Economics12

THE SERVICES SECTOR IN THE PHILIPPINES

THE THREE MAJOR FASTEST

GROWING INDUSTRIES

TELECOMMUNICATIONSTelecommunication comes from the adapted Spanish word Telecom.

It is communication at a distance by technological means, particularly through electrical signals or electromagnetic waves.

The Philippines is said to be the “texting capital of the world”.

Consider the statistics: The telecommunications industry has an average of about 6% growth in the last 10 years.

Many telecommunications companies have put up shop in the country because of robust sales.

Funds are coming in for additional capital and investment in new devices, technology, and equipment.

OUTSOURCING

Outsourcing is a practice used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally.

Global enterprises and businesses are consistently outsourcing their functions, and this is mainly due to the lower cost of having other firms perform some of their functions. It is estimated that the savings that may be generated in outsourcing functions range in billions of dollars.

The Philippines is one of the main players in outsourcing, and many global companies are looking towards the Philippines for its outsourcing functions. The Philippine advantage is mainly due to factors such as the English proficiency of Filipinos; a highly educated labor force; and investment incentives given by the government.

Most outsourced jobs are call center marketing work; and many call center companies are developed in the Philippines’ central business district, a testament to the brooming outsourcing industry in the country.

OVERSEAS FILIPINO WORKERS

The OFWs are a potent economic force in the country, and it is estimated that about 8 million Filipinos are already working abroad as OFWs, with only about three fourths of these are registered or documented. Close to a million workers are deployed abroad each year.

The contributions of the OFWs cannot be underestimated. They bring in about $ 8 billion in remittance since 2003. These remittances that reach the country are like funds that water our depleted economy, especially during Christmas time.

THE INFORMAL SECTOR

The Informal Sector is another important sector of the economy. It refers to businesses and markets that are unregulated by government and other institutions of society. However, it provides a way for people to support themselves and gives them the ability to work.

The informal economy is more evident in developing nations. In the Philippines, it can be seen in the neighborhood sari-sari store, in the magtataho and ice cream vendor; the various stalls in Divisoria; the manang selling cigarettes on the streets; and the girl with the sampaguita.

The workers in the informal sector are varied, but one thing they have in common is that they are not regulated by government. Some of them will work part-time, while others will work full-time; most will not declare their income to government or to any of its agencies to evade paying taxes; and a lot will not avail of any voluntary contributions to social security pension plans, such as the Social Security System (SSS).

However, the above workers may be described as helpful workers, keeping the economy moving in a smaller scale, and having jobs and earning money that would provide for their families.

THE UNDERGROUND

ECONOMY

The other half of the informal economy, however, is more hidden but more dangerous to society and to the nation. This sector is termed the underground economy, where “under the table” arrangements are made. This special subsector of the informal economy is where big money and dirty money are exchanged.

The underground economy consists of the black market, where dollars and other currencies are exchanged in rates different from acceptable ones; the “business transactions” entered into by those in the illegal trade; smuggling; drug trafficking; and a host of other unlawful activities and transactions.

This is the subsector—the underground economy—that has paralyzed many economies, laundering dirty money for the purpose of creating more illegal businesses; and siphoning needed dollars from banks and other legal entities. Government have tried to put their foot down in the activities of the underground economy, but most of the time they fail because of the powerful connections of those in this trade.

ROOTS OF THE INFORMAL ECONOMY

The informal economy has existed side by side with the regular sectors of the economy, in any country. Even the earliest economies such as those in Mesopotamia show evidence of informal sectors. This is because people since the earliest times generally try to evade regulations or government control. This is especially true if government excessively regulates businesses. In this case, businesses that are in the regular sectors may opt to transfer to the informal economy to escape regulations and fees.

TAPPING INTO THE INFORMAL

ECONOMY

MAJOR OBJECTIVES

1. To bring the informal economy to the attention of major leaders in government, especially the legislators, so that they can enact laws to support this sector.

2. To change people’s perceptions of workers in the informal economy so that they will look at themselves with dignity and try to work better for the development of their communities.