PIDS in the News

MANILA, Philippines - Increasing the legal minimum wages (LMWs) is seen as more detrimental to the welfare of workers particularly the young and inexperienced, less educated and women laborers, the Philippine Institute for Development Studies (PIDS) said.
In the recently published paper titled The impact of legal minimum wages on employment, income, and poverty incidence in the Philippines, the state think tank said implementing higher LMWs in the country would reduce the work hours of average employees; decrease the employment probability of the young, inexperienced, less educated and women laborers; and reduce the average income and raise household poverty rate.
(Higher LMWs) can be disadvantageous against the very groups that LMWs are intended to protect, said PIDS research fellows Vicente Paqueo, Aniceto Orbeta and Leonardo Lanzona.
The PIDS noted the Philippines gives a higher minimum wage compared to its more progressive neighbors like Thailand.
This begs to rethink the common belief of having massive employment expansion with rapidly rising wages as the key to increase the incomes of poor households and to change their poverty status. Demanding the government to impose higher minimum wages to move the poor out of poverty requires deeper thought, PIDS said.
As of March 2016, the daily minimum wage in the National Capital Region (NCR) ranges from P444 to P481 for non-agriculture jobs and P444 for agriculture-based jobs.
The LMW is lowest in the Autonomous Region in Muslim Mindanao (ARMM) at P265 for non-agriculture work and P255 for agriculture work.
Citing various studies overseas, the PIDS researchers noted mixed effects on employment as a result of increases in the minimum wage. These include decreased employment of young people, decreased employment of unskilled workers, and decreased provision of in-house training to unskilled workers.
In the Philippines, the effect is immediately seen in decline in hours of work. The probability of gaining and retaining employment also falls between eight to 22 percent.
A 10 percent increase in LMW would lead to declines in labor participation rate by 6.36 percent (for all workers), by 5.97 percent and 3.64 percent (among teenagers and young adults), and by 2.36 percent (among workers with little or no education).
PIDS also noted a faster rise in LMW significantly increases poverty incidence by 1.7 to three percentage points.
The average real income of households would have grown faster by about 20 percent " and household poverty would have been lower " if the LMW had increased more slowly over time, said the researchers. The total income of a household with just one minimum-wage earner is likely to be smaller than a household where the wife, and perhaps the older children too, can also work but as lower, market-determines wages.
Average daily wages in the country have risen steadily since 2000.
To address the mixed effects of LMWs on the countrys labor force, PIDS recommends tempering demand for large increases in LMWs.
In theory, the impact of LMW on employment can be positive, negative or zero, depending on ones assumptions about the market situation and the underlying mechanisms governing wages and employment decisions. Looking at the current empirical evidence, we similarly find that the LMW effects are mixed, said the PIDS researchers.
There is wisdom in the policy view of government to temper demands for larges rises in LMW, they added. It is important to stress that the government has yet to recognize and address the need to temper the discriminatory impact of LMWs on the employment opportunities of disadvantaged population groups.
It also urged further studies on the tightening of the implementation of the current six-month regularization law and labor contractualization.
During the recent presidential election season, many influential politicians promised to adopt more stringent measures to ensure that those regulations are effectively implemented and enforced. What is concerning in this regard is the lack of studies on the impact of those regulations, it added.
PIDS said banning contractualization entirely may be more detrimental than helpful to workers.//

Author: Czeriza Valencia
Date: January 20, 2017
Source: Philippine Star

HIGHER across-the-board wages run the risk of limiting the employment prospects of less experienced workers and women, according to a paper published by the Philippine Institute for Development Studies (PIDS).
In The Impact of Legal Minimum Wages on Employment, Income and Poverty Incidence by researchers Vicente B. Paqueo, Aniceto C. Orbeta, Jr. and Leonardo A. Lanzona, it was found that increases to the legal minimum wage adversely affect the very groups the government is trying to help.
According to the authors, a higher legal minimum wage is likely to reduce the work hours of the average worker, can be disadvantageous against the very groups that [the wage is] intended to protect, decrease the employment probability of the young, inexperienced, less educated and women laborers and tends to ironically reduce average income and raise household poverty rate.
In the Philippines, the number of work hours fell and an 8-22% decline in the probability of gaining or retaining employment was seen following an increase in the legal minimum wage.
Hours of work significantly declined, and the probability of gaining/retaining employment fell by about 8% to 22%, following an increase in the legal minimum wage, PIDS said.
Meanwhile, disadvantaged groups particularly the young, the inexperienced, the less educated and women showed lower productivity compared to their older, more educated, experienced and male counterparts for jobs.
Using the fixed effects model alone, an increase in the legal minimum wage of 10% would lead to declines in labor participation rate (negative elasticities) by -6.36% (for all workers), by -5.97% and -3.64% (among teenagers and young adults relative to 50 years old and over), and by -2.36% (no schooling relative to college educated), said PIDS.
Further along, larger increases in the legal minimum wage tend to reduce average household income and raise the prevalence rate of poverty.
The total income of a household with just one minimum-wage earner is likely to be smaller than a household where the wife, and perhaps the older children too, can also work but at lower, market-determined wages, said PIDS.
It was also found that quicker hikes in the legal minimum wage increase poverty incidence by 1.7 to 3.0 percentage points.
PIDS said government policies to increase the minimum wage cause firms to lay off some of its workers because continuing to employ them would cost the firms more than the revenue they are expected to bring in and thereby have a negative consequence on employment.
Currently the average daily minimum wage ranges from P235-P491, according to the Current Labor Statistics January 2017 Issue of the Philippine Statistics Authority (PSA).
Moreover, the authors noted the adverse effects of increases in LMWs on employment by firms with average assets below P1.1 billion to be higher compared with larger corporations with an asset size above P1.1 billion.
PIDS called for a policy review to temper both demands for larger increases in the legal minimum wage and its effects by decentralizing the setting of minimum wages to regional authorities to take into account differences in regional conditions.
Furthermore, the government should also address the discriminatory impact of the legal minimum wage on the poor, the young and inexperienced, the less educated and the women by developing and testing compensatory interventions that would reduce, if not completely reverse, the discriminatory effects... to promote greater inclusiveness.
Equally important is the need to study empirically the impact of tightening the design and implementation of the current six-month regularization law and labor contractualization as the government still lacks data to review the impact of the legal minimum wage on employment opportunities and the disadvantaged. --

