Over the years, employee productivity has always been a center of discussion in the academe, business community, and trade unions, especially when there is talk of wage increases.
The intent of the law creating the regional tripartite wage and productivity boards is clear. Otherwise, it would not have included the word “productivity” in the law.
Having said that, how productive really is our labor force? The Asian Development Bank compared the productivity of 15 Asian countries. With Japan ranked the highest and Nepal in the lowest totem pole, the Philippines was ranked 7th. In the ASEAN countries, the Philippines’ labor productivity was higher than Vietnam, Laos, Timor-Leste, Myanmar, and Cambodia. Singapore takes the lead, followed by Malaysia, Brunei and Indonesia.
It is extremely important to compare our productivity with that of our neighboring countries as we compete with them in a highly globalized competitive economy.
Measuring Productivity
The Asian Development Bank use the formula of:
Gross Domestic Product
_____________________
No. of Employed Persons
To my mind, an organization is productive if it achieves its business goals by transferring inputs to outputs at the lowest cost. As such, productivity implies a concern for both effectiveness and efficiency. Effectiveness refers to the organization’s ability to achieve its goals, while Efficiency is the ratio of effective output to the input required to achieve it.
For example, if truck driver A delivers his goods to Baguio in six hours at seven liters per kilometer while truck driver B delivers his goods to Baguio in six hours (identical truck model and load) at 10 liters per kilometer both are effective in that they achieve their goals of delivering the goods to Baguio. But obviously, truck driver A is more efficient than B because he achieved his goal at a lower cost.
In short, productivity is attributed to a worker’s ability to achieve the company’s goal at the lowest cost. Machines can affect productivity, but all things being equal in machines’ good working condition, it is the worker’s individual efficiency that can distinguish him from other workers.
A critical look at our holidays
Holidays are essential to mark a significant historical or religious event. But too many holidays impact adversely on the nation’s productivity, a source of complaints by foreign investors. Let’s take a summary of our holidays.
We have 10 regular holidays which include New Year and Christmas day, four special holidays, four more added which includes Chinese New Year. All told we have a total of 18 regular and special holidays! Don’t count the special holidays declared by a city. You add the 19 long holiday weekends under the pernicious “holiday economics” concept.
Since total working hours and days are essential components in determining productivity versus outputs, how in heaven’s name can we catch up with our neighbors in labor productivity?
In fairness, Congress passed a bill giving productivity incentives to employers and employees, R.A. 6971, known as the “Productivity Incentives Act of 1990.” It provides a productivity bonus to workers, which shall not be less than half of the percentage increase in the productivity of the business enterprise. Conversely, it also grants tax incentives “through special deduction from gross income equivalent to 50% of the total productivity bonuses given to employees under the program over and above the total allowable ordinary and necessary business deductions for said bonuses under the National Internal Revenue Code, as amended.”
Has this law gotten off the ground? Hardly. Firstly, management has to reach an agreement with the workers. There is no agreement and no productivity incentives. Such productivity agreements shall supplement existing Collective Bargaining Agreements.
In short, the employer could not install a productivity incentive scheme without consulting the employees of its own volition and management prerogative. Neither could the employer diminish nor increase the incentives without negotiating with the employees in unorganized companies and the union in organized companies. Most of the covered employees must duly ratify the agreement in writing. Any dispute or disagreement in its implementation becomes a grievable issue that can be grounds for a strike. Now, why should a peaceful company look for such potential trouble?
If this requirement is disincentive enough for employers, let’s consider the tax incentives. Firstly, the agreement must be submitted to the Regional Tripartite Wage and Productivity Board, which will review the program within 60 calendar days. Where manpower training and special studies are included in the program, “same will be reviewed by the appropriate Regional Manpower Development Office(RMDO) of the NMYC” (now TESDA). Then, once accredited by the RMDO, it shall go through the labyrinthian process of tax incentives by the BIR.
Given the bureaucratic red tape that an employer has to undergo to get the tax incentives, isn’t it any wonder that this much-vaunted Productivity Gainsharing Program under this law hasn’t gone first base?
(Author is Vice President of ECOP; email address: [email protected])