The Philippine Labor IndexThe Philippine Labor Index … a work in progress… a work in progress … a progress in work … a progress in work

ILO/UNDP-ILS/BLES PROJECT

ISO 9001:2000 Certified

Institute for Labor Studies Bureau of Labor and Employment Statistics

Contents of Contents of PresentationPresentation

The Philippine Labor IndexThe Philippine Labor Index and its Usesand its Uses Decent Work and its DimensionsDecent Work and its Dimensions The PLI Component IndicatorsThe PLI Component Indicators The Methodology for Index The Methodology for Index

ConstructionConstruction The PLI and its Dimension Indices The PLI and its Dimension Indices Comparisons with Related Comparisons with Related

Development IndicatorsDevelopment Indicators Issues and ConcernsIssues and Concerns

The Philippine Labor Index and its Uses

What is the PLI?What is the PLI?

Philippine Labor IndexPhilippine Labor Index

… … is a summary measure that is a summary measure that monitors the progress made monitors the progress made towards achieving the labor towards achieving the labor and employment goals of the and employment goals of the country. country.

What are the uses of the PLI?What are the uses of the PLI?

• Provides a balanced and objective Provides a balanced and objective assessment of collective efforts to attain assessment of collective efforts to attain the country’s employment goalsthe country’s employment goals

• Provides useful data for policy-makers Provides useful data for policy-makers on areas that need to be enhanced/ on areas that need to be enhanced/ strengthenedstrengthened

• Complements other development Complements other development indicators in monitoring social and indicators in monitoring social and economic progress of the working economic progress of the working populationpopulation

What is the basis of the PLI?What is the basis of the PLI?

PLI is based on the PLI is based on the

ILO Decent Work FrameworkILO Decent Work Framework

Decent work is defined as … Decent work is defined as … ““opportunities for women and men to opportunities for women and men to obtain decent and productive work, in obtain decent and productive work, in conditions of freedom, equity, security conditions of freedom, equity, security

and human dignity.and human dignity. “ “

Decent Work and its Dimensions

What are the core objectives of What are the core objectives of Decent Work?Decent Work?

• To achieve universal respect for To achieve universal respect for fundamental principles and rights at work fundamental principles and rights at work

• To create greater employment and To create greater employment and income opportunities for women and menincome opportunities for women and men

• To extend social protectionTo extend social protection

• To promote social dialogueTo promote social dialogue

What are the conceptual What are the conceptual dimensions of Decent Work?dimensions of Decent Work?

• Opportunities for Opportunities for work work

• Freedom of choice of Freedom of choice of employmentemployment

• Productive work Productive work • Equity in work Equity in work • Security at workSecurity at work• Dignity at work Dignity at work

The PLI Component Indicators

How were the indicators selected?How were the indicators selected?

• series of consultations and series of consultations and workshopsworkshops

• application of statistical tools application of statistical tools • conduct of technical sessionsconduct of technical sessions

What are the component indicators What are the component indicators of each dimension?of each dimension?

Opportunities for workOpportunities for work• unemployment to local working age unemployment to local working age

population ratiopopulation ratio (unemp1)(unemp1)

• percentage of wage and salary percentage of wage and salary workers to total employed workers to total employed (employee)(employee)

• percentage of part-time workers or percentage of part-time workers or those working less than 40 hours a those working less than 40 hours a week to total employedweek to total employed (less40)(less40)

Freedom of Choice of Employment• employment rate of children aged 10-14 years

(emp1014)

• school attendance rate of children aged 10-17 years (sch1017)

Productive Work• percentage of employed working 40 to 48

hours a week to total employed (emp4048)

• visible underemployment rate (visund)

• percentage of low-paid employees or those earning below ½ the median hourly basic pay to total employees (bhalfmed)

Equity in WorkEquity in Work• female-male ratio in non-agricultural female-male ratio in non-agricultural

wage employment wage employment (fmnagri)(fmnagri)

• industry-agriculture hourly basic pay industry-agriculture hourly basic pay ratio ratio (indag)(indag)

• female-male hourly basic pay ratio female-male hourly basic pay ratio for for clerical, sales and service occupations clerical, sales and service occupations (fmcler)(fmcler)

  

Security at WorkSecurity at Work• percentage of permanently employed percentage of permanently employed

to total employed to total employed (permemp)(permemp)

• percentage of workers covered by percentage of workers covered by social security schemessocial security schemes to total self- to total self-employed and employees employed and employees (sshare)(sshare)

