Ep. 147: Minimum Wage In The Philippines

Hello and welcome to the Secret Sauce of Outsourcing Podcast. The podcast that is dedicated to helping you do better at outsourcing your work. My name is Jamie, I'm one of John's ofs. Don't worry, John is still the host for this podcast. He just asked me to take over because we'll be talking about minimum wage in the Philippines. So what triggered this episode was an email that we received from Mitchell. Hey John, I've listened to every podcast episode you have. I love them. Short and sweet and to the point, which I appreciate. I would love to hear some episodes on compensation for ofs. I know that will vary based on what position they do, how skilled they are, where they are located, etc. Just like someone in New York or LA is good to make more money than someone in a small town. But I'd love to hear from you and your team about the minimum wage there, how that works, what is considered good, great and amazing in terms of salary and what things cost over there to help us Americans better picture in our minds of what things cost. Thanks in advance. I'm looking forward to this episode. The minimum wage varies per region in the Philippines and it's determined by a committee, a government committee called the Regional Tripartite Wages and Productivity Board. So they base the minimum wage on the cost of living in that area, socioeconomic factors, salary trends, etc. And the biggest cities, the metropolitan cities like Cebu, Davao and Metro Manila, they're the ones that have the highest minimum wage as of June 2022. This is actually the minimum wage. If you're watching the video, you'll see it here. The podcast will include the link that would show you the graphs, the tables we created. So as of June 2022, which is when the board actually increased the wages of a lot of regions here in the Philippines, Metro Manila now has a minimum daily wage for full time work. That means an eight hour workday. The minimum daily wage is around $10.87. Metro Manila is the highest minimum wage. And for Davao, for the cities, Davao is $8.37 and Cebu is $8.58. So that means if you have a person earning minimum wage, if they do full time work, that's 25 working days, eight hours a day they'll be making for in Metro Manila they'll be making 271amonth. For Cebu it's 214 and in Davao it's 209. So are these rates good starting salaries? To be honest, no, not really? Why is that? So I'll be showing you another table which shows the monthly expenses of an average family, let's say a three person family and sole breadwinner. That breadwinner is earning minimum wage. And the cost, the range of the cost is pretty wide because we're taking into consideration the lowest possible cost and the highest possible cost to cover what Mitchell mentioned in his email, the provinces where they have a lower cost of living. So even taking that into consideration, you'll see that the lowest possible expenses, the lowest possible cost would come around $660. And the highest possible cost is this means this person is working in Metro Manila, Everything is more expensive there. It could be as high as 2,259. And we included A plus there for other possible expenses that we may not be able to account for that varies from region to region or family to family. So knowing that you'll be spending at least 660 without even looking at the other possible expenses, let's compare that to the current minimum wage. So in Metro Manila, if you're earning $271 a month, that's just a third of what you need to survive for your family to survive. If you're spending only $660 a month. And this is the reason why most Filipino homes have two breadwinners. And working abroad is such an attractive option. Because if you're making minimum wage, you can't support a family, you'll barely even, you're barely, barely even able to support yourself. But, but when Filipinos work from home, a lot of those expenses can go down. Like the commuting cost of food and clothing expenses. They can go down because you don't have to go out as much. You don't have to buy new clothes, you don't have to spend for a jeep or a train. And some might be able to get rid of rent altogether. Because a reason why a lot of people are renting is so they could live closer to their offices. But if they can work from home, they can work from home. Or they can live with relatives, it could be rent free. Or if they're living with relatives and they're still rent, at least they'll be sharing the rent. It's not as high. But when Filipinos do work from home, the Internet costs go up. Because we have to pay for backup Internet, we tend to get the better plan, the more expensive plans. Electricity costs also rise. The computer will be on most of the day, will have the air conditioning on or the fans on. But it pretty much cancels out sometimes the cost is negligible if we're able to get a lot of the expenses associated with commuting reduced or if we get rid of them completely. If you check our salary guide you'll see that we've set the minimum rate for inexperienced workers really high compared to what's in the minimum wage because we know that if the OFS is the primary breadwinner minimum wage is really not going to be enough. But in a to breadwinner household that salary is going to help cover a lot of the expenses and we didn't set it too high because we also want to give you a bit of room. So if you want to give your OFS a raise when everything works out, you'll have the chance to do so. So I hope this episode has been helpful. If you'd like to see more of me, tell John we'll talk more about this. So I hope this has been helpful. Thank you for listening and you'll see John in the next episode.