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Reforming the Philippine Labor Market

Author

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  • Gerardo P. Sicat

    (School of Economics, University of the Philippines Diliman)

Abstract

Philippine labor market policies, in the presence of a high degree of excess labor supply, are highly regulated and they tend to be along standards of highly developed markets. The policies adopted by the government are more pro-employed labor than to promote the overall employment of the labor force. These policies made the country to miss the path of labor intensive development in industrial enterprises, a pattern typical of the early growth of East Asian economies. These policies strengthened a powerful labor bureaucracy in the government. Side effects of the regulations and the culture surrounding the disposition of labor management issues encouraged rent-seeking and other motivational distortions in the behavior of labor when employed. The welfare policies as developed have contributed to the distortion in labor skill formation, the tendency to provide an increase of emoluments without any link to productivity growth, and so on. The last part of the essay focuses on the areas of reform suggested by this state of affairs. The balance between welfare and employment creation needs to be continually brought in the forefront. In undertaking reforms, productivity change needs to be placed in the center stage of reforms. Finally, it is argued that the labor sector would find it in its interest to deal positively with the challenges of globalization. This means recognizing that labor market policies need to adjust to global competition. This further means that it emphasize the need to accept that economic liberalization would require encouraging the growth of investments from all sources – including foreign direct investments. Such a route will create jobs and improved welfare for the working man.

Suggested Citation

  • Gerardo P. Sicat, 2004. "Reforming the Philippine Labor Market," UP School of Economics Discussion Papers 200404, University of the Philippines School of Economics.
    • Handle: RePEc:phs:dpaper:200404
    as

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    File URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/113/107
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    References listed on IDEAS

    as
    1. Mike Hobday, 2001. "The Electronics Industries of the Asia–Pacific: Exploiting International Production Networks for Economic Development," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 15(1), pages 13-29, May.
    2. Michael Hobday, 1995. "Innovation In East Asia," Books, Edward Elgar Publishing, number 226.
    3. Gerardo P. Sicat, 2002. "Philippine Economic Nationalism," UP School of Economics Discussion Papers 200201, University of the Philippines School of Economics.
    4. Paul F. M. Krabbe & Eddy M. M. Adang & Peep F. M. Stalmeier & Bruce R. Schackman & John Brazier & Milton C. Weinstein, 2003. "Letter to the Editor," Medical Decision Making, , vol. 23(6), pages 542-543, November.
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    Cited by:

    1. Campos, Nauro F. & Nugent, Jeffrey B., 2012. "The Dynamics of the Regulation of Labor in Developing and Developed Countries since 1960," IZA Discussion Papers 6881, Institute of Labor Economics (IZA).
    2. Gerardo P. Sicat, 2004. "“Successes” and Adjustment in the Philippine Labor Market," UP School of Economics Discussion Papers 200403, University of the Philippines School of Economics.
    3. Sy, Deborah Kim & Hosoe, Nobuhiro, 2023. "Consequences of a minimum wage increase in a migrant-sending country," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 1057-1066.
    4. Son, Hyun, 2008. "Explaining Growth and Inequality in Factor Income: The Philippines Case," ADB Economics Working Paper Series 120, Asian Development Bank.
    5. Deborah Kim Sy & Nobuhiro Hosoe, 2022. "Intended and Unintended Impacts of Minimum Wage Change: The Pivotal Role of Migration in the Philippines," GRIPS Discussion Papers 22-08, National Graduate Institute for Policy Studies.
    6. Sy, Deborah Kim & Hosoe, Nobuhiro, 2022. "Intended and Unintended Impacts of Minimum Wage Change: A Computable General Equilibrium Model Analysis with Cross-border Labor Mobility in the Philippines," Conference papers 333454, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

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