Employment in the Philippines

• The economy in the Philippines has been continuously growing year by year.
• Plan your retirement funding carefully as you may not be able to rely on the national social security system.
• Don’t forget to read up on local business culture, e.g. on hierarchies in the workplace.

Working in the Philippines is an increasingly attractive option for many expatriates. Economically, the country has a lot to offer and attracts more and more interest from foreign investors who consider working in the Philippines a chance to establish themselves in the region. The local government is trying to implement changes in order to compete with other Asian countries and the rest of the world.

The Economy: Still Going Strong

Due to the growing consumer demand and a rebound in exports and investments, the Philippines’ GDP has grown by around 6% in recent years. The economy survived the recession of 2008 and 2009 in better condition than most, and it is now experiencing significant growth. The secondary as well as the services sector were the main drivers of the recent economic upswing, mostly with the support of the manufacturing and construction industries.

All in all, there are about 41 million people working in the Philippines, and more than 21 million of them are employed in the services sector. Other important sectors for expats working in the Philippines are agriculture and the production industries, which employ 29% and 16% of the labor force, respectively. With an unemployment rate of 6.3%, conditions are decent.

Despite its currently strong economy, the Philippines face large national debt and a high rate of poverty. Also, the country depends on the money overseas workers send home to their families. The government has yet to take measures benefit fully from the strong economy and create incentives for people to start working in the Philippines.

What the long-term economic effects of the 2013 typhoon will be is still unclear. Beyond the obvious human tragedy caused by the natural disaster, the infrastructure in the eastern parts of the Philippines could take years to rebuild. Additionally, the economic growth lost a bit of steam as the increase in GDP slowed down after the events. However, the economy is still growing at a consistent rate following the storm damages.

Getting Your Work Permit

Every foreign national who plans on working in the Philippines needs to report to the Philippine Department of Labor & Employment (DOLE) for an Alien Employment Permit (AEP). If you are heading to the Philippines and have already secured your non-immigrant visa, you can apply for an AEP at your nearest embassy or consulate. See our article on moving to the Philippines for more information on visas.

However, if you already have an employer in the Philippines, it is usually easier if they apply on your behalf at the nearest regional DOLE office. The period of your AEP validity strongly depends on your work contract and on your position within the company you will be working for.

Social Security and Insurance Issues

When it comes to social security services in the Philippines, private sector employees, as well as domestic workers and the self-employed, are covered. It is possible to get voluntary coverage for insured people who are no longer eligible to receive compulsory coverage and for their spouses. Government employees and military personnel have their own insurance system.

The social security system in the Philippines covers disability and retirement benefits, maternity leave, sick leave, survivors, and work-related injuries. Additionally, you might also want to check whether there are any social security agreements between the Philippines and your home country.

Contributions you make to retirement, disability, and survivors funds while working in the Philippines also cover sickness, maternity, and funeral benefits. The contributions are as follows:

• Insured employees contribute 3.33% of their gross monthly earnings.
• Employers pay 7.07% of the employee’s gross monthly earnings.
• Self-employed people contribute 10.4% of their gross monthly earnings.

Unfortunately, as is the case with healthcare coverage, your social security coverage may not be as comprehensive as you would expect. For that reason, it may make sense for expatriates working in the Philippines to keep contributing to their social security system at home or to take out private plans.

Doing Business in the Philippines

Foreign business people who are used to a rather egalitarian business customs may be surprised by the hierarchies prevalent in Filipino companies. This strong sense of hierarchy may even be reflected in seating arrangements in meetings.

The different working relationships and the roles of individual employees often resemble the structure of a Filipino family. The boss plays a paternalistic role and heads a hierarchical management. In this type of business world, which is prevalent in most Southeast Asian countries, a high status, mutual respect, and a good reputation are essential to success. Therefore, age and status demand high levels of respect.

Business Values and Customs in the Philippines

In the Philippines, doing business is a highly personal endeavor. If you plan to close a deal in the Philippines or are even preparing to invest, expect proceedings to take more time than you may be used to. In the Philippines, patience is indeed a virtue. A personal introduction through a friend or business associate is essential to establishing a relationship with your business partners-to-be. Keep in mind that, in the Philippines, successful business relationships are based on personal interaction and trust.

As mentioned before, Filipinos are very status-conscious, and the use of formal titles is an important way of showing respect to your business partners and colleagues. Unlike in other Asian countries, however, the exchange of business cards is not overly formalized, albeit still of some importance. You should present and receive business cards with both hands. Include your title and position on the card to make clear the influence and status you may have.

Know Your Local Business Etiquette

When working in the Philippines, you ought to follow a few guidelines in order to avoid alienating your colleagues and business partners. In general, it takes time to establish strong business relationships. Try to be patient while you stick to these tips on business etiquette:

• Try to avoid direct or continuous eye contact as staring is considered rather rude and confrontational.
• Converse with your Filipino colleagues before and after meetings and try to establish personal relationships with them. Prepare to be asked a lot of (harmless) personal questions.
• Both men and women should always dress appropriately and conservatively at work and during meetings. Dressing well is a vital part of earning respect in the Philippines.
• Don’t be surprised when business negotiations take longer than expected as the pace of doing business is quite slow in the Philippines, especially compared to Western countries.
• Make sure not to underestimate the influence of the family unit and the effect it has on business.
• Don’t raise your voice or interrupt your business partners, as this is regarded as terribly disrespectful.