Better Performance – Wage Structure

There has been mass leaves and resignation at the Bureau of Immigration due to the the cancellation of the additional overtime pay from payments made to the airport express lanes.

If a person conducts overtime work, then it should be properly compensated. However, the structure incentivizes the officers to make regular processing longer to generate more express lane customers, leading to more pay.

Payment Scheme No OT Pay Some OT Pay Full OT Pay
Performance No prioritization Prioritizing those who pay No prioritization
Customer Experience No One Pays

Customers get what they need at regular time

Those who rush pays

Customers can get what they need at a price point

Everyone Pays

Customers need to pay more for better processing (better for the rich)

For a worker, good performance should produce good wages. Express lane fees should be independent from a person’s wage as it incentives worse performance for regular lanes. Wages can be based on activity (hours worked) or outcomes (% of applications processed on time, whether regular or express).

Activity and outcomes are related using the expected capacity per person to produce a certain outcome. Example: We need 10 people to process 100 applications 90% on time.

A time and motion study is needed to get this standard productivity. If a worker performs above their productivity using the same hours, they can be given more pay through a performance bonus. If a worker performs the standard number of applications per day but takes longer than a day and gets overtime pay, then should be a red flag already. They should still be paid overtime (based on activity) but should be shown to have poor performance (based on outcomes). This should affect their performance bonus, if any.

Productivity and Retirement

Aside from our spending habits, one of the factors that contribute to Filipino’s difficulties in retirement, is its official retirement at 60 years old. which is below the Asian average of 65. Note: The Labor codes states 60 to 65, which makes 60 enforceable.

The retirement age 60 years was created in 1974 when the average life expectancy at birth was 61.47 years whereas the average life expectancy in 2015 was 68.41 years. The improvement of lifespan lengthens the retirement period of Filipinos, which is also a strain on the retirement savings of the Filipino. When you look at productivity by age studies, you see that individuals are still productive after 60. They generally decline in most of the skills, with Finger Dexterity falling down the most, but overall they are still productive.



Proposal: Increase Compulsory Retirement Age to 65. (Possibly even 70.)

To incentivize hiring of older people, we can introduce allowable pay reduction laws after 65. Minimum wage can be reduced to 75% of their current rates. The limit of working days in a week can also be negotiated from 5-6 days to 3-4 days. The employee can also still be part of the company’s health insurance but cost should be shared as this is already costly for all parties.

Proposal: Introduce allowable pay reduction laws after the retirement age.

For employees who still want to work from 60 to 65, pensionable age is still kept at 60, such that they have additional income to enjoy while working at 100% of their wage.

For employees who want to retire earlier, early retirement at 60 should still be available.

Proposal: Keep early retirement company packages and SSS/GSIS possible availment at 60 years.

Another thing that we can look into is lowering the pensionable age to around 50 years. However, pensions availed at the age of 50-60 should have a different computation as this reduces the years of your contribution and increases the years of your pension. This should have a significantly smaller value than if you got your pension at 60. An even more drastic solution is the Universal Basic Income which gives a fixed income per person per month. Currently, the Philippines is not productive enough to give a significant amount to Filipinos.

Future Proposal: Reduce Pensionable Age and Universal Basic Income


Savings and Retirement

The Philippines is a consumption driven economy. We love to spend hence we have payday traffic, 13th month pay and paluwagans.

Do we save? Do we save for retirement? According to a BSP survey, only one in 10 Filipinos saves for retirement.

Our 2 national insurance corporations (SSS and GSIS) provide pensions to those who have contributed to it for Filipino’s retirement.

Computing the maximum, we can make for retirement from these:

  • For SSS, it is the sum of P300 plus 20 percent of the average monthly salary credit plus two percent of the average monthly salary credit for each credited year of service (CYS) in excess of ten years;
    • This equates to 300 + .20*16000 + .02*16000*n-10 years. If a person worked for 30 years, this is Php 9,900.

  • For GSIS, If period with paid premiums is 15 years and more:
    • BMP (Basic Monthly Pension) = .025 x RAMC x Period with Paid Premiums
    • RAMC(Revalued Average Monthly Compensation)=Php700 + AMC (Average Monthly Compensation)
    • AMC=Total Monthly Compensation received during the last 36 months of service divided by 36.
    • Let’s say the government employee worked and  Php 16,000, the pension received would be:  .025*Php16,700*30 = Php, 12,525.

For a person who was previously working for and living with Php 16,000 a month, a Php 9,900 – Php 12,525 pension would probably do.

