Philippine BPO sector blasted by critics

Reading Time: 3 minutes

CallcenterThe Philippine government’s enthusiastic support for the Business Process Outsourcing (BPO) sector is mainly a “hype” coming at the cost of poor pay and labour conditions for BPO workers, critics in the country have said, adding that BPO offices are nothing more than “electronic sweatshops” for most workers.

The sector “has been played up as a source of resilience for the economy,” said Rhea Padilla, spokeswoman of Ibon Foundation, a socio-economic research firm  in Quezon City.

“However, despite a relatively large increase in employment and investments in recent years, its significance in the context of larger economic development is less than projected,” she said.

“The maximum contribution to the economy that can be attributed to the BPOs is barely two per cent of the country’s gross domestic product and some 11 per cent of total exports,” she added, a statement that stands in sharp contrast to the government’s claims that the BPO sector contributes 5 per cent to GDP and more than 20 per cent to exports.

Padilla is supported by an analysis by the UN Conference on Trade and Development (UNCTAD) which warned in 2012 that there was a danger of countries such as the Philippines becoming too dependent on foreign direct investment in service sectors like BPO. While there were distinct advantages such as relatively higher income for workers and low investment requirements for companies, by their nature BPOs were easy to establish but also easy to lose, the UNCTAD said.

Though BPO and IT-related activities account for a growing slice of the Philippines’ GDP and provide employment for more than 600,000 people, the UNCTAD report noted that more was needed to be done to maximise developmental benefits from the sector so as to protect against what it called its “footloose” nature.

The sector is also largely seen as lacking high-value non-voice services, such as financial, accounting and engineering tasks, which puts pressure on export margins and will require higher skills standards of workers in the future.

Low human capital costs in the Philippine BPO sector, often cited as one of the major draws for foreign investors to set up shop in the country, will also only be an advantage as long as the growing BPO workforce is willing to cope with poor labour conditions until it backfires.

A study conducted by the church-based Ecumenical Institute for Labour Education and Research found that occupational health risks among BPO workers were “very serious and life-threatening.” Among the health concerns cited in the study are sleeping problems, over-all fatigue, headaches, chest and back pains, voice problems and mental stress.

Adding to that,  provisions of the new Guidelines on Flexible Work Arrangements issued by the Philippine Department of Labour and Employment encourage BPO companies to implement overtime without pay, shift reduction, forced leaves, rotation, compressed work week, and other unfavourable regulations for workers.

The low salary is a double-edged topic. The minimum wage for non-agricultural workers in Manila is currently 8,500 pesos per month ($208), in Cebu, another BPO hub, just 5,800 pesos ($142), which is around 70 per cent and 45 per cent, respectively, of the minimum salary for unskilled workers recently imposed in Thailand.

“Having cheap and young labour force which is paid just a fraction of what counterparts in the region, let alone North America are making is nothing to be proud of,” said Padilla.

However, a study by the International Labour Organisation (ILO) said that the monthly salary of an experienced BPO worker can reach 17,000 pesos  ($415) per month and is beefed up with meal and transport allowances. But this comes at the costs of irregular working hours and health concerns. Around half of the BPO workers were suffering from insomnia, and the majority of them have to cope with high levels of work-related stress, such as harassment from irate clients, excessive and tedious workload, performance demands, monotony and regular night work, the ILO study said.

 

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Reading Time: 3 minutes

The Philippine government’s enthusiastic support for the Business Process Outsourcing (BPO) sector is mainly a “hype” coming at the cost of poor pay and labour conditions for BPO workers, critics in the country have said, adding that BPO offices are nothing more than “electronic sweatshops” for most workers.

Reading Time: 3 minutes

CallcenterThe Philippine government’s enthusiastic support for the Business Process Outsourcing (BPO) sector is mainly a “hype” coming at the cost of poor pay and labour conditions for BPO workers, critics in the country have said, adding that BPO offices are nothing more than “electronic sweatshops” for most workers.

The sector “has been played up as a source of resilience for the economy,” said Rhea Padilla, spokeswoman of Ibon Foundation, a socio-economic research firm  in Quezon City.

“However, despite a relatively large increase in employment and investments in recent years, its significance in the context of larger economic development is less than projected,” she said.

“The maximum contribution to the economy that can be attributed to the BPOs is barely two per cent of the country’s gross domestic product and some 11 per cent of total exports,” she added, a statement that stands in sharp contrast to the government’s claims that the BPO sector contributes 5 per cent to GDP and more than 20 per cent to exports.

Padilla is supported by an analysis by the UN Conference on Trade and Development (UNCTAD) which warned in 2012 that there was a danger of countries such as the Philippines becoming too dependent on foreign direct investment in service sectors like BPO. While there were distinct advantages such as relatively higher income for workers and low investment requirements for companies, by their nature BPOs were easy to establish but also easy to lose, the UNCTAD said.

Though BPO and IT-related activities account for a growing slice of the Philippines’ GDP and provide employment for more than 600,000 people, the UNCTAD report noted that more was needed to be done to maximise developmental benefits from the sector so as to protect against what it called its “footloose” nature.

The sector is also largely seen as lacking high-value non-voice services, such as financial, accounting and engineering tasks, which puts pressure on export margins and will require higher skills standards of workers in the future.

Low human capital costs in the Philippine BPO sector, often cited as one of the major draws for foreign investors to set up shop in the country, will also only be an advantage as long as the growing BPO workforce is willing to cope with poor labour conditions until it backfires.

A study conducted by the church-based Ecumenical Institute for Labour Education and Research found that occupational health risks among BPO workers were “very serious and life-threatening.” Among the health concerns cited in the study are sleeping problems, over-all fatigue, headaches, chest and back pains, voice problems and mental stress.

Adding to that,  provisions of the new Guidelines on Flexible Work Arrangements issued by the Philippine Department of Labour and Employment encourage BPO companies to implement overtime without pay, shift reduction, forced leaves, rotation, compressed work week, and other unfavourable regulations for workers.

The low salary is a double-edged topic. The minimum wage for non-agricultural workers in Manila is currently 8,500 pesos per month ($208), in Cebu, another BPO hub, just 5,800 pesos ($142), which is around 70 per cent and 45 per cent, respectively, of the minimum salary for unskilled workers recently imposed in Thailand.

“Having cheap and young labour force which is paid just a fraction of what counterparts in the region, let alone North America are making is nothing to be proud of,” said Padilla.

However, a study by the International Labour Organisation (ILO) said that the monthly salary of an experienced BPO worker can reach 17,000 pesos  ($415) per month and is beefed up with meal and transport allowances. But this comes at the costs of irregular working hours and health concerns. Around half of the BPO workers were suffering from insomnia, and the majority of them have to cope with high levels of work-related stress, such as harassment from irate clients, excessive and tedious workload, performance demands, monotony and regular night work, the ILO study said.

 

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