Author: Danica M. Uy
Date: January 20, 2017
Source: Business World

CEBU, Philippines " With the anticipated impact of the worsening hot weather to the water supply, a business leader calls for long-term and sustainable programs to mitigate its effect.

"Water is a basic necessity needed by everyone " businessmen or not," said Cebu Chamber of Commerce and Industry President Ma. Teresa Chan.

"Since this is a yearly phenomenon (hot weather) like typhoons, we should already implement long-term [and] sustainable programs to address it [water supply woes]," Chan told The FREEMAN.

The El Nio phenomenon, which is currently affecting the Philippines, has caused hotter weather, threatening food production and water supply stability.

"The effect of water shortage in Cebu depends on the extent of the shortage," Chan said. "If it will be at this same level, there might be some increase in cost of production but it will be bearable."

"But it is our farmers who will be most affected and so, all of us " employers and employees " as consumers," the president added.

Projected shortage

Late last year, the Metropolitan Cebu Water District (MCWD) had warned of water shortage as it projected a drought from January to May this year due to El Nio.

Previous reports quoted Edgar Ortega, MCWD's production and distribution department manager, as saying that there would be around 34,000 cubic meters of water shortage by April this year.

MCWD mostly relies on groundwater sources which account for 80 percent of its daily production or 164,000 cubic meters per day and 20 percent (40,000 cubic meters per day) comes from surface water sources. The utility had forged agreement with bulk water suppliers and commissioned additional wells to address the projected shortfall.


Chan emphasized that everyone should help in water conservation.

"The chamber has disseminated information on the water situation to its members and has conducted seminars on water conservation," she said, adding that CCCI is involved in various water-related programs and advocacies.

The business leader said that water treatment, recycling and conservation should be part of not only the regular programs of the government but of the daily lives of consumers.

According to a data from the Philippine Institute for Development Studies, an average Filipino family consumes six liters per capita per day for drinking and 12 for cooking and the kitchen.

Bulk of water use in households is for personal hygiene and sanitation services, areas where reusing and recycling of water should be done.

One advice from MCWD to consumers is to regularly check faucets, toilets and pipes for leaks and have these repaired immediately. //

Author: Carlo S. Lorenciana
Date: January 19, 2017
Source: Freeman

The President and the countrys top businessmen found common ground on the various economic issues affecting the country during a dinner meeting on Tuesday night.
In a briefing on Wednesday, Presidential Spokesman Ernesto C. Abella said the Presidents meeting was arranged by Presidential Consultant for Entrepreneurship Jose Ma. Concepcion, who is also known for his Go Negosyo advocacy, which aims to address poverty through entrepreneurship.
Duterte met with businessmen led by Ayala Corp. Chairman Jaime Augusto Zobel de Ayala and Metro Pacific Investments Corp. and PLDT chairman Manuel Pangilinan.
The open discussion touched on many topics, federalism, contractualization, job creation and tax reform. The President reiterated that he was all for job creation to uplift the peoples well-being, Abella said.
He added: The one-hour meeting was extended to three and, in the words of Concepcion, everybody walked out extremely, extremely happy.
Abella said that, in terms of the governments plan to end contractualization, Labor Secretary Silvestre H. Bello III and the businessmen are already working out a win-win situation.
The Presidential spokesman said that while he could not provide details of the arrangement, he can assure the public that it will be beneficial to both employers and employees.
Abella said the businessmens concerns and reservations regarding the President were put to rest after the dinner on Tuesday night.
[Mr. Concepcion] was saying that their preconceptions regarding the President were settled because of the one-on-one, face-to-face conversation. Many of them, apparently, never really met the President but this was the first time that they had this face-to-face and according to[Concepcion], a number of their uncertainties were settled, Abella said.
While there were no commitments made during the dinner, Abella said the businessmen expressed their support for the governments efforts to achieve inclusive economic growth.
He added that Finance Secretary Carlos G. Dominguez III, who was also present in the dinner, shared the governments efforts to address poverty.
One particular aspect is making available credit for poor Filipinos. Abella said Dominguez shared that the Land Bank of the Philippines (LBP) had excess funds worth $40 million for improvements in other places in Mindanao.
Basically, they were being brought onboard to help address the issue of how to create a more inclusive economy, especially addressing work and investments in areas of conflict, Abella said.
Earlier, state-owned think tank Philippine Institute for Development Studies (PIDS) said the governments plan to end endo, could lead to layoffs and greater inequality in the country.
In a study titled Beware of the End Contractualization! Battle Cry, PIDS research fellows Vicente B. Paqueo and Aniceto C. Orbeta Jr. said ending contractualization would be more expensive for companies than the government estimated.
Hiring more permanent employees would increase the cost of firms by about 30 to 40 percent, higher than the governments estimate of around 10 percent.
Findings in the research showed that Filipino workers were predominantly regular workers constituting 70 percent of all workers. The share of regular employees was also steady at 75 percent prior to 2014.
Data also showed that relatively, regular workers have higher wages and there was a decline in real wage rate between 2001 to 2014.
The study also noted that there is a rise in real earnings to P266 in 2014 during the term of President Benigno Aquino III from P260 in 2010.//