But if the person was working for and living with Php 30,000 or more per month and will only get Php 9,900 for pension, it will be difficult. The big difference is GSIS  Monthly compensation can go higher than SSS’s Maximum Php 16,000 monthly salary credit. A person earning Php 30,000 will get Php 23,025 as GSIS pension, which would probably do.

Can a reform be passed to increase SSS member’s monthly salary credit?  This will likely need an increase in the contributions as well.

Another option for retirement that was recently launched is the PERA, which is a voluntary investment account that has a tax credit, tax exempt investment income and other tax incentives. This is similar to the US’ 401k.

Learn about this more here:


Political Dynasties

Are political dynasties inherently bad?

In the Philippines, political dynasties are getting more entrenched as the years progresses and it’s looking like a global trend in democracies.

From the previous “A Healthier Democracy” post:

Suggestion: Clarify the rules of the anti-Dynasty bill based on check and balances.

Fat dynasties should definitely be outlawed as this removes check and balances of the government. Limit positions to a family to 1 local and 1 national post. There is also a link to fatter dynasties and poverty incidence.

As for thin dynasties, allow this but increase voter education and protection so if a family does not perform well they may choose other leaders. This is heavily shown in the rampant cases of vote buying and voter intimidation. The link to a thin dynasty and poverty incidence though is not yet visible as most of the country have dynasties and are poor. We have rich and poor cities with dynasties. Even if they are proven to be linked, should we disallow this or rather increase voter education.

From Mendoza’s study of Political Dynasties and Poverty: “The empirical findings suggest that poverty entrenches political dynasties, while there is less evidence that political dynasties exacerbate poverty.”

In studies, it is very important to show what causes what, as correlation does not mean causation. The basic idea to prove causality is to have good controlled experiments which show x then y, and not x then not y.

It is stated by Emmanuel de Dios very simply as: “Philippine politics, in short, is not broken because dynasties are strong; rather, dynasties are strong because politics is broken.”


Click to access IPS-11_1%20Political%20Dynasties%20and%20Poverty_Evidence%20from%20the%20Philippines.pdf

Ending ENDO

Workers have been complaining about ENDO, a practice hiring workers to less than 6 month contracts so they don’t have to be regularized. However, there are a lot of cases wherein they stay at the same company, but they are just renewed contracts indefinitely with the company avoiding security of tenure and other benefits to the workers.

Recent talks between DOLE and Labor groups have discussed a win-win situation wherein it defines the relationship between the a) Parent Company – b) Service Provider – c) Employees.

The Parent Company hires the Service Provider. The Service Provider hires and regularizes the employees. If the employee is not regularized and perennially under a short contract without the required benefits, then that is a violation of our current laws. As our Trade Secretary commented: The problem is not contractualization per se but compliance.

The service providers are very critical as a central piece in this relationship so they have to be well regulated and also protected. The huge risk for them in the win-win setup is regularizing employees then having no work for them leading to huge losses. This is the reason they have to be well-capitalized. They can possibly be given more protection if adequate time is given in informing the end of contract of the service provider as well. If you know that in X months time, your contract with a Parent Company for 100 employees (that you have already regularized) will end, then the Service Providers job is to find work for these 100 employees. The X months time is very critical as it should be enough for both Parent Companies and Service Provider to plan. Too high an X and you make it hard for the Parent Company to adjust based on seasonality of their demand, while too low an X will make it hard for the Service Provider to look for jobs for their employees. You can look into historical data of how companies plan and make decisions for # of employees needed (usually by quarter to a year), and data on how long it takes for Service Providers to find jobs.

Now, if the demand of the employees is to be a part of the parent company, let’s look at how that can be implemented. Who determines who should be part of the parent company? If there’s a limit to a percentage of manpower to be outsourced, how do you define that? Does a security guard of a fastfood restaurant need to be hired by the parent company as well? There are no popular proposals and company mechanisms that define this but this can be looked into.

The possible option for this is to limit what companies can spend on outside its company. This is easier as this can be found in the accounting of the company. A proposal could be that salaries paid to employees should be at least X% of the companies’ expenses. This will lead to companies doing more things in-house, however, might provide detrimental as current practice is to outsource to experts. Companies that mostly outsource may find it difficult to adjust and build the capability that the companies they outsource to already have.

We have to look into why employees want to be part of the parent company rather than the service provider? One, it usually has higher job security as parent companies are usually bigger, and two, parent companies usually have more benefits than service providers. Maybe the law’s minimum benefits are not enough and need to be increased?

The key thing for these parties’ relationship is balance. The policies should lead to protection of all parties (Parent Company, Service Provider and Employee) so that all will continuously benefit from the relationship. If one falls, everyone suffers.


