«

»

Sep 25

The Explainer: Competitiveness as a nation

That was a scene from “Bridge On the River Kwai.” The Japanese commandant’s speech may have been to the British prisoners of war, but any worker, anywhere, some time or another has had a boss make a similar speech. We all want to work, and we all hope we don’t end up working for someone like Colonel Saito.

 

But how equipped are we to find work? That is, how competitive are we, as a nation? There are those actively looking into this, and that’s what we’re explaining tonight.

 

I. Weighed and found wanting

 

THERE’S an amusing website called, Indexed and this is one of the recent images from it.

How many of us haven’t felt this way? They say there’s lots of jobs –but where are the jobs we’d like?

Or could it it be, as National Artist F. Sionil Jose argues in his book, “Why We Are Poor,” that we inherited from Spain, a distaste for manual labor. And so, he says, that’s why you see so many poor Filipinos drinking and idling, but not looking for work. Because the work they’d get is manual labor, and as a people we look down on honest toil.

Recently, representatives of some of the largest Philippine businesses issued a statement, expressing concern over a looming crisis. Emerging employment opportunities such as the market for call center workers in the Philippines, and nursing opportunities abroad, has resulted in a noticeable shift in the Filipino work force. The products of well-known colleges and universities, for example, who entered the corporate work force upon graduation, aren’t joining the corporate world in the numbers they used to. They can earn twice as much –or more- simply manning call centers. Filipino doctors are training as nurses, and nursing schools are bursting at the seams.

And yet, even if many of us want to work abroad –why is it, that up to now, you will find people from overseas who have come here to start new lives and find work? Our idea of competition is to escape the local rat race, and go overseas –why do they want to come here?

And so,  sooner or later, this question comes up: whether you stay or go, are you equipped to fight? Individually and collectively, we end up asking, are Filipinos and the Philippines competitive?

Over a millennia ago, wise sayings were compiled in what we know as the Analects of Confucius.

One such story is this one.

Fan Ch’ih asked to be taught the art of husbandry –that is, taking care of animals. Confucius said: Any farmer can teach you that better than I can. He then asked to be taught gardening. Confucius replied: Any gardener will teach you that better than I can. Fan Ch’ih left them, upon which Confucius observed: What a small-minded man is Fan Hsü! If the ruler is addicted to modesty and self-control, his people will not permit themselves to be irreverent. If the ruler loves justice and duty, his people will not venture to be unruly. If the ruler loves sincerity and good faith, the people will not be slow to respond. Such being his qualities, the people will flock to him from all quarters, with their babies strapped to their backs. What need for him to know the art of husbandry?

Whether it’s investors or even keeping the cream of our crop at home instead of going abroad, this story illustrates how the Ancients knew the basics. We know the basics, too. But what about the details?

2006 is a milestone for the Asian Institute of Management’s Policy Center. It marks the 10th year of their partnership with the International Institute for Management Development (IMD), a Swiss-based leading European graduate management institution, for the annual World Competitiveness Yearbook (WCY). This anniversary and their work inspired this show.

The WCY analyzes and ranks the ability of nations to create and maintain an environment that Confucius roughly described eons ago, and which they’re doing so now, according to an objective criteria. They inquire into the most efficient structure, institutions and policies that encourage the competitiveness of enterprises. If every nation is an athlete, these benchmarks are our sports statistics.

To measure competitiveness, 4 Competitiveness Input Factors are used in the WCY. They are: Economic Performance, Government Efficiency, Business Efficiency, and Infrastructure.  Each input factor is further divided into sub-factors, as this table shows. The result is a mosaic that forms the big picture. So let’s look at some of their findings.

They were revealed in August of this year. On October 29, the President of the Philippines is convening a meeting, in which these findings will be further discussed.

Take Economic performance.  Disappointingly, the country’s Economic Performance slipped further from rank No. 41 in 2005 to No. 52 this year.

The Philippines did best in terms of price stability, where we slid 8 notches down to No. 13 from last year’s ranking of No. 5. Meaning, prices are much more stable.  Our biggest setback this year was in the performance of employment where the Philippines’ rank dropped 24 notches, to 49, from last year’s rank of 25. That’s a big deterioration.

