in the Philippines vary from region to region, with boards established for each
region to monitor economic activity and adjust minimum wages based on growth rates,
unemployment rates, and other factors. The minimum wage rate for Non-Agriculture employees, in
[14]

Manila region, 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.
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. The 426 combined rate is
[15]

locally referred to in the Philippines as "Manila Rate" due to this regional disparity. [14]

Regular work hours and rest periods[edit]

Normal hours of work. - The normal hours of work of any employee shall not exceed eight (8) hours
a day.
Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in
hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular office hours
for eight (8) hours a day, for five (5) days a week, exclusive of time for meals, except where the
exigencies of the service require that such personnel work for six (6) days or forty-eight (48) hours,
in which case, they shall be entitled to an additional compensation of at least thirty percent (30%) of
their regular wage for work on the sixth day. For purposes of this Article, "health personnel" shall
include resident physicians, nurses, nutritionists, dietitians, pharmacists, social workers, laboratory
technicians, paramedical technicians, psychologists, midwives, attendants and all other hospital or
clinic personnel.
Meal periods. - Subject to such regulations as the Secretary of Labor may prescribe, it shall be the
duty of every employer to give his employees not less than sixty (60) minutes time-off for their
regular meals.
Rest days[edit]

All employees have the right to have a 24 consecutive hours of rest day after every 6 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. [13]

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) are allowed and workers shall be
paid with his/her regular wage plus an additional 25% of the regular wage per hour worked or 30%
during holidays or rest days. [13]

Household helpers[edit]

Household helpers, or maids, are common in the Philippines. Household helpers 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 just treatment to the household
helper. [13]

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 gives the employer a just case to terminate the services of the employee. [13]

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). [13]

Labor market institutions[edit]

Government[edit]
The Philippine government greatly affects the labor market through its policies and interventions. It
plays a role in job creation through generating a formidable 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. Below are some government agencies concerned with the labor market.
[10]

Department of Labor and Employment (DOLE)[edit]

Main article: Department of Labor and Employment (Philippines)
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. [16]

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. [17]

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

Main article: Technical Education and Skills Development Authority
The Technical 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. [18]

Philippine Overseas Employment Agency (POEA)[edit]

Main article: Philippine Overseas Employment Administration
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 also tasked to promote, develop
and supervise the government's overseas employment program. [19]

Labor unions[edit]
Trade or Labor unions in the Philippines are organizations sanctioned by Labor Code 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. They aim to raise awareness on their obligations as union members and employees,
[13]

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, a temporary stoppage of work by the
[13]

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 regular operations.
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. As of [20]

2009, there are a total of 34,320 unions with consist of members summing up to 2.6 million. [21]

Employers' confederation[edit]
In the Philippines, there is also an employers' confederation in order to lobby the protection 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. Last September
[22]

27, 2011, ECOP had a dialogue with Labor secretary, Rosalinda Baldoz regarding different issues
on 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. [23]