• permanently displaced workers due to permanently displaced workers due to economic reasons per 1,000 wage and economic reasons per 1,000 wage and salary workers in private salary workers in private establishments establishments (permdis)(permdis)

Representation at WorkRepresentation at Work• union density rate for government and union density rate for government and

private establishments private establishments (udens)(udens)

• collective bargaining coverage rate for collective bargaining coverage rate for private establishments private establishments (prvcba)(prvcba)

• mandays lost due to strikes and mandays lost due to strikes and lockouts per employee lockouts per employee (mandlost)(mandlost)

• percentage of worker association percentage of worker association membership to total employed membership to total employed (wamem)(wamem)

The Methodology for Index Construction

• Shortfall or gap Shortfall or gap approachapproach

• Use of benchmarksUse of benchmarks

• Determination of Determination of dimension and overall dimension and overall indicesindices

How was the PLI constructed?How was the PLI constructed?

Three approaches to constructing the Three approaches to constructing the indices were comparedindices were compared: :

• simple averagesimple average

• shortfall or gap approach shortfall or gap approach

• principal components analysisprincipal components analysis

The study recommends the use of the The study recommends the use of the shortfall or gap approachshortfall or gap approach in computing in computing the index. the index.

It was found to be:It was found to be:

• flexibleflexible• sufficiently simplesufficiently simple• appropriateappropriate

BenchmarksBenchmarks

The following minimum and maximum The following minimum and maximum values were set for each component values were set for each component indicator.indicator.

Opportunities for WorkIndicatorIndicator MinMin MaxMax

unemployment to local unemployment to local working age population working age population ratio ratio (unemp1)(unemp1)

55 9595

percentage of wage and percentage of wage and salary workers to total salary workers to total employed employed (employee)(employee)

2020 8080

percentage of part-time percentage of part-time workers to total employed workers to total employed (less40)(less40)

2020 8080

Freedom of Choice of EmploymentIndicatorIndicator MinMin MaxMax

employment rate of employment rate of children aged 10-14 children aged 10-14 years years (emp1014)(emp1014)

11 9999

school attendance rate school attendance rate of children aged 10-17 of children aged 10-17 years years (sch1017)(sch1017)

00 100100

Productive Work

IndicatorIndicator MinMin MaxMax

percentage of employed percentage of employed working 40 to 48 hours a working 40 to 48 hours a week to total employed week to total employed (emp4048)(emp4048)

2020 8080

visible underemployment visible underemployment rate rate (visund)(visund)

55 9595

percentage of low paid percentage of low paid employees employees (bhalfmed)(bhalfmed)

00 4545

Equity in WorkIndicatorIndicator ReferenceReference Max | CMax | Ckk – 1| – 1|

female-male ratio in female-male ratio in non-agricultural wage non-agricultural wage employmentemployment (fmnagri)(fmnagri)

11 11

industry-agriculture industry-agriculture hourly basic pay ratiohourly basic pay ratio (indag)(indag)

11 22

female-male hourly female-male hourly basic pay ratio basic pay ratio for for clerical, sales and clerical, sales and service occupationsservice occupations (fmcler)(fmcler)

11 11

Security at Work

IndicatorIndicator MinMin MaxMax

percentage of permanently employed percentage of permanently employed to total employedto total employed (permemp)(permemp)

1010 9090

percentage of workers covered by percentage of workers covered by social security schemessocial security schemes to total self- to total self-employed and employeesemployed and employees (ssshare)(ssshare)

00 100100

permanently displaced workers due permanently displaced workers due to economic reasons per 1,000 wage to economic reasons per 1,000 wage and salary workers in private and salary workers in private establishmentsestablishments (permdis)(permdis)

55 9595

Representation at WorkIndicatorIndicator MinMin MaxMax

union density rate for government union density rate for government and private establishmentsand private establishments (udens)(udens)

00 5050

collective bargaining coverage rate collective bargaining coverage rate for private establishmentsfor private establishments (prvcba)(prvcba)

00 5050

mandays lost due to strikes and mandays lost due to strikes and lockouts per employeelockouts per employee (mandlost)(mandlost)

11 2626

percentage of worker association percentage of worker association membership to total employedmembership to total employed (wamem)(wamem)

00 6060

Component Index Value

minimummaximum

minimum- valueactual*100

minimummaximum

valueactual maximum-minimum-maximum*100

minimummaximum

valueactual-maximum1*100

minimum-maximum

valueactual-maximum*100100

Shortfall100IndexComponent

However, for a negatively oriented indicator, the index value is,

where the translated value is the actual value subtracted from 100 (or the sum of the minimum and maximum benchmark values)

