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A GLOBAL
outsourcing and consultancy firm cited high wages, a
fall in Philippine labor-force productivity and poor
business infrastructure as major threats to the
country’s manufacturing and outsourcing competitiveness.
According to a Mercer study titled,
“Com-petitiveness: How does the Philippines measure
up?”, the Philippines has the highest minimum-wage
rates compared with its closest investment
competitors—identified as Thailand, Vietnam, Indonesia
and especially China—for manufacturing, and India for
outsourcing. Details of the study were discussed during
a press briefing held Friday.
Additionally, the study claimed that
Philip-pine labor-force productivity increased by only
0.9 percent in 2000-2005 compared with a 2.3-percent
increase in the years 1995-2000.
Finally, poor business infrastructure
such as roads, the high cost of electricity and frequent
power disruptions hampers growth and, subsequently,
attractiveness. The study reported that (Metro) Manila
has the highest power rates in its survey of 10
Southeast Asian cities.
“The economy has been growing but the
other factors are not keeping pace,” said Su-Yen Wong,
managing director of Mercer Asean at the briefing.
She said the Philippines “has many
elements that make it an attractive investment,” with
many companies from India looking to the Philippines to
relocate, but the factors cited were hampering the
country.
She added that as a result, many large
multinationals such Intel, Toshiba and UPS have turned
to alternatives like Vietnam which, according to the
study, has the lowest wage rates among the Philippines’
competitors.
While high wage rates cannot be
decreased, due to external factors such as inflation and
the Philippine labor force being generally
“well-educated,” Wong also identified as key factors
labor-force productivity and business infrastructure.
“A challenge for the Philippines will be
how to improve productivity through more effective
training, and better selection processes,” she said,
adding that this is the way to sustain higher wages.
She said better business infrastructure
such as lowering of power costs will go “a long way” in
helping energy-intensive industries such as those in the
manufacturing sector.
Recently, in Mercer’s “Quality of Living
Global City Rankings 2008” report, it was stated that
Manila has slipped, dropping 8 points in its quality of
living ranking from 123 to 131.
Wong added that this is another factor
that could be cited for investors seeking alternatives
to the Philippines. “Talent today is very mobile; it
goes where it wants to go,” she said, adding that it
also goes back to standard of living as a measure of how
attractive a country is. |
