Q4 Lesson 5: The Service Sector Qualities of Filipino Workers in the Service

Sector
Service Sector
The service sector provides intangible goods, 1. Highly skilled workforce with a
more precisely services instead of physical strong work ethic
goods. This sector assists the other sectors in
A lot of Filipinos are highly skilled. Some may
their activities such as the transportation of
not have finished college, but they have gone
raw materials and finished products,
thru a vocational school that has given them
transferring of funds, as well as providing
the skills to be proficient in their work. Also, a
healthcare to those who work in the other two
lot of them have very good work ethics that
sectors. Just as what was mentioned in the
they can do their jobs well.
quote by James Fitzsimmons, that the service
sector facilitates the production and 2. World-class proficiency in English
distribution of goods, and supports other firms
in meeting their goals, and adds value to our Many Filipinos are very good English speakers
personal lives. especially those who work in call centers and
in the hospitality industry. This is why the
The service sector in the Philippines is divided Philippines is among the top choices among
into three categories, namely, services that foreign investors.
facilitate exchange (wholesale/retail stores,
telecommunication, banks, etc.), services that 3. Intercultural systems
change the condition of a good or product
The Philippines is a culturally diverse country,
(repair shops, transport & storage, etc.), and
and this is evident in Filipinos being able to
services that change the physical or mental
adapt easily to other cultures. This makes the
condition of people (resorts, restaurants,
Philippines an ideal choice for BPOs or
schools, healthcare providers, etc.), to name a
Business Process Outsourcing or what your
few, which comprises different activities in
know as call centers.
each category (see photo on the right).

4. Self-reliance Filipinos are known to

The service sector is a big contributor to the
be self-reliant. This makes them
country's economic activity. As you can see in
dependable in the workplace.
the data on the right, it shows that the service
sector is indeed a major contributor to the Despite the qualities of our Filipino workers,
Philippine economy, it accounted for 56.7% of they also face challenges.
the GDP in 2014. It may be old data, but it
does show how big a contribution this sector
gives to the economy.
Job security and labor flexibility Low wages and income

Filipino workers fear that they could lose their Workers are never paid wages corresponding
jobs anytime. Companies seldom regularize to their labor. The living wage is the amount of
their employees or workers designating most family income needed to provide for the
of them as permanent casuals or also known family's food and other basic needs, with
as contractual with contracts ranging from 5 to enough allowance for extra needs, social
6 months and others for as short as three security, and savings. Most of the time,
months. This problem is known as workers do not receive the living wage, instead
contractualization, which is the process of receive the minimum or low wage. Although
hiring a worker continuously for a period of not there is a minimum wage rate set by the law, it
more than 5 months. is almost always not enough, especially for a
family of four, and most Filipinos have more
Contractualization is actually a loophole in
than four members in a household.
Presidential Decree #442. There is no such
thing as contractualization in P.D. 442, Minimum wage
instead, it states that the probationary period is
The minimum wage is the lowest allowable
only up to 6 months, after which, the employer
wage rate paid to workers as mandated by
should regularize the employee if he or she
law. This is set by the government. The
qualifies or passes the probationary
amount varies depending on the type of job.
qualifications. This is the loophole that is
thought to be the contractualization law, where
in fact, it is a loophole that companies use to
hire workers for only 6 months for a specific
job. Companies do this to avoid the workers
becoming regular because when an employee
becomes permanent, they are entitled to
receive higher wages and other benefits of a
regular employee. And all these are
shouldered by the employer.

Poor living conditions

Many Filipino workers live below the poverty

line, they have a hard time making both ends
meet. Most live in squatter areas where
sanitation is almost non-existent, thus
malnutrition and diseases are almost a regular
occurrence. The lack of housing, as well as
poor quality of education, contributes to the
low performance of workers. One of the major
causes of poor living conditions is low wages.
Q4 Lesson 6: The Informal Sector page, they tend to just stay at the current state
they're in and not look to improve or expand.
Informal Sector

This sector of the economy is known by Jobs are temporary

several names. Informal, underground, Most jobs in the informal sector are temporary.

unofficial, illegal, black market, or unrecorded Some of the people who work in this sector

economy. It is known by these names because are actually college graduates. But since they

the transactions in this sector are (1) not cannot get a job immediately after graduation,

recorded directly to the GDP, (2) it does not they work in the informal sector in whatever

have licenses hence it is not reported and capacity they can while they are searching for

therefore it avoids taxes and regulations, and a more permanent job to be offered.

(3) some of it is intentionally hidden.

Health and safety are always at risk

This part of the economy is comprised of Most of those who work in the informal sector

mostly poor people who are just trying to make are susceptible to health hazards. A lot of

a living, to be able to put food on the table and times they are on the side of the streets selling

a roof above their heads. Most activities in their products thus their health is almost

this sector are not illegal, the fishball vendor always exposed to dangers of sickness,

you buy your afternoon snacks from, the pollution, even accidents.

trisikad that sells your favorite banana-q, or

your classmate or friend that sells you load for More labor-intensive

your internet data so you could play Mobile People who work here do everything

Legends are some examples of the informal themselves. They do not have people who

sector. But some of the activities in this sector work for them, so they have to do all the

are also illegal, that is why it is called the black preparations and all the selling. Take for

market, and that part is hiding from the example an inasal vendor. In the morning he

authorities. would buy the ingredients for the inasal, then

in the early afternoon, he would prepare the

Despite its names, there is nothing inasal. Then by around 5 in the afternoon until

underground about the informal economy. It is night time he would sell the inasal to people

out there in the open and we see it every day. going home from work. After he has sold

And let us be honest, most of us, if not all of everything he has or when there are no more

us, do transactions in the informal economy. customers, he would go home and rest. The
next day the cycle would continue. Some

Challenges of Informal Sector would probably have help from their children
or spouse, but definitely, they don't hire people

Low levels of productivity to work for them because they cannot afford it.

People in this sector tend to not strive hard. As

you have seen in the video on the previous Violation of minimum wage law
Most of those who work in this sector work for
themselves. but there are those that have a
sort of an employer. And this employer does
not follow the minimum wage law. Most of the
time it would be a percentage of what was
earned for the day. If the person did not sell
much, then he/she does not get much as well.
Non-payment of taxes
Establishments in the informal sector are not
registered, and therefore, do not pay taxes.
This is also brought upon a distrust of the
government. So, the government does not
earn anything from this sector because they
do not pay taxes. But if the government is not
transparent with what it does, so would the
people in this sector.
Absence of social protection and benefits
And because people in this sector work to
make ends meet, they do not have social
benefits like SSS, medical insurance, and
pension that people who work regular jobs
have.
Positive effects of Informal Sector
On the other hand, the informal sector can
provide the economy with an operative and
entrepreneurial spirit that could lead to more
competition and higher efficiency. Also, though
the informal sector may not be paying taxes, it
doesn't mean that it no longer contributes to
the GDP of the Philippines. A lot of these
sellers in the informal sector purchase their
ingredients from the formal economy and just
sells them in the informal economy. So,
indirectly, it still contributes to the GDP, and
considering how big the informal sector in the
Philippines is you can just imagine how much
it contributes to the GDP.
In conclusion, just because they do not pay
taxes, it does not mean it no longer contributes
to the economy.

Negative Effects of Informal Sector

On one hand, the relationship between the
government and its people is weak, especially
people who are in the informal sector. People
do not trust the government because of
corruption. They believe that they should just
fend for themselves.