Author: Cai Ordinario
Date: January 18, 2017
Source: Business Mirror

Not just the lives but even the livelihood of poor Filipinos, particularly those depending on agriculture exports to Europe, are at stake once the bill reinstating the death penalty is passed, economists said.

They are concerned that reviving the capital punishment could negatively affect the countrys trade relations with Europe, resulting in the removal of the countrys trade privileges under the European Union-Generalized Scheme of Preferences Plus (EU-GSP+).

Former Tariff Commissioner George N. Manzano said that, while the countrys main export to Europe are electronic and mechanical products, merchandise exports that fully take advantage of the EU-GSP+ are food and agriculture items, many of which are peddled by poor farmers and fishermen. We will lose our competitive advantage against those that do not have GSP+ standing but enjoy lower tariffs and those who will continue to enjoy
GSP+ privileges, Manzano told the BusinessMirror.

Philippine Institute for Development Studies (PIDS) Research Fellow Roehlano M. Briones said agriculture exports that could be affected are coconut oil and fishery products, like processed tuna.

Manzano added that many of these exporters operate from Mindanao, which is home to the countrys poorest region"the Autonomous Region in Muslim Mindanao.

Briones said if the GSP+ is removed, tariffs could go up anywhere from 7 percent to 10 percent. While this is not a significant amount, this is expected to hurt Filipino exporters.

Thats a relatively strong hit, but it will not be a deal-breaker for exporters. But its definitely going to be a cost, Briones said in a phone interview.

Apart from trade costs, Manzano said the removal of the GSP+ could negatively impact the countrys foreign direct investments (FDI). He said this could discourage foreign players from putting up businesses in the country in the hope of taking advantage of the countrys GSP+ standing.

The countrys FDI inflows in the January-to-October 2016 period reached $6.2 billion, a 22.2-percent growth from the $5.1-billion posted in the same period in 2015. These were channeled to real estate; manufacturing; wholesale and retail trade; electricity, gas, steam and air-conditioning supply; and human-health and social-work activities.

Due to the removal of the GSP+, we might be less attractive to invest in. One of the considerations is the rules of origin, so we can only export products that are made in the Philippines or products that have high value-added content from the country or Europe, Manzano said.

National Economic and Development Authority (Neda) Undersecretary Rosemarie G. Edillon told the BusinessMirror that, while it hopes the country retains its GSP+ standing, the government is also committed to expand and diversify its export markets.

This is one of the goals set under the 2017 to 2022 Philippine Development Plan (PDP), the countrys medium-term socioeconomic blueprint, which is currently being crafted by the Neda.

We hope we will not be removed. We hope EU will acknowledge our efforts to protect the rights of claimholders. Sometimes there are conflicting claims but we do have procedures to resolve these, making sure that processes are inclusive, Edillon said.

Manzano said losing the GSP+ standing of the country will be a waste since the country is one of the few, if not the only Asean country, granted the privilege.

The EU-GSP+ is a preferential trade scheme that the Philippines has been benefiting from since December 2014. The EU-GSP+ allows the Philippines to export 6,274 products to the EU duty free.

This is an upgrade from the regular EU-GSP, which only covered 6,209 products and of which only 2,442 products are accorded duty-free privilege.

The Philippiness availment of this scheme, however, is subject to continuous review and is hinged on the observance of 27 international conventions.

Among these conventions is the International Covenant on Economic, Social and Cultural Rights, of which the Philippines is a party to. The country similarly agreed to the amendments of the said convention, or the Second Optional Protocol to the International Covenant on Civil and Political Rights.

Majority vote

Despite the growing opposition against the revival of the death penalty, Speaker Pantaleon D. Alvarez on Tuesday said he has enough vote to approve the bill in 30 days.

In a news conference, Alvarez expressed confidence that the so-called super majority in the House will vote in favor of the death penalty bill.

I am very confident of its passage because we have the [super majority] coalition. And if there is anyone who will go against it, there are probably just five or 10 lawmakers, Alvarez added.

According to the Speaker, the full debates on the bill will start next week, and he expects to complete its passage in 30 days in the lower chamber.

[But] lets allow the full debates to happen to know the sentiments of the members, said Alvarez, the principal author of the capital punishment bill.

In a separate news conference, Liberal Party Rep. Edcel C. Lagman of Albay, member of the legitimate minority bloc, said there are at least 50 lawmakers who want to interpellate once the plenary debates on the bill start next week.

Lagman asked Alvarez to allow all lawmakers even from the super majority to exercise a conscience vote instead of a party vote.

Party vote means a pressure vote, he said.

