THE average cost of labor in the country shouldered by employers was only slightly over a hundred pesos per hour before the pandemic, according to the latest data from the Philippine Statistics Authority (PSA).
Based on the PSA’s Module on Labor Cost of Employees (LCE) for 2019, the labor cost was estimated at P125.17 per hour. The average annual labor cost per employee was estimated at P304,691 in 2019.
“[Labor cost is the] cost incurred by the employer in the employment of labor in a specified reference period. The statistical concept of labor cost as consisting of remuneration for work performed, payments in respect of time paid but not worked, bonuses and gratuities,” the PSA explained.
“[It also includes] the cost of food, drinks and other payments in kind, cost of workers’ housing borne by employers, employers’ social security expenditures, cost to the employer for vocational training, welfare services and miscellaneous items, such as transport of workers, work clothes and recruitment, together with taxes regarded as labor cost,” it added.
By industry, PSA said establishments engaged in financial and insurance activities posted the highest labor cost at P347.49 per hour.
This was followed by electricity, gas, steam and air conditioning supply at P225.93 and water supply; sewerage waste management and remediation activities at P192.2 per hour.
As a share of total cost, labor cost accounted for 26.9 percent on average. The share varies per industry with professional, scientific and technical activities having the highest percent share of labor cost relative to their total cost at 31.8 percent.
This was followed by Transportation and storage with labor cost accounting for 30.8 percent; Education except public education, 29.6 percent; and accommodation and food services, 29.3 percent.
Lowest share of labor cost
However, PSA data showed the lowest share of labor cost to total cost was recorded in mining and quarrying at 16.6 percent.
“Labor cost statistics (LCS) is one of the basic labor and employment statistics generated and compiled by the Philippine Statistics System in the country following the major provisions of Labour Statistics Convention 160 (C160) for the International Labour Organization (ILO), to which the Philippines is a member state,” PSA explained.
“The LCS intends to provide data that would address the gap in wage statistics, specifically on the evolution of labor cost and its various components,” it added.
Based on PSA data, a total of P1.66 trillion comprised the annual labor cost incurred by all establishments employing 20 or more workers in the Philippines for their employees in 2019. This was 55.9 percent higher than the P1.066 trillion recorded in 2013.
Across industries, the data showed financial and insurance activities recorded the highest annual labor cost per employee with P763,591. This was followed by electricity, gas, steam and air conditioning supply at P526,401.
Comparatively high annual labor costs per employee were also found in water supply; sewerage waste management and remediation activities at P435,457; information and communication at P410,285; and repair of computers and personal and household goods; other personal service activities at P407,027.
“Remarkably, the lowest annual labor costs per employee was posted in transportation and storage at P197,588,” PSA said.
The annual cost of labor per employee in the Philippines was mainly by direct wages and salaries, which accounted for 77.6 percent of the cost or P236,405 per employee in 2019.
This was followed by the expenses incurred by employers for social security, and bonuses and gratuities at P32,327 or 10.6 percent and P28,598 or 9.5 percent, respectively.