‘Reasonable’ pay hike won’t impact BPO growth: Romulo

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Sunday, March 29, 2015


REASONABLE pay increases will not dampen the rapid expansion of the country’s labor-intensive information technology (IT) and business process outsourcing (BPO) sector, Pasig City Rep. Roman Romulo said Sunday.

“We do not see the P15-inrcease in the daily minimum wage (for private sector workers in Metro Manila) influencing the decision of BPO players to either step up, or slow down hiring,” said Romulo, a key industry backer.

Many college-educated, highly skilled employees in the BPO sector already receive higher wages.

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While these employees may not be directly covered by the increased minimum pay, the adjustment will nonetheless create “wage distortions” in their favor, according to Romulo.

The Labor Code defines wage distortion as “a situation where an increase in prescribed wage rates results in the elimination or severe contraction of intentional quantitative differences in wage or salary rates between and among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of differentiation.”

A wage distortion is usually corrected through commensurate pay increases for those employees not initially meant to be covered by the specified increment.

Romulo also said “fair wage increases” will not diminish the country’s global competitiveness.

“If we look at India and our other competitors in the BPO space, their wages are rising faster than ours,” he said.

Foreign exchange rate fluctuations tend to have greater weight on BPO operations than wage increases, Romulo said.

Like exporters, BPO firms sell their services to overseas clients. They generate revenues in US dollars, but spend for their operations here in pesos.

A weak peso and a strong dollar are considered beneficial to BPO firms. In contrast, they may be disadvantaged by a rising peso and a declining US currency.

BPO firms gained more when the peso-dollar rate averaged 44:1 in 2014 versus 42:1 in 2013.

The IT and Business Processing Association of the Philippines sees the sector directly employing up to 1.3 million Filipinos and yielding some $26 billion in annual revenues by 2016.

The sector includes contact centers, back offices, data transcription, animation, software development, engineering design, and digital content.

Romulo is author of the Data Privacy Act of 2012, which has helped to attract global firms to either establish new in-house outsourcing units in the Philippines, or relegate their non-core, business support activities to independent BPO providers operating here.

The law mandates all entities, including BPO firms, to protect the confidentiality of personal information collected from clients and stored in IT systems, in accordance with rigorous international privacy standards.

Last week, the National Capital Region’s Tripartite Wages and Productivity Board ordered a P15-increase in the minimum wage.

The new P481 statutory floor wage will take effect next month, 15 days after publication of the order. (PR)

Published in the Sun.Star Cebu newspaper on March 30, 2015.

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