Lawmakers from the super majority who expressed opposition against the reimposition of capital punishment are Deputy Speaker and Lakas Rep. Gloria Macapagal-Arroyo of Pampanga, PBA Party-list Rep. Jericho B. Nograles and the Makabayan bloc.

Alvarez said the lower chamber may change the scope of the death penalty bill, as they may focus only on illegal drugs-related crimes.

Author: Cai U. Ordinario and Jovee Marie N. dela Cruz
Date: January 17, 2017
Source: Business Mirror

The global unemployment rate will increase to 5.8 percent representing 3.4 million people or a total of 201.1 million, according to the World Employment and Social Outlook-Trends 2017 report recently released by the International Labor Organization. This gloomy picture is attributed to the weak economic growth in many regions, in particular Sub-Saharan Africa, Latin America and the Caribbean, which are all still reeling from the effects of the 2008 economic meltdown that affected many countries.
However, projections for Asia Pacific are positive, with the report citing the Philippines and Indonesias significant employment growth. According to the Philippine Statistics Authority, the number of jobless Filipinos in 2016 has gone down to 2.4 million or 5.5 percent, lower than the 2.6 million or 6.3 percent jobless recorded in 2015. However, the underemployment rate continues to be in the double digits with 18.3 percent or 7.5 million Filipinos working part-time or employed in non-regular jobs.
Socioeconomic Planning Secretary Ernie Pernia had disclosed much earlier that the government is targeting a four to five percent unemployment rate by 2022, though he agreed that underemployment is of more concern because of the double digit rates. Pernia said that over 30 percent of those employed are still considered vulnerable, especially those working in the agriculture sector.
Members of the business delegation that accompanied Japanese Prime Minister Shinzo Abe during his recent two-day visit to the Philippines expressed interest in investment opportunities in the agribusiness sector " one of the five priority areas under the governments comprehensive national industrial strategy program. This is definitely a positive development especially for Mindanao " dubbed as the land of promise and the food basket of the Philippines " whose agricultural potential has not been maximized despite its rich biodiversity, conducive climate and fertile soil.
Just recently, the Japan International Cooperation Agency extended a 4.9-billion loan for the development of Mindanaos agriculture sector under a project called Harnessing Agribusiness Opportunities through Robust and Vibrant Entrepreneurship Supportive of Peaceful Transformation or Harvest which will act as a lending facility for agribusiness and related investments.
The project aims to help ordinary Mindanao farmers and concerned institutions develop and grow the agriculture sector which could generate more investments and job opportunities especially in conflict-affected areas. The Philippine Statistics Authority says agriculture, forestry and fishing account for over 60 percent of the economy in Mindanao, but conflicts have made many areas among the poorest in the country.
According to London-based industry intelligence provider ReportBuyer, projections for the agribusiness sector in the Philippines is positive in the long term given the countrys potential for expansion into new sectors such as palm oil. The outlook for sugar mills as well as the livestock sector is also expected to show healthy growth rates, the report said. ReportBuyer also noted the governments initiatives to support rice and sugar production, although backyard farming and infrastructure problems continue to hamper growth of the sector which remains uncompetitive.

Experts have long been saying that agriculture is a key factor in making economic growth inclusive and in reducing poverty incidence in the country. One of those who has been stressing the need to pursue large-scale activities in the agribusiness sector is businessman Manny Pangilinan, saying as early as five years ago that government has to focus on the sector, noting its very small contribution to the countrys gross domestic product.
First Pacific, in particular, has always been keen on investing in the agri sector most especially in the production of cash crops like banana and sugar as well as coffee, rubber and palm oil. Even Malaysia has indicated interest in agribusiness investments, specifically in palm oil.
Secretary Pernia, who is also director general of the National Economic and Development Authority or NEDA, said the government is looking at policy changes on agriculture and rural development that would allow for large-scale commercial farming in order to improve productivity and enhance profitability even for ordinary farmers. Pernia previously noted that the agriculture sector continues to lag despite the countrys consistent economic growth.
Productivity has not been maximized because of small land parcels awarded to beneficiaries of the agrarian reform program with minimal production capacity. The NEDA chief says the small parcels should be consolidated into plantation-size areas for cultivation in order to achieve economies of scale to produce enough rice and other cash crops. Consolidating the small parcels would attract more investors who have the financial muscle to buy modern machinery and employ the latest farming techniques " instead of the traditional plow and carabao method employed by small, struggling farmers " for increased productivity.
A report by the Philippines Institute of Development Studies showed that poverty, especially in the rural areas, is related to low farming productivity and poor agricultural diversification. This is the same view shared by several business organizations that believe an efficient agricultural sector with improved productivity, through increased investments and industrialization, would significantly contribute to poverty alleviation efforts and help residents in poor rural communities improve their quality of life.//