 

SUB-FACTORS

RANK

Domestic Economy

59

International Trade

53

International Investment

58

Employment

49

Prices

13

 

The AIM report tells us that the Philippines deteriorated in terms of  International Investment, International Trade and the Domestic Economy – which were all factors in our decline of eleven notches in Economic Performance from 2005, from No. 41 to No. 52.

In terms of Government Efficiency, AIM says the Philippines’ competitiveness performance improved slightly. Our rank moved from 47 to 45 this year. The lower the score, the better.

AIM says that although we rank fairly high  in terms of fiscal policy, or how government handles its money, we still emerged in the lowest grouping in the sub-factors of public finance, institutional framework and business legislation.

 

SUB-FACTORS

RANK

Public Finance

58

Fiscal Policy

15

Institutional Framework

54

Business Legislation

49

Societal Framework

28

 

AIM also says that we have to look at local needs more closely.  The IMD ranks criteria on taxes from a “the lesser the better” viewpoint, which of course makes sense from the perspective of business, which everywhere, hates taxes.  AIM says that as a developing country, we also need to bear in mind that we need to collect taxes at a level that can support delivery of social services and other developmental needs.

In terms of Business Efficiency, AIM says that overall, business efficiency ranking of the Philippines declined significantly from 38 to 44.

AIM says this was due to the general decline in rankings in most of the sub-factors, particularly the labor market factor, where last year’s number 1 ranking slid to number 15.  Finance, management practices, and attitudes and values all similarly declined, while productivity posted a 12-notch gain. So the good news is, we do more with the same hours; the bad news is, our management’s deteriorating, and our labor market’s not as attractive as it was last year.

 

SUB-FACTORS

RANK

Productivity & Efficiency

46

Labor Market

15

Finance

55

Management Practices

40

Attitudes and Values

39

 

Now when it comes to Infrastructure,  The Philippines’ infrastructure rating declined by a notch. There was an improvement in the ranking of health and environment (up two notches) but all the rest declined slightly.

AIM says it is a cause for the “utmost concern” that we’re at the bottom in terms of basic infrastructure.  Infrastructure is a major driver of growth and therefore improvements in this area need to be undertaken, along with initiatives to improve our scientific and educational infrastructure. We need roads, bridges, ports; but we also need better-educated people and improvement in our science and math skills.

 

SUB-FACTORS

RANK

Basic Infrastructure

61

Technological Infrastructure

37

Scientific Infrastructure

58

Health & Environment

53

Education

57

 

In education, AIM  says we’re all used to bad news, but there’s more where it came from. We slid to last place in terms of pupil-teacher ratio in secondary schools; and our students fare badly in the Trends in International Mathematics and Science Study (TIMSS). Everyone knows there’s  a marked decline in English proficiency – all these, AIM reminds us, leads to diminished quality in our graduates and ergo, second-rate manpower.

And in case you fell for that idea peddled by bishops, that there’s no population problem, AIM points out some facts that say otherwise.

At the rate that our population is growing, DOF Secretary Teves himself said in April this year that our economy would have to grow by 7 to 9% annually in order to support the population.

AIM cites a groundbreaking study by Dr. Arsenio Balisacan et al on the population-growth-poverty connection.  Research findings showed, among others, that the Philippines and Thailand were neck-and-neck in terms of population size and per capita GDP in 1975.

In the three decades since then, the Philippine population has ballooned to 85M while the number of Thais stood at 65M.  The decline in the population growth of Thailand – from 1.9 in 1975 to an estimated .87 by 2005 – was complemented with an increasing per capita GDP, growing to 8x its 1975 level.  The Philippines, on the other hand, with a far higher population growth of 3.6 in 1975 and an estimated 1.95 by 2005, grew its GDP per capita by only 2.6x.

Of course, AIM says population growth cannot be the sole reason for the dismal performance of our economy.  Nonetheless, the Balisacan study showed that the impact of population growth is much more significant and could worsen poverty if left unchecked.