Translation is done so that all indicators would have uniformly positively orientation.

minimummaximum

minimum - valuetranslated*100

The Dimension IndexThe Dimension Index

Each dimension index is computed byEach dimension index is computed by averaging the component index values of averaging the component index values of each dimension each dimension

/nCIndexDimension n

1kk

where Ck is the index value of the component indicator and n is the number of indicators in the dimension

For Equity in Work, a different approach is used to derive the dimension index. It takes the form,

where the shortfall value of the component indicator is,

where k =1, 2, 3

3

CCC100EW 321

1Cmax

1C*100

k

k

Philippine Labor IndexPhilippine Labor Index

• The dimensions were categorized into two groupsThe dimensions were categorized into two groups1.1. Opportunities for Work and Freedom of Choice of Opportunities for Work and Freedom of Choice of

Employment - Employment - concerned with the availability of work and the concerned with the availability of work and the acceptable scope of workacceptable scope of work

2.2. Productive Work, Equity in Work, Security at Work and Productive Work, Equity in Work, Security at Work and Representation at Work - Representation at Work - concerned with the extent to which concerned with the extent to which the work is decent or quality of employmentthe work is decent or quality of employment

  • The simple average of the dimension indices of The simple average of the dimension indices of

each group was computed and each was assigned each group was computed and each was assigned a weight of 50% a weight of 50%

• The PLI is the sum of the weighted indicesThe PLI is the sum of the weighted indices

Weights used for the PLIWeights used for the PLI

DimensionDimensionGroup Group WeightWeight

Weight Weight in the in the GroupGroup

Dimension Dimension WeightWeight

Opportunities for WorkOpportunities for Work

0.500.500.500.50 0.2500.250

Freedom of ChoiceFreedom of Choice 0.500.50 0.2500.250

Productive WorkProductive Work

0.500.50

0.250.25 0.1250.125

Equity in WorkEquity in Work 0.250.25 0.1250.125

Security at WorkSecurity at Work 0.250.25 0.1250.125

Representation at WorkRepresentation at Work 0.250.25 0.1250.125

The Philippine Labor Index and its Dimension Indices

Note: The indices are unofficial and not for quotation.

Opportunities for Work

YearYear

Actual DataActual Data

IndexIndex

Percent Percent ChangeChangeunemp1unemp1 employeeemployee less40less40

19981998 6.766.76 49.8949.89 34.0434.04 74.8274.82 --

19991999 6.516.51 49.6049.60 34.4534.45 74.5274.52 (0.40)(0.40)

20002000 7.267.26 50.7250.72 32.8132.81 75.7875.78 1.691.69

20012001 7.477.47 49.5249.52 37.4437.44 72.4672.46 (4.38)(4.38)

20022002 7.707.70 48.7548.75 37.5437.54 71.8971.89 (0.79)(0.79)

20032003 7.607.60 50.1250.12 36.9236.92 73.0473.04 1.601.60

20042004 8.008.00 52.1152.11 36.7336.73 74.1074.10 1.451.45Note: The definition of unemployment excludes the availability criterion.

Freedom of Choice of Employment

YearYear

Actual DataActual Data

IndexIndex

Percent Percent ChangeChangeemp1014emp1014 sch1017sch1017

19981998 73.3273.32 84.2984.29 55.2555.25 --

19991999 77.4877.48 83.8983.89 52.9252.92 (4.22)(4.22)

20002000 67.5867.58 84.3684.36 58.2158.21 10.0010.00

20012001 77.8777.87 87.7787.77 54.6754.67 (6.08)(6.08)

20022002 79.1379.13 87.1487.14 53.7153.71 (1.76)(1.76)

20032003 79.1779.17

20042004 76.3576.35

Productive Work

YearYear

Actual DataActual Data

IndexIndexemp4048emp4048 visundvisund bhalfmedbhalfmed

19981998 42.1542.15 11.5411.54 64.8364.83aa

19991999 42.4542.45 11.6711.67 65.0065.00aa

20002000 41.8841.88 11.0711.07 64.8664.86aa

20012001 39.2639.26 10.9810.98 20.0320.03 60.3160.31

20022002 38.1638.16 11.0511.05 20.0520.05 59.2959.29

20032003 10.5410.54

20042004 10.9810.98a - Excludes data for one indicator.