Author: Babe G. Romualdez
Date: January 17, 2017
Source: Philippine Star

THE government should carefully weigh its policy options on endo, or temporary employment contracts (TEC), because immediately ending the practice could undermine the goal of achieving rapid, inclusive and sustained economic growth, a state think tank said.
Endo, short for end-of-contract, is a practice that refers to the use of temporary employment contracts whereby a firm hires a temporary worker for a six-month probationary period, dismisses them after a few (usually five) months, then rehires them and dismisses them again after five months, colloquially known as 5-5-5.
The Philippines Institute for Development Studies (PIDS) said that last year, anti-contractualization advocates succeeded in getting political leaders, including the elected President and Vice President, to commit to a new law and the immediate issuance of regulations that would tighten, if not abolish, the use of TECs and tamp down abuses in outsourcing.
Following up on his electoral promise, President Rodrigo Duterte has given his new Department of Labor and Employment (DOLE) Secretary marching orders to end contractualization. The President emphasizes that the government, after all, is mandated by the constitution to provide job security to all workers.
There is little doubt that the endo practice is illegal. Therefore, to uphold the majesty of the law, the government is obligated to end the practice, PIDS stated in a recently released report.
However, it should not prevent citizens from questioning the wisdom of the current worker regularization law and from examining the need for its amendment, it pointed out.
More crucially, the outrage against illegal endo practices should not blind politicians and voters to the potential adverse consequences of further curtailment or prohibition of temporary employment and job outsourcing, it added.
In effect, the government needs to carefully weigh the effects of ending endo and of curtailing other TECs, it said.
Overblown response
It appears that the need for immediately ending endo is overblown and could significantly impede achievement of inclusive growth, it said.
PIDS said endo and other TECs play valuable roles in keeping the Philippine economy efficient, competitive and inclusive.
Ending endo would adversely affect inclusive economic growth, depending on the aggressiveness and nature of government response to the anti-contractualization demands, it said.
The agency said the call to outlaw TECs is partly due to lack of appreciation of its important role in labor market efficiency. For government and voters to have a more informed response to the anti-contractualization demands, it is critical to have a good understanding of the economic value of TECs, it said.
In its view, PIDS said endo is a mechanism for coping with the business costs and difficulties associated with labor regulations.
For many employers, their decision to regularize a worker or practice endo depends on their calculation of the costs and benefits from endo practices, it said.
The think tank said that like the impact of rapidly rising legal minimum wages, some proposed regulatory changes could inadvertently hurt the growth and survival of small enterprises as this could prevent them from providing job opportunities to people with poor credentials.
Such unintentional consequences could happen, should political leaders fail to recognize TECs role in the efficient functioning of labor, it stated.
Cautionary note
While we do not pretend to present definitive conclusions about the anti-contractualization proposals, we believe that a more informed view of the policy proposal is needed. This is to allow time to find more efficient and less counter-productive alternatives to the proposed curtailment of TEC use. Based on our preliminary reading of immediately available information, we present a cautionary note, it added.
PIDS said adverse impact would be intensified by imposition of more restrictions on other forms of TECS or, worse, by the passage of pending congressional bills prohibiting all forms of TECs.
In theory, there are a variety of ways for reducing the prevalence of endo practice. They range from tightening enforcement of existing labor regulations to passing legislation for plugging loopholes that employers are allegedly abusing to circumvent the regularization law, it said.
The dilemma is that, on the one hand, limiting government action to tightening enforcement might not be enough to eliminate endo practice, as promised by President Duterte, it added
On the other hand, PIDS said aggressive threats of government harassment, huge penalties, business closures as well as prohibition of all forms of TECs to close loopholes could lead to unintended adverse consequences like reduction in job opportunities and inclusive growth.
The pending bills would also undermine the countrys ability to prepare and re-position its regulatory and policy environment for the impending Fourth Industrial Revolution"the would-be new normal which will bring about massive destruction of current jobs and the creation of new ones.
Contrary to peoples mindset at present, what is needed, looking forward, is to liberalize the use of TECs and find ways of providing better-paying jobs and income security under the would-be new normal. It is in light of the above observations that the government should address the anti-contractualization issue, it concluded.//

Author: Mayvelin U. Caraballo
Date: January 17, 2017
Source: Manila Times

The governments plan to end endo, or contractualization, could lead to layoffs and greater inequality in the country, according to a study released by the Philippine Institute for Development Studies (PIDS).

In a study, titled Beware of the End Contractualization! Battle Cry, PIDS research fellows Vicente B. Paqueo and Aniceto C. Orbeta Jr. said ending contractualization would be more expensive for companies than the government estimated.

Hiring more permanent employees would increase the cost of firms by about 30 percent to 40 percent, higher than the governments estimate of around 10 percent.

The dilemma is that, on the one hand, limiting government action to tightening enforcement might not be enough to eliminate endo practice, as promised by President Duterte. On the other hand, aggressive threats of government harassment, huge penalties, business closures, as well as prohibition of all forms of TECs [temporary employment contracts] to close loopholes could lead to unintended adverse consequences like reduction in job opportunities and inclusive growth, Paqueo and Orbeta said.

The government plans to impose a 100-percent end to contractualization that will force employers to strictly comply with the regulation.

But based on the Department of Trade and Industry (DTI) proposed win-win solution to contractualization, firms will be allowed to hire workers but these same workers will not be regularized after six months based on certain conditions.

These conditions is if firms are provided with qualified manpower service agencies, and if these workers are employed as regular employees of contractors and they receive the mandated benefits.

[The] scheme would give job security to the laborers, while addressing the needs of contractors principals for employment flexibility, the research fellows said.

The main issue is the additional costs to be passed on to the principals by manpower suppliers, they added.

Findings in the research showed that Filipino workers were predominantly regular workers constituting 70 percent of all workers. Interestingly, the share of regular employees was steady at 75 percent prior to 2014.