Q&A: 2014 Handbook on Workers’ Statutory Monetary Benefits

Payroll Salary Compensation and Benefits in the Philippines

Presidential Decree No. 442

Foreign Policy and Game Theory

Recent events regarding the Philippine’s foreign policy has shaken our long-standing alliance with the United States of America.

What is our administration doing? Is it playing games with our nation and the world?

Looking at the administration’s actions as games, we can take a look at formal Game Theory. Games in Game Theory definition has the following elements:

1. Players 2. Players’ Options (Strategies) 3. Outcomes (Benefits) and the 4. Rules

In the below example:

  1. The Philippines and the US are the players
  2. Whether or not to seek China is the Philippines’ option; Whether or not to give PH what it wants is the US’ option
  3. Heavily simplified benefits table and a possible interpretation of the current administration of the situation.
  4. The benefit is taken from the decisions of both nations and both nations want to maximize their own benefit.
US gives PH what we want US doesn’t give PH what we want
Philippines does not seek China as top backer Moderate benefit for PH, Moderate benefit for US Small benefit for PH,  Large benefit for US
Philippines seeks China as top backer Large benefit for PH, Moderate benefit for US Moderate benefit for PH,  Small benefit for US

In this example, the best strategy leads to the Philippines seeking China and US giving us what we want. This is because if either Philippines or US changes strategy, they will lose more. If US does not give us what want we want while we seek China as top backer, they move from a moderate benefit to a small benefit. If the Philippines does not seek out China, we will move from a large benefit to a moderate benefit.

The administration is forcing the hand of US to give us what we want. However, changing the benefits table can lead to a change in the optimal strategy. What if the US views that it can get the same benefit elsewhere for a similar or lower cost? What if the perceived benefit of the PH-China relationship is not that large?

What if the game is changed altogether?

This example is a 2-person game but can be expanded to an n-person game to include other strategies and benefits of other nations.


Reducing Brain Drain

Brain Drain – the emigration of highly trained or intelligent people from a particular country.
The Philippines’ education system produces trained Filipinos and an estimated 10% leave to work in other countries. This 10% is composed of highly trained individuals that are in-demand in other countries. Why do they leave?
The most common reason is economic. The common Filipino works abroad to get better pay. Along with this pay is the greater standard of living for their families. According to a NEDA report, the Filipino dreams of a “simple” life, and this simple life costs Php 120,000 per month which is of an upper income or rich income class.
Looking at the current income levels in the Philippines, only 320,000 households or 1% of households are in this range. The rest will naturally be open for greener pastures outside the country.

Looking at the data though, it shows that Filipinos going abroad are not earning this amount either at roughly around 2% of households. The metric that is heavily improved by going abroad is the poor income class. With an OFW family member, you won’t be poor. For highly trained Filipinos though, this will likely be skewed towards the the upper income areas. which is in line with why they leave.


Treating education as a service to the Filipino people and the objective as producing Filipinos who will be able to reach their own dream of a simple life, then Filipinos seeking better opportunities should not be seen as a problem.

Treating education as an investment of the Filipino people to the Filipino people and the objective as producing Filipinos who will help build the nation, then we have to look at how they can help build the nation. If we view OFW remittances as the biggest contributor to nation building, then they are contributing $7.2bn in the 1st quarter of 2016, which is a sizable amount.

However, if we view that the educated should render services to the Philippines as the required return of investment of the Filipinos, then we have a gap here. I’ll focus on the higher education system.

Supplier Input (Requirement) Process  Output (Requirement) Customers
 The Filipino people  Students (Best and Brightest through examinations) Higher Education System Trained Filipinos (who will render services to the Philippines) The Filipino people

The SIRPORC diagram shows the flow of material from its input to its desired output. Looking at the higher education system as a process, and starting at the gap closest to the output, there can be  a lacking system to keep Filipinos or stop them from leaving.

Keeping Filipinos means that there should be jobs for the trained Filipinos that uses their skills. We need to build and grow industries, and train Filipinos accordingly. Infrastructure has always been noted as a lacking item for the Philippines. For example, how many scientists are we able to produce and how many science jobs does the country have? Also, if we desire Filipinos to have global pay but living here, then we need to further support and promote freelance outsourced workers.

Stopping Filipinos from leaving means binding contracts that make them stay. There are already some forms here, with the Return Service Agreement in UP Manila as one of the strongest. The trained Filipino shall serve in the Philippines for 5 years after their graduation, else pay for the cost of their education. This is an almost certain return on investment, but very restrictive. Do we want to do this to our people?

Another way to view this is: “What makes Filipinos want to stay in the Philippines?” Can we improve these aspects further? We must not forget that we still have 90% that stay.

