International Human
Resource Management
Guide To
THE PHILIPPINES
Roneal Jit
Michael Corbett
Ahmad Marda
Yvette Jaquez
Joe Huang
IHRM Guide to The Philippines
• Host Country Profile: Philippines
• Parent Country Profile: United States
• US-Philippines Cultural Gap Analysis
• Company Case Study: Ford Motor Co.
• IHRM Issues
• Role of IHRM in Cross Cultural Ethical
Issues and Corporate Social Responsibility
Country Profile:
Republic of the Philippines
Geography
Area: 300,000 sq. km. (117,187 sq. mi.).
Capital: Manila
Terrain: Islands, 65% mountainous, with
narrow coastal lowlands.
Climate: Tropical.
People
Population (2000 census): 76.5 million. Government’s
estimate for 2003: 82.0 million
Annual growth rate: 2.36%.Ethnic groups: Malay,
Chinese.
Religions: Catholic 85%, Protestant 9%, Muslim 5%,
Buddhist and other 1%.
Languages: Tagalog, English, language of government
and instruction in education.
Education: .Literacy: 92.3%.
Life expectancy ( 2003): 67.2 yrs. for males; 72.5 yrs. for
females.
Work force ( 2003): 34.6 million. Services (including
commerce and government): 48%; agriculture: 36%;
industry: 16%.
Government
Type: Republic.
Independence: 1946.
Constitution: February 11, 1987.
Suffrage: Universal, but not compulsory, at age 18.
Home Country Profile:
United States
• Economic & Military Super Power
• Characteristics of Americans:
• Independent
• Straight Forward
• Value Time
• Current Issues
• Outsourcing
Cultural Gap Analysis:
US-Philippines
• Shared History
• Institutions
• Family Values
• Education
• Work Norms
Ford Motor Company
• History and Business Profile
• Mass Production
• Globalization
• Company Financial
IHRM ISSUES
Target Country: Philippines
Parent Country: US
Company: Ford Motor Co.
ASEAN Ford
• Confidence
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Economic
Employee
Environment
Growth
IHRM & Ford
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Compensation & Recognition
Staffing
Development
Cultural Gap
MAP
• “The skillful management of people turns out to be the most
critical single ingredient to helping business survive &
excel…”
“People Vision”
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Continued Education
Awareness
Empowerment
Open-Book
Responsibility
Efficient Communication
• Increased Productivity &
Utilization
• 1991- 10%
• Today- 64% &
70%
Export Production
The BIG Picture
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Employers Confederation of the Philippines (EcoP)
Social Leadership
Human Resource Development
“Big Brother – Small Brother”
An Outsider’s Opinion
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Expatriates rank Philippines #2
Friendly Attitude
Education
Housing
Health Care
Sporting & Recreation
Role of IHRM in
Cross Cultural Ethical
Issues &
Corporate Social
Responsibility
Corporate Social Responsibility
• Definition and Scope
• Globalization Effect
• Legal issues
• Home Country
• Host Country
• International Standard
5 Stages of Corporate Responsibility
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Defensive
Compliance
Managerial
Strategic
Civil
Human Resources Training and Stages of
Social issues
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Latent
Emerging
Consolidating
Institutionalization
The Philippines
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Political Environment
Social Environment
Economic Condition
Labor Practices
Corporate Strategy and Responsibility
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Economics
Social
Markets
Outsourcing
Fair Pay / Fair Labor
Work Conditions
Special Economic Zones (SEZ)
• Ford Philippines Assembly Plant
• No. 1 American Road, Greenfield Automotive Park,
Special Economic Zone, Sta. Rosa, Laguna, Philippines 4026
• Zones are a key role in attracting new investors to the
country
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•
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Tax incentives
Low corporate income tax rates
Indirect access to governmental administrative services
Minimum government influence
Administers their own economic, financial, industrial and
tourism development
Areas of Investments
The SEZ
• Abuse in the SEZ
• Many industries using extralegal methods are successful
in preventing the formation of unions
• Poor working conditions
• Ford Motor Co.
• Keeping their workforce happy to avoid unionization
• Provide sufficient benefits and rights to the trained
workforce
Labor Force
• 1996 Labor Code
• Allow all private and public sectors workers with the exception of the
military and police, to freely associate and to form or join a union
• Forced labor is prohibited by the Constitution, but bonded labor of
children known to occur
• Children in the labor force
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Approximately 3.7 million children are economically active
At least 2 million are working in hazardous condition
Can work at the age of 12 with parental consent
Can not work more than 6 hours a day and can not work at night
Cont.