Data also showed that, relatively, regular workers have higher wages and there was a decline in real wage rate between 2001 and 2014.

The study also noted that there is a rise in real earnings to P266 in 2014, during the term of former president Benigno S. Aquino III, from P260 in 2010.

Further, a 2014 survey showed that 95 percent of workers employed by endo contractors appear satisfied with their current jobs.

Additional information reveals that the workers covered by the Social Security System, Pag-ibig and Philippine Health Insurance Corp. are quite high at 95.7, 92.8 and 94.8 percent, respectively.

The research fellow also said a high proportion also enjoy minimum wages, overtime pay/holiday premiums and 13th-month pay.

It is, therefore, not surprising that a high proportion of interviewed workers expressed satisfaction with their current jobs despite the fact that only a small proportion of them are entitled to leave credits, separation pay, security of tenure and other benefits. There is, however, still room for improving the work conditions of endo workers when it comes to security of tenure, the authors said.

In 2014 PSA data showed over a million Filipino workers did not hold regular positions in their companies.

Based on the Statistics on Non-Regular Workers, the PSA said 1.336 million workers were considered nonregular employees in 2014.

This represented some 29.9 percent of all 4.472 million workers employed in establishments with 20 or more workers.

Nonregular workers are composed of contractual/project-based workers, probationary workers, casual employees, seasonal employees and apprentices/learners.//

Author: Cai Ordinario
Date: January 17, 2017
Source: Business Mirror

The abolition or the scaling down of the Pantawid Pamilyang Pilipino Program (4Ps), pushed by the militant left and their allies in Congress would have damaging unintended consequences on the present and future welfare of poor children, a report released by the Philippine Institute for Development Studies said.

According to the discussion paper titled, Pantawid Pamilya Pilipino Program: Boon or Bane, such policy decision would arguably reduce beneficiary childrens opportunities for gainful jobs as well as their chances of moving out of poverty when they become adults.

Opponents of Pantawid have been disingenuous in denying the value of preparing children for productive employment. Their use of the adage about teaching people how to fish instead of providing dole outs is misleading to advocate reallocation of Pantawid budget to some unspecified job creation program, the report said.

The study said the critics concern that Pantawid cash grants would just increase expenditures on vices, undermine work ethics and encourage a culture of mendicancy is overblown.

In fact, impact evaluation does not support the critics allegations, at least within the parameters of the current design of Pantawid Pamilya and other CCT (conditional cash transfer) programs outside the Philippines. In this regard, evidence indicates that poor parents spend their resources responsibly, the paper said.

Mere labeling and denigrating the programs conditional grants as dole-outs that parents would just waste on vices instead of childrens human capital formation is not a credible argument to support the critics call for the abolition of Pantawid Pamilya, it added.

Second, the study said critics claim that Pantawid is a failure because its benefits are going to beneficiaries above the poverty line is a gross exaggeration.

In fact, 82 percent of the beneficiaries belong to bottom 40 income class and 53 percent are from the bottom 20 income class. It was also pointed out that Pantawid is one of the better targeted CCT programs in the world, it said.

The report said Pantawid not only had spillover effects of improved education, health and nutrition but that evidence indicates the grants do lead to less insurgent influence and fewer violent conflicts.

The benefits from reduced conflicts, greater social cohesion and improved social order can be viewed as public goods. These benefits provide yet another justification for investing public funds in Pantawid Pamilya, the paper said.

However, the study said there are important issues that need to be addressed to maintain and enhance the impact of Pantawid on the welfare of the poor.

On the size of grants, the paper said there are proposals to raise their amounts to enhance the impact of Pantawid Pamilya.

There is reason to believe that increased amounts would raise the impact of the program. But providing all beneficiary households bigger grants without piloting it would be risky, the study said.//

Author: Angela Celis
Date: January 16, 2017
Source: Malaya

HEALTH CARE in the countrys public hospitals is compromised by the maintenance of their assets, according to a policy note by the Philippine Institute for Development Studies (PIDS) released last Friday, Jan. 13.

The policy note, titled How budgeting practices on health-care equipment may fail government hospitals, said in part that, Based on the actual hospital expenditures on repair and maintenance and results from the FGD (focus group discussions), it can be construed that the selected hospitals do not have maintenance programs specific to their assets, especially the heavy equipment.

It was found that reported repairs and maintenance expenditure only took up 0.17-2.58% of the budget for maintenance and other operating expenses of public hospitals.
Generally, hospitals have a very low budget utilization or actual expenditure for repairs and maintenance, with some reporting not to have spent anything at all for their maintenance, said PIDS, adding:

All the selected hospitals reported that they have continued to use even the fully depreciated capital assets. Although hospitals are well aware of the protocol for handling fully dilapidated assets as stipulated by CoA (Commission on Audit), the scarcity of resources compels them to continue utilizing these equipment until the latter have reached their operational limit and/or a replacement arrives.
This practice has led to additional maintenance costs in terms of servicing the damage beyond their useful years and the replacement of their spare parts, the institute said, as it noted further: Spare parts of outdated models turn out to be more expensive particularly when they are not easily available.

In the end, health care is compromised by the obsolescence of the fully depreciated equipment, PIDS said.