In all, our Higher Education system and the corresponding economics of the job market, lead to brain drain. There are already some solutions implemented to address this, but this is a very complicated problem.

Note: SIRPORC analysis can also at the other elements (supplier, input, process, customers) as well. For the process of higher education, we can also see how many best and brighest are not able to complete their higher education.


Capital Punishment

Capital Punishment (or the Death Penalty)  is being revived in the Philippines. Current world trends show that the number of countries that are abolishing the death penalty is increasing. (Note: This doesn’t mean that abolishing Capital Punishment is right.)


Let’s look at the purposes of punishment:

  1. Deterrence
  2. Incapacitation
  3. Rehabilitation
  4. Retribution
  5. Restitution.

Let’s evaluate the case of death penalty vs the possibility of 3 things for the criminal. 1 being the a bad case and 10 being a good scenario. For example, if a person who would have returned to being a criminal was given the death penalty, they would have been incapacitated, but were not rehabilitated or given a chance for restitution. I’ll put it as a relatively good scenario at 6.

Punishment Returns to being a Criminal Lives with minimal Impact on society  Saves a lot of people from being Criminals
Death Penalty  6  4 3
Life Imprisonment without Parole  2  5  7
Life Imprisonment with Parole  1  8  10

Decision Theory shows basic thinking of people for these punishments.

  1. Maximax – We look for the most best case scenario and decide on that. Life Imprisonment with Parole (10) wins since it assumes the best in people.
  2. Maximin – We look for the maximum  of the minimum per decision. The minimum of each Death penalty has it as 3, without Parole has it at 2 and with Parole at 1. We take on the maximum among the minimums which is Death Penalty. Maximin is seen as a pessimist view on things.
  3. Minimax – We want to look for where we have the minimal regret. This is computed by  looking at the regrets per decision (computing best case to worst case difference)  and minimizing the maximum of this value. Life Imprisonment without Parole wins on this one.

Just by evaluating 3 basic decision making criteria already gives us 3 different results. The criteria is set by the person’s view on the scenario, whether they are optimists, pessimists or somewhere in between. There are a lot of other criteria available for a decision maker and a lot of metrics to look at.

Note 1: If Death Penalty is to be implemented, since the main purpose is Incapacitation and Retribution, can we go for a method that is the most cost-efficient?

Note 2: The Philippines is a highly Christian nation (90%) and one of the 10 commandments in the Bible is “Thou shall not kill”. The Pope has spoken out against it as well. But why is it gaining support?



Regions of the Philippines

I read an article showing how USA was divided into 11 distinct cultures. Each state was assigned into a distinct culture. I thought about how we can make a similar analysis for the Philippines. What is the Philippine culture?

My search started with the proposed states of the Philippines of Pimentel. The states are basically our current regions with some consolidation. Looking at the regions, these are commonly divided in terms of language. In the Philippines, there are 13 indigenous languages with at least 1 million native speakers and these 13 languages are spoken by 90% of the population. Comparing the proposed states and the languages spoken, and we see a huge similarity. Is this a good justification for Federalism?


Proposed States – 12 Main Languages and Provinces – Provinces and Language of Majority

Also, if we look at the results of the recent elections we also see a similar pattern. Contiguous ( bordering) regions voted for the same candidates. I’m very interested in how the languages and voting patterns relate to the values that are associated with the region. Which states would allow same-sex marriage? How about legalization of marijuana?

Once we know what people value, then we know what Philippines we can aspire for.

Additional: I searched for what the language/people are known for and these were the results.

Proposed State Current Regions  Language – Are known for <> in Google
Metro Manila  NCR  Filipino/Tagalog
Northern Luzon  Region 1-2 (Ilocos, Pangasinan, Cagayan Valley (Isabela Tugugerao), Cordillera (Benguet)


 Ilocano, Pangasinense (Ilocanos are Kuripot)
Central Luzon  Central Luzon (Bulacan, Pampanga, Nueva Ecija)  Kapampangan

(Kapampangans are good cooks)

Southern Luzon  Calabarzon (Cavite, Laguna Batangas, Rizal, Quezon)  Tagalog

(Cavitenos are Brave)

Bicol  Bicol (Camarines Sur, Albay)  Bicolano
Minparom  Mimaropa (Mindoro, Marinduque, Romblon, Palawan)  Tagalog
Eastern Visayas  Eastern Visayas (Samar, Leyte)  Waray


Central Visayas  Central Visayas (Cebu, Bohol)  Cebuano

(Cebuanos are proud, cool)

Western Visayas  Western Visayas (Iloilo, Capiz) NIR (Negros Occidental, Oriental)  Hiligaynon, Ilonggo, Kiniray-a

(Ilonggos are sweet)

Northern Mindanao  Northern Mindanao (Bukidnon, Misamis), CARAGA (Surigao, Butuan), Zamboanga Peninsula  Bisaya, Chavacano, Surigaonon
Southern Mindanao  Davao Region, Soccsksargen (Cotabato, Sultan Kudarat, Saranggani)  Cebuano, Ilonggo
Bangsamoro  ARMM (Maguindanao, Lanao del Sur)  Tausug, Maguindanao, Maranao


Additional Images:


A More Unique Itinerary – Metro Manila

When visiting Metro Manila, what should tourists do? What do locals do?