• Standard workweek
• 48 hours for most industries
• 40 hours for government workers
• Work beyond 8 hours in any given day requires payment
of 125 percent the regular wage
• No limit on overtime hours
• Must have 1 day of rest per week
LABOR FORCE STATISTICS
INDICATOR
Household Population 15 Years Old and Over (000)
2004
2005p
52,675
53,975
35,447
35,664
31,547
31,634
Less than 40 Hours (part-time) (000)
11,095
11,323
40 Hours and Over (full-time) (000)
20,028
19,814
Did not work during the Past Week (000)
423
496
Mean Weekly Hours Worked
41.9
NA
5,522
5,098
3,900
4,030
7.9
NA
67.3
66.1
89
88.7
17.5
16.1
11
11.3
Labor Force (000)
Employed (000)
Underemployed (000)
Unemployed (000)
Mean Weeks Looking for Work
Labor Force Participation Rate (%)
Employment Rate (%)
Underemployment Rate (as % of Employed)
Unemployment Rate (%)
Note: Details may not add up to totals due to rounding, p Preliminary, NA Not available.
Source of data: National Statistics Office, Labor Force Survey.
Wages
• Minimum wage
• Established in 1950, based on democratic principles
• Wage boards set minimum rates in each of the country’s
15 administrative regions
• Local prices, rates of inflation, need to attract
manufacturing investment, and economic stability of the
region
Cont.
Currency Conversion Results
Symbol
U.S. Dollar
USDPHP=X
1
Exchange
Rate
Apr 29
http://finance.yahoo.com/currency/convert?amt=1&from=USD&to=PHP&submit=Convert
Philippine Peso
54.000
54.000
Category
OT Work on Regular Day
OT work during Rest Day or Special Public Holiday
First 8 hours
In excess of the 1st 8 hours
OT work on Special Public Holiday falling on employee’s
rest day
First 8 hours
In excess of the 1st 8 hours
OT work on Regular Holiday
First 8 hours
In excess of the 1st 8 hours
OT work on Rest Day falling on a Regular Holiday
First 8 hours
In excess of the 1st 8 hours
Source: Department of Labor and Employment (http://www.dole.gov.ph)
Computation (in Pesos)
125% * Rate/Hour
130% * Rate/Hour
130% * Rate/Hour+30% of(130% of Rate/Hour)
150% * Rate/Hour
150% * Rate/Hour+30% of(150% of Rate/Hour)
200% of Rate/Hour
200% of Rate/Hour + 30% of (200% of Rate/Hour)
260% of Rate/Hour
260% of Rate/Hour + 30% of (260% of Rate?Hour)
Family Income and Expenditures
INDICATOR
2000
2003
Average Family Income
145,121
130,604
Average Family Expenditures
118,839
109,988
26,282
20,615
Average Family Savings
MANDATORY EMPLOYMENT CONTRIBUTION
13th Month Pay
By law, companies are required to give its employees a 13th pay equivalent to one (1) month salary.
Social Security
Systems (SSS)
Contributions
As mandated by law, both employer and employees are to contribute for the social security benefits of the
employees in accordance with the following schedule:
Source of data: National Statistics Office (NSO), 2003 Family Income and Expenditures Survey (Preliminary Results).
Union
• The Constitution and the Labor Code guarantee workers’
rights to self-organization.
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Common in the manufacturing sectors
Secure a labor contract from the employer
Defines the rights and duties of
Covers wages, hours of work and working conditions
Regions
Metro Manila) private sector workers & employees
Wage Order # NCR 10 (July 10, 2004)
private sector workers and employees
Daily Minimum Wage Rates
Non-Agriculture Industries*
(in Pesos/day) - As of September 2004
P 300.00
CAR (Cordillera Autonomous Region)
P 205.00
Region I
P 175.00
Region II
P 193.00
Region III
P 243.50
Region IV
P 237.00
Region V
P 194.00
Region VI
P 190.00
Region VII
P 208.00
Source: Department of Labor and Employment (http://www.dole.gov.ph)
Note: Wage per region inclusive of COLA / ECOLA (which rates varies per region).
Cont.
INDICATOR
Existing Unions
Membership (000)
Existing Collective Bargaining Agreements (CBAs)
Workers Covered (000)
Sources of data: Bureau of Labor Relations, Statistical and Performance Reporting System (SPRS) (2003).
2003
2004 p
16,091
16,724
1,517
1,572
2,842
2,798
556
555
Work Conditions
• Labor Laws (Based on U.S)
• 40 hour work week
• Safe & Healthy Work environment
• Paid Vacation
• Minimum wage $4.55 for non-agriculture, $2.45 for
Agriculture
• Child Labor, 16 is the minimum working age by law.
Conclusion
• Philippines and IHRM
• Historic and Cultural Ties
• Adoption of American Standards and Norms
• Role of IHRM
• in Cross Cultural Ethical Issues and Corporate Social
Responsibility