So with these horrifying findings, is the glass empty or half full? More on this, when we return.

II. Half empty and half full

That was from the movie “Fight Club,” where Edward Norton describes how many think that better jobs simply means a better chance to buy consumer items. But having better jobs means more than that –the chance to get those jobs, means greater participation in a growing, instead of dying economy. The benefits of this was seen long ago.

A century ago, looking to today, Jose Rizal observed, and I quote, “Everybody engages in business in our country except ourselves. It is sufficient that the foreigners praise to us imported merchandise and run down the native products for us to hasten to change without reflecting, that everything has its weak side and the most sensible custom is ridiculous in the eyes of those who do not follow it. If this practice is continued, we shall be a people without character; everything in us will be borrowed, even our very defects. And remember that the most commercial and the most industrious countries have been the freest countries.”

The AIM findings, as this table shows, shows there’s good and bad news.  As far as individual indicator ratings are concerned, the following are the areas where the country gained and fell the most. (enumerate)

 

Improvements

2005

2006

Broadband subscribers (# of subscribers per 1000)

5.02

21.27

Portfolio investment liabilities (US$B)

3.74

10.85

Direct investment flows inward (US$B)

4.59

12.61

Direct investment flows abroad (US$B)

.31

.79

Direct investment flows inward (% of GDP)

2.12

4.99

Direct investment flows abroad (% of GDP)

.14

.31

Value traded on stock markets (US$ per capita)

220

434

Stock market capitalization (% of GDP)

17.16

28.15

Current account balance (% of GDP)

-4.09

-1.62

Direct investment stocks abroad (US$B)

2.15

3.22

Direct investment stocks inward (US$B)

57.88

85.61

Computers per capita (# of computers per 1000)

138

202

High-tech exports

1,334

1,932

Customer satisfaction

4.74

6.69

Sustainable development

4.42

6.24

 

In this table, we see where we’ve declined, and where action’s needed. (discuss)

 

Declines

2005

2006

Real GDP growth per capita (% change)

6.65

3.09

Real GDP growth

5.3

3.2

Management of public finances

4.36

3

Ease of doing business

3.31

2.33

Science in schools

5.85

4.19

Justice

2.85

2.11

Competent senior managers

4.75

3.63

Policy direction of the government

2.39

1.84

Protectionism

3.53

2.72

Risk of political instability

2.68

2.08

Language skills

3.74

2.91

Pollution problems

4.81

3.76

Cost-of-living index

75.4

91.5

Public sector contracts

5.23

4.14

Health infrastructure

2.47

2

So, based on all this, AIM has some specific recommendations.

 

The AIM Policy Center thus puts forth the following recommendations:

  • Improve quality of basic education (achieve demonstrable improvements in Math, Science & English);
  • Undertake capacity-building for regulatory agencies to ensure transparency, non-discrimination and procedural fairness;
  • Establish credibility of public anti-corruption efforts by vigorously prosecuting/securing conviction of some “big fish”;
  • Accelerate implementation of e-governance projects to promote transparency and facilitate trade;
  • Strongly encourage private investment in infrastructure, and
  • Improve distribution infrastructure for faster turn-around times and lower transaction costs.

 

The details behind these recommendations, is the task for our guests when we return.

 

My View

 

I recently had the opportunity to talk to an architect who heads a small firm. I asked his observations as a business owner about his employees –their strengths and weaknesses. Immediately, he replied that young professionals are much more technologically accomplished than his generation. Add to this what he says is the innate artistry of the Filipino, and you have a powerful combination.

But he lamented the deterioration in the quality of expression. Instruct someone to do something, and they’ll do it, he says –and do it well. Asking them to explain why they did it that way, or how they solved a certain problem or embarked on a particular design, is another thing altogether. They’re much less articulate, these days, he says.

He says this is a tremendous liability in terms of accessing the foreign market. I’d add, also in terms of citizenship here at home. How can we help our country, if we can’t explain to each other, what needs to be fixed? So whatever your line of work, it’s not enough to do it well. We have to be able to articulate why we do what we do –and what we need to do.

 

Leave a Reply