Friday, 11 September 2015 18:22
There are four different methodologies I can think of whereby you can arrive at a perspective on how much to pay a Filipino.
1. Minimum Wage – based on legislated minimum wage standards.
2. Market Wage – based on market surveys.
3. Sustainable Living Wage – based on cost of living to a minimum standard.
4. Comparative Wage – PPP-based analysis against similar jobs in other markets.
Well, in truth there are five methodologies.
What I plan to do is write a series of articles detailing what these methodologies are and, finally, how Flat Planet itself finds the balance.
My hope is that you can use these articles to come to your own view on how to decide your salary levels.
However, before getting onto the serious articles, let’s deal first with the elephant in the room.
Let’s talk about methodology number 5 – Blatant Exploitation – this is based on the degree to which you can screw people.
This is a very difficult topic that raises the hair on the back of my neck. It infuriates me.
A lot of people use the ‘any pay is better than nothing’ argument to justify all sorts of behavior.
I just don’t buy it.
My perspective is that if you want to come to the Philippines and exploit people… then you can. It is easy. It is easy because there are a lot of people living in poverty who have an absence of choice or opportunity in their life.
You however are not one of those people living in poverty. You do have choice. You can choose NOT to exploit people.
There are heaps of people in the world who just don’t care and are happy to exploit. I understand this.
I don’t really want to discuss the really obvious exploitation of the vulnerable that happens in many parts of the world. A lot of horrific exploitation does take place in the dark corners of the Philippines. This is why there is a permanent Australian Federal Police presence here, warmly welcomed by the Filipino Government which also wants to stamp out all forms of exploitation, especially the most egregious.
I hear random guys all the time boasting at the bar about how little they pay their staff or how clever they are ignoring this workplace law or that compliance requirement. I have also seen guys leave the country in a hurry or, if too slow, end up in jail.
Lots of people have websites and books offering great advice on how to hire Filipinos cheap and avoid various compliance and industrial relations obligations.
These books have names such as ‘How to Hire A Filipino for $100 a week!’ or ‘How to Hire Workers for $2.00 an Hour!’
Of course I have read many of these books and I also have operated a business here for a long time. I know how it is done.
1.Put an ad on one of the freelance sites, a job board or some other bulletin board and make an offer to pay someone $100 a week or whatever.
2.Wait and someone will put their hand up and say ‘yes’.
3.Toss a coin for heads or tails or some similar process and miraculously decide they are both a real person and a genuine job seeker.
4.Tell them that you will pay them via Western Union or some other online channel like PayPal… .and that therefore they don’t need to declare it or pay tax.
5.They say ok.
So let’s just put to one side the idea that the person you end up hiring is probably doing a number of ‘full time’ roles at once and the person actually doing your work will be their 13-year-old baby sister who is being kept out of school to do your stuff. Let’s just assume that is not happening because that would be terrible and you don’t want to be found to have been exploiting child labor.
Let’s also pretend that a miracle happens and you find a really good and really sincere person who is both professional and prepared to work for a little less than the minimum wage (I realise that AUD100 a week is around the base for the minimum wage in Manila and a bit above for other regions. But there is a lot more to the minimum wage than just a number used for calculating the base. I will discuss the minimum wage next week – and before people start arguing with me I urge you to consider 13th month, IR law, sick leave and all the other on-costs associated with the minimum wage).
And let’s put to one side the fact that, for this arrangement to work, the worker has to provide their own work space, computer, electricity and internet connection (all non-trivial, especially when earning $2.50/hr).
And, I am not even going to discuss the cost of living in the Philippines (I will discuss this in two weeks when we address the idea of a ‘living wage’), or the idea that if this person has kids, for $100 a week they will only be eating once a day and will only get basic protein 4-5 times a week.
So let’s just tie up all the really smelly stuff into a big garbage bag and ignore it for the time being.
Let’s just focus on the social consequences.
For example, did you know that the Philippines does in fact have a ‘social wage’. There is a national health program (PhilHealth), a national social security system (SSS), a national retirement / home loan program (Pag-Ibig).
Did you know that only people who work for reputable employers who employ their staff legally and pay their obligations have access to any of this?
So, if you choose to hire someone through the ‘back door’ you are locking them out of the opportunity to participate in the civil life and facility (rudimentary though it is) of their own country?
And what about tax?
Just because you pay them via Western Union or PayPal doesn’t actually mean they are legally entitled to a tax-free income. They actually, legally, are required to report it and pay tax on it (although I accept that in practice very few do - not least because the paperwork is so impossibly complicated).
So let's unpack this. They are the one who, from a legal perspective, are avoiding tax and are legally liable for the consequences… but you are the person putting most of the benefit associated with that avoidance into your pocket.
“They understand the risk”, I hear you say?
Really? Someone who is so desperate for any kind of opportunity at all that they are prepared to work remotely for $100 a week is also, somehow, educated enough to hold a sophisticated understanding on risk management?
While, by the way, conversely and ironically, you, the beneficiary of a first world education system including, probably, an education from a global top 200 University, are able to blithely ignore not just the accumulation of such a risk but also the moral hazard of the enterprise you are embarking on?
I have lived in the Philippines for a long time and traveled a lot including most of Asia and sub-Saharan Africa and I have seen a lot of stuff, more than most. But it just astounds me how quickly people from sophisticated civilized societies like Australia can so quickly not only descend into the abyss, but also luxuriate in it and boast about it, including via the publication of books.
I am not making any effort to hide my contempt for those that embark on this course of action. It is absolutely possible, whether by Flat Planet or any other reputable firm, to hire people legally, pay them a fair wage, enable them to live with dignity and still ‘save’ a huge amount of money.
If you can save 50% or 60% and hire them legally and give them dignity, then why do you need to grasp for the extra 10% or 20%? Why push it to a 95% saving?
Are you greedy?
Or maybe the task you are having them undertake is so trivial and meaningless that it has no real commercial value? Gee Whizz! You are a very great businessman if that is the case!
Think about that while you are boasting to your mates and beating your chest about what a champion you are for ripping off a lot of super-poor people. And if you do find yourself boasting about this stuff within my earshot, I might just tell you what I really think.
And trust me you are not that clever. You are not the first person to figure out how to rip off poor people. Why do you think they are trapped in poverty in the first place?
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