All these confirm that depreciation costs are not being utilized as inputs to guide hospitals in capital management, the agency also pointed out.
The government should consider long-term capital investment fund, public-private partnership (PPP) arrangements for hospital equipment, output-based payment and improved data management and utilization for better budgeting system of public hospital facilities.
PIDS recommended the conversion of the medium-term Health Facilities Enhancement Program (HFEP), which sought to utilize the states budget for capital outlay (CO) in health, into a long-term capital investment fund, which will require public hospitals to submit long-term investment plans and maintenance programs.

There shall be a regular reporting system that would monitor and evaluate the effectiveness of the CO investment including financial, clinical care and quality of care measures, said PIDS.
The government should also consider allowing the private sector to invest in hospital equipment in a PPP scheme as well as provide incentives by shifting towards an output-based payment system for better quality health-care services.
PIDS also suggested the formulation of proper guidelines and protocols for budgeting and maintenance of equipment, as well as the implementation of the New Government Accounting System straight-line depreciation method, in calculating the depreciation costs.
PIDS further saw the need for the government to digitize financial processes and workflow by investing in information technology for more efficiency in budgeting and financial management in public hospitals.//

Author: Danica M. Uy
Date: January 16, 2017
Source: Business World

A study conducted by the Philippine Institute of Deve-lopment Studies (Pids) raised warning bells over higher- than-necessary conditional cash transfer (CCT) grants as this could lead to a culture of dependency among recipients.

The study, titled Pantawid Pamilya Pilipino Program: Boon or Bane?, was authored by Pids research fellows Aniceto Orbeta and Vicente Paqueo.

The authors recommended that the government first pilot a study of various cash grants before deciding on granting higher CCT amounts.

Much bigger grants, however, can change the household calculus in ways that would lead to the weakening of work
ethics and the emergence of dependency on government, as critics have warned, the study read.

The authors said that, while arguments supporting increased cash grant amounts for beneficiaries could enhance the impact of the CCT Program, increasing the amount without studying the impact of various levels of cash grants would be risky.

They said it would be more prudent for the government to see the impact of alternative grant amounts could be an incentive to become dependent on the government.

Providing all beneficiary households bigger grants without piloting it would be risky, the authors said. Relatively large grants could trigger unintended consequences on work ethics. Apart from the studying possible amounts for the CCTs, the authors said there is a need to rethink the conditions for the cash grants.

Orbeta and Paqueo said that, given the elementary enrollment rate is now at 100 percent and all CCT beneficiaries are now covered by Philippine Health Insurance Corp., other education and health-related conditions must be put in place.

The study found enrollment for elementary pupils remained high in the first two waves of the CCT implementation and enrollment among children aged 12 to 17 years saw an increase after Wave 2, when high-school children were included in the CCTs.

While the CCT has not eradicated child labor owing to the grants being insufficient to remove the practice, it has significantly contributed to its decrease.

In terms of health, the study found more children undergoing growth monitoring and receiving deworming pills, vitamin A and iron supplementation. Further, more mothers received ante-natal and postnatal care from health-care professionals.

Overall, the evaluations have shown that the poor, like anybody else, are rational on the use of their money. They respond to incentives, such as giving importance to socially desirable expenditures, like education and health, the authors said.

The CCT Program started with 284,000 beneficiary households in 2008. By 2015, beneficiaries reached 4.1 million households. In terms of population, the number of beneficiaries rose from 662,000 children aged 0-18 years old in 2008 to 10.2 million in 2015.

Today the program covers about 79 percent of poor households whose income is less than the amount needed to basic necessities.

The CCT extends a health grant amounting to P500 monthly year round and an education grant of P300 per child for 10 months each year to each participating household.

To receive these cash grants, pregnant women must avail themselves of pre- and postnatal care, and be attended during childbirth by a trained professional and parents or guardians must attend the family development sessions, which include topics on responsible parenting, health and nutrition.

Other conditions include children aged 0 to 5 must receive regular preventive health check-ups and vaccines; those aged 6 to 14 must receive deworming pills twice a year; and children between 3 and 18 must enroll in school, and maintain an attendance of at least 85 percent of class days every month.//