Equity in Work

YearYear

Actual DataActual Data

IndexIndexfmnagrifmnagri indagindag fmclerfmcler

19981998 0.820.82 82.0082.00aa

19991999 0.830.83 83.0083.00aa

20002000 0.840.84 84.0084.00aa

20012001 0.810.81 2.412.41 0.850.85 65.1765.17

20022002 0.820.82 2.312.31 0.820.82 66.1766.17

20032003 0.830.83

20042004 0.830.83a - Excludes data for two indicators.

Security at Work

YearYear

Actual DataActual Data

IndexIndex

Percent Percent ChangeChangepermemppermemp sssharessshare permdispermdis

19981998 77.2577.25 35.3835.38 8.358.35 71.9171.91 --

19991999 78.2378.23 35.0135.01 7.217.21 72.6172.61 0.970.97

20002000 77.1577.15 36.2336.23rr 6.866.86 72.7072.70rr 0.120.12

20012001 77.6677.66 34.2934.29rr 6.936.93 72.2472.24rr (0.63)(0.63)

20022002 78.3078.30 35.6035.60 7.367.36 72.7872.78 0.750.75

20032003 77.0577.05 6.026.02r- Revised.

Representation at Work

YearYear

Actual DataActual Data

IndexIndexudensudens prvcbaprvcba mandlostmandlost wamemwamem

19981998 10.4910.49 5.825.82 1111 30.8730.87aa

19991999 10.4110.41 5.325.32 77 35.8235.82aa

20002000 10.8410.84 4.914.91 1111 30.5030.50aa

20012001 10.9310.93 4.464.46 1919 1.591.59 15.3615.36

20022002 11.3711.37rr 5.015.01 1515 1.801.80 19.9419.94rr

20032003 11.1011.10 4.924.92 55

20042004 44a - Excludes data for one indicator.r - Revised.

  

The 2001-2002 PLIDimensionDimension 20012001 20022002

Philippine Labor IndexPhilippine Labor Index 58.4258.42rr 58.6758.67

Opportunities for WorkOpportunities for Work 72.4672.46 71.8971.89

Freedom of ChoiceFreedom of Choice 54.6754.67 53.7153.71

Productive WorkProductive Work 60.3160.31 59.2959.29

Equity in WorkEquity in Work 65.1765.17 66.1766.17

Security at WorkSecurity at Work 72.2472.24rr 72.7872.78

Representation at WorkRepresentation at Work 15.3615.36 19.9419.94rr

r- Revised.

Comparisons with Related Development Indicators

Comparisons of GDP Growth, Poverty Incidence, Opportunities for Work Index and Freedom of Choice of Employment, 1999-2004

IndicatorIndicator 19991999 20002000 20012001 20022002 20032003 20042004GDP Growth (%)GDP Growth (%) 3.403.40 5.975.97 1.761.76 4.344.34 4.704.70 6.16.1

Poverty Poverty Incidence (%)Incidence (%)

- Population- Population 33.033.0 30.430.4

- Families- Families 27.527.5 24.724.7

Opportunities for Opportunities for Work IndexWork Index 74.5274.52 75.7875.78 72.4672.46 71.8971.89 73.0473.04 74.1074.10

- % Change- % Change (0.40)(0.40) 1.691.69 (4.38)(4.38) (0.79)(0.79) 1.601.60 1.451.45

Freedom of...IndexFreedom of...Index 52.9252.92 58.2158.21 54.6754.67 53.7153.71

- % Change- % Change (4.22)(4.22) 10.0010.00 (6.08)(6.08) (1.76)(1.76)

GDP Growth and Changes in Indices of Opportunities for Work and Freedom of Choice of Employment, 1999-2004

-7

-2

3

8

1999 2000 2001 2002 2003 2004

Pe

rce

nt

GDP Growth

Opportunities for Work Index

Freedom of Choice of Employment Index

The Philippine Labor Index and the Philippine Human Development Index

IndicatorIndicator Reference Reference YearYear

IndexIndex

Philippine Labor IndexPhilippine Labor Index 20012001 58.4258.42

Philippine Human Philippine Human Development Index*Development Index* 20002000 65.665.6

* The actual value is 0.656. It is expressed in units similar to PLI for comparison purposes.

Issues and Concerns

Issues and Concerns

Interpretation of the indices

Acceptance of the PLI by the stakeholders

Issues and Concerns

Institutionalization of the data collection system

Periodical assessment of the component indicators and the specified limits or benchmarks

Issues and Concerns

Use of the PLI to criticize government performance

Use of the PLI to put down the country in the international arena

Issues and Concerns

Development or construction of labor indices at the regional level for purposes of monitoring the achievements of the regions in the six dimensions of decent work across time

Preparation of Decent Work Status Report

Thank you and good day!

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