Do other countries have this food/place/activity? What’s different about our country?

See my 2 previous posts about this, which served as a reference for this post.


This is my take on what a Metro Manila itinerary should be.


Day 1 – Manila


Breakfast at Aristocrat – Popular for Chicken Barbeque. Best to try local breakfasts with Daing na Bangus (Fried Milkfish) as the most unique one.

Walk this Way by Carlos Celdran – This showcases Philippine History, Architecture, Religion etc. in one tour. Spain and USA fought at 4 countries (Philippines, Cuba, Guam and Puerto Rico) with Guam and Puerto Rico ending up as territories of USA.

San Agustin Church – A Baroque Churche

1 of the Philippines’ 6 World Heritage Sites and 1 of the 1031 Total World Heritage Sites


Lunch at Jollibee – The only Fastfood restaurant that beats Mcdonalds! Must try – Fried Chicken, Spaghetti and Peach Mango Pie

Coming Soon – Look around the Galleon Museum at Mall of Asia. This showcases our history as the world’s top seafarers.


Go around Mall of Asia, the world’s 11th biggest mall. – Filipinos love the mall! The Philippines has 4 of the top 11 largest malls in the world. In the Mall of Asia, you can also see the famous Manila Bay sunset.

Dinner at Manam at Mall of Asia  – All the classic Filipino Food plus twists! – Restaurant’s recommendation: Adobo, Crispy Pata(Pork Knuckles), Sisig (Pig ears/liver), Karekare (Oxtail and Tripe with Peanut Sauce) and Sinigang sa Sampaloc (pork tamarind stew)

Pork Adobo – Filipino stew that marinates using soy sauce and vinegar

Day 2 – Quezon City


Breakfast at Pi Breakfast and Pies – Pinoy Breakfast Platter, Beef Tapa (cured beef), Chicken Tocino (sweetened chicken), Pork Longganisa (Pork sausage)


Ultimate Street Food Trip at University of the Philippines Diliman – Isaw Manok/Isaw Baboy (Pig/Chicken Intestines) or Green Mango, Balut (duck egg), Fishballs, Sweet Corn. If you would like to try a jeep, this is probably one of the safest places to try them.


Dinner at Max’s – It’s regular fried chicken but our Banana ketchup is unique. It was made in World War 2 due to the shortage of tomatoes at the time.

Karaoke, Music Bars or Comedy Bars in Tomas Morato – Our entertainment revolves around music and singing, slapstick and gay comedy. Filipinos love to sing, anytime and anywhere. We love singing so much and too much which is why one of the newly inaugurated president’s first laws were to ban Karaoke after 10pm.

Day 3 – Personal preference day.

Looking at our unique Filipino food, we love our organ meats. Nothing goes to waste.

Filipino Food:

Gerry’s/Dencio’s Sisig (Pork Ears, Head),  Baliwag’s Roaster Chicken, Mang Inasal’s  Marinated Chicken, Goldilocks’s Puto (Rice Cake),Dinuguan (Pork blood stew), Polvoron(Shortbread), Macaroons, Kanin Club’s Crispy Dinuguan (crispy pig blood stew), Singing Cooks and Waiters, Chicharon Bulaklak (pig mesentery), URC’s Jack & Jill Chips, Lengua (cow tongue), Lechon (Roasted Pig)

Looking at our unique sites and activites, it based on our history as a Spanish Colony that was also colonized by the US. We are a part of 4 countries (Cuba, Puerto Rico, Guam and the Philippines) that was fought over in the Spanish-American War.

Philippine Activities: 

National Museum – Philippine Art, Luneta – Philippine History, Corregidor – Philippine War History, Grocery/Convenience Stores – Cheap alcohol & cigarettes(San Miguel Beer, Ginebra,Emperador) , Divisoria(masses)/ Greenhills(middle class)/ Greenbelt(elite) – Shopping, Malls – Cheap massages/facials/manicure/pedicure

Other readings:

10 Popular Pasalubong Ideas from the Philippines