Author: Cai Ordinario
Date: January 15, 2017
Source: Business Mirror

The Conditional Cash Transfer Program (Pantawid Pamilyang Pilipino Program or 4Ps) is a smart populist program and its abolition or scaling down could damage the gains achieved especially on the welfare of poor children, according to state think tank Philippine Institute for Development Studies (PIDS).
But this does not mean there is no room for improvement, it pointed out.
In a discussion paper, PIDS said despite criticisms that the program promotes the culture of mendicancy and dependence, the 4Ps has become a highly popular and well-regarded program with international partners like the World Bank and Asian Development Bank, which consider the Pantawid as one of the best conditional cash transfer programs in the world.
The administration of then-President Gloria Macapagal-Arroyo developed 4Ps and tried it as a pilot project in a few locations in 2008.
Recognizing its potential, then-President Benigno Aquino 3rd started a massive expansion of the program in 2010, along with a series of measures strengthening its governance and management.
The objective of the program is to immediately ease poor families pain of deprivation and simultaneously enable and motivate them to raise the education, health and nutrition status of their children.
With increased human capital, these children would supposedly have a better chance of escaping poverty in the long run.
With this objective in mind, the government designed Pantawid Pamilya to assist the poor by providing them conditional cash transfers (CCTs). Unlike conventional social assistance, those grants are provided in exchange for certain actions [called conditionalities]that beneficiaries must comply with, PIDS said.
Starting with 284,000 in 2008, beneficiary households reached 4.1 million by 2015.
In terms of population, the number of beneficiaries rose from 662,000 children 0-18 years old in 2008 to 10.2 million in 2015.
Today, the program covers 79 percent of poor households whose income is less than the amount needed for basic necessities, PIDS noted.
PIDS said its impact evaluations showed that the Pantawid has kept children in school; decreased the time spent on paid work for children although it has not significantly decreased the incidence of child labor; improved access to essential health services even though its higher-level impact is mixed perhaps because of supply side issues; increased household expenditure on education as well as expenditure on clothing; shown that adult members of the Pantawid households are as industrious as their non-Pantawid counterparts as indicated by all aspects of the labor market outcomes from labor force participation, employment, hours of work and looking for work when unemployed; and decreased conflict incidents.
Overall, the evaluations have shown that the poor, like anybody else, are rational on the use of their money. They respond to incentives such as giving importance to socially desirable expenditures like education and health promoted by Pantawid which are known to be of little current importance to them because the prospective benefits are too far in the future, it added.
Indeed, Pantawid Pamilya is a smart populist program unlike other anti-poverty programs. It helps the poor with their urgent needs, while creating a more hopeful future for their children, PIDS said.
This alternative future, according to the think tank, is being created by helping the children of the poor develop greater capacity to eventually earn income through increased years of education.
In addition, the program paves the way for the poor childrens development in terms of mental capacity and other physical abilities, qualities associated with good health and nutrition, PIDS said.
This implies that the program supports interventions that would likely reduce the transmission of poverty from parents to children, the think tank added.
Therefore, the abolition or the scaling down of Pantawid would probably have damaging unintended consequences on the present and future welfare of poor children, it said.
PIDS added that such policy decision would arguably reduce beneficiary childrens opportunities for gainful jobs as well as their chances of moving out of poverty, when they become adults.
Improvement needed
Nevertheless, despite advances in social assistance, the 2015 Family Income and Expenditure Survey (FIES) showed that there remains a considerable gap between the average household income of the poor and the poverty threshold.
The gap is estimated to be 135.6 billion pesos in 2015. This is the amount of transfer needed annually to bring the income of all poor households to the level of the poverty threshold, it added.
Despite large increases in Pantawid budget, therefore, the financial challenge of helping the poor close the gap between their income and the poverty line remains substantial, PIDS said.
Moving forward, there are important issues that need to be addressed to maintain and enhance the impact of Pantawid on the welfare of the poor, it added.
Therefore, PIDS said the three important issues needed to be addressed were: the mixed findings regarding the impact of the program on outcome indicators; the desirability of raising the amount of grants provided; and the need to adjust the program conditionalities.//

Author: Cai Ordinario
Date: January 15, 2017
Source: Business Mirror

The government should create an agency focused on reforestation alone to build on the success of the National Greening Program (NGP), according to a study released by the Philippine Institute for Development Studies (Pids).
In a Policy Note, titled Taking Stock of the National Greening Program Six Years Hence, Pids research fellow Danilo C. Israel said if this is not possible, the Forest Management Bureau (FMB) of the Department of Environment and Natural Resources (DENR) must be ultimately responsible for all reforestation initiatives.
The national government should place the ultimate responsibility for all reforestation initiatives on the FMB. Thus, its conversion to a bureau should be seriously studied, Israel said.
Alternatively, the creation of a new agency tasked only with reforestation, possibly answering directly to the president, should be considered, he added.
Israel said this is one of the ways to boost the DENRs reforestation and rehabilitation efforts.
Currently, the DENR hires NGP coordinators and extension officers as contractual workers to manage and run the project, which is a double-edged sword.
Israel said that, while their lack of security of tenure can compel them to work and meet the project targets, they are not invested in the missions and mandates of the DENR.
He said this has an impact on project management and funding, as well as monitoring corruption in NGP activities.
The national government should strengthen the capacity of DENR personnel and POs [peoples organizations] to monitor corruption in NGP activities. For one, the implementation of an effective reward system for those who report illegal practices should be considered, Israel said.
The program, he said, must invest in organization development and the capacity-building of the POs to reduce conflicts that could undermine the gains of the NGP.
It must also put in place incentives for communities to protect and sustain the plantations in the long run, Israel said.
These could be in the form of harvesting rights, livelihood support, mechanisms for long-term financing, such as payments for ecosystem services schemes and addressing tenure issues.
The government must also review the design of the NGP in terms of individual species and mix of tree species planted, tree spacing and other important technical parameters.
The DENR should identify and include highly vulnerable areas in the site mapping and planning and then match species and spacing with the sites, Israel added.
In terms of hectares covered and seedling planted, the NGP was able to meet 113 percent and 90 percent of its targets, respectively, between 2011 and 2016.
Under the NGP, 1.34 million of the 1.5 million seedlings of various tree species were planted in 1.64 million hectares of the 1.45-million hectares target open, denuded and degraded forestlands.
The program allowed the Philippines to rank fifth among the countries worldwide with the most annual forest gain between 2010 and 2015.
Data from the Food and Agriculture Organization showed the countrys annual forest gain was 240,000 hectares, representing a 3.5-percent yearly increase in forest area.
Apart from forest area gained, the NGP was able to create 3.3 million jobs and employed 462,066 in upland and rural communities as of November 2016.//

Author: Cai Ordinario
Date: January 15, 2017
Source: Business Mirror