Is the Philippines a Third-World Country?

Is the Philippines a third world country? So actually asking this question is a little bit offensive to people in the Philippines. And by the end of this, I hope you'll understand why. So to start, let's define what third world country means. Typically, it means there's a high poverty rate, that there is economic and political instability and typically high mortality rates. So does the Philippines qualify for these? Well, some sort of. Is there lots of poverty? Yes. Is it what you would typically think of as third world country? No, it's not. Is there economic and political instability? Yes, but it's a much more stable country than what you would typically think of for third world. Do they have high mortality rates? Well, not really. So the reality is that third world country in terms of the Philippines is an obsolete classification and they really prefer to be called an emerging economy. They've had significant economic growth, they've had significant infrastructure investment and development. They have a very educated workforce and very highly skilled and talented workforce. The government is fully on board with the education and the upskilling the workforce and with supporting outsourcing there. And they have a very thriving BPO sector which is bringing thousands of jobs to the Philippines. So is it a third world country? Well, let's call it an emerging economy and let's talk through the details of this. Number one, the workforce of the Philippines is very highly educated. Now when I say educated, I mean they have typical elementary school where they start in kindergarten, they go through sixth or seventh grade, then they have high school. And high school is typically grades 9, 10, 11, 12. Now a couple years ago they added senior high school and then they have two more years of high school and this is where they start to learn specialty things, trademark stuff, or specializing in computer science or things like that. Now keep in mind, this is still high school after that. Most people that you will find in the Philippines have a university education, they have a college degree, they have a bachelor's degree. Then in all this, education is where people learn to think. And so you have a lot of really high level thinkers in the Philippines. This leads to a very talented workforce, a very capable and competent workforce. So is that third world? Well, no, it's not. However, finding a long term stable job in the Philippines is hard because the Philippines doesn't have a lot of resources. So there's not a lot of manufacturing, there's not a lot of technological development going on there. This typically means that labor costs are lower because there aren't a lot of jobs and there's a lot of competition for those jobs and so people are willing to accept lower pay. So what is that lower pay? Well, let's talk about income in the Philippines. So a typical low end worker is going to make somewhere between 15,000 and 30,000 Filipino pesos per month. What does that translate to? Well, the typical conversion rate is about 50 to 150 Filipino pesos to 1 US dollar. Right now it's above that it's about 55 to 58. But let's use 50 as an even easy number. So at 15,000 pesos per month, that's 300 US dollars per month. At 30,000 pesos, that's 600 US dollars per month. Now this is for full time work. Also remember this is for an entry level person. When you get to mid level, you're looking at more like 30,000 to 60,000 Filipino pesos a month. So you're looking at $600 to $1,200 US dollars per month for full time work. And then you start to get into like senior roles and managers up to C level people, CEOs or CFOs. So in those roles you're looking at 60,000 to 150,000 Filipino pesos per month. So like US$1,200 to US$3,000 per month for full time for like a C level person. So there's some interesting things going on. Are these US level wages? Absolutely not. Not even close. However, the fact that you have C level people in the Philippines and actually kind of a lot of them lends itself more towards the emerging economy status than a third world status. And the number of people in the mid level roles and in senior roles is really high, like in the tens of millions people in the Philippines in that category. So now let's move into something else that does lend itself more towards it being a third world country, which is the high income inequality. This is something you typically see in third world countries where there's people making almost no money at all. And then you have some really, really rich people. This comes from really developed cities and really rural outlying cities. And this is because the Philippines is an island nation where there are 7,000 islands. You have people on really remote islands. And you have people in Manila, which is the most densely populated city space in the world. And in Manila you have really high education rate and in the outlying areas you have lower education rates. So with this comes income inequality. In the rural areas you have people making the Philippines mandated minimum wage, which is about 8 to $10 per day. And at 22 work days per month, that means somewhere under $200 per month for these people. Now typically these people will work 12 hour days, not just 8 hour days, which makes the hourly rate even lower. So you have people that are really, really living low. Along with that you have some areas where there just are not jobs because there is no industry there. So I'll give an example of this. My son serving as a missionary for the Church of Jesus Christ of Latter Day Saints in the Philippines, served on the island of Marinduque. It's not a small island, but there's almost nothing there. And the people living there really had almost no option for work other than to leave their families and travel to Manila or Cebu or to a big city where they could find a job and work, live there and then send money home to their family in Marinduque. Is it a good situation? No, it's not. Is it a workable situation? Yes, sort of. At least they can make money in the Philippines, which is different than a lot of third world countries where it's almost impossible to even make money. On the other end of the spectrum, you have people in Manila working at really big companies and making quite a bit of money and traveling internationally, owning multiple cars. It's a very different situation. So you have this really high income inequality. Now in typical third world countries you have very little middle class. And in the Philippines they have a really thriving middle class. Now let's add to this outsourcing because the Philippines government has gotten very on board with bringing overseas work into the Philippines, which has created an entire industry, they call it the BPO industry, business process outsourcing. And then there's the virtual assistant industry which the government is also on board with, where people stay at home, they work at home, people overseas hire them, pay them directly. And there are millions of jobs of people like this, virtual assistants who really are hundreds of highly educated, highly talented. So they're staying at home, working at home, doing video editing or graphic design or programming or content writing or customer support. There's this whole huge industry bringing millions of jobs to the Philippines. This has lent itself to a really large and really stable middle class of people. Are most virtual assistants earning C level wages? No, they're not. But some of them are. And most of them are solidly in the middle class earner income. A lot of them are buying cars, they're buying their own houses, they're, they're starting to travel, they're taking vacations. This is a big difference from what you would think of most third world countries. Now when you add to this that a lot of these virtual assistants or people working in BPR are now sending their children to private schools. It's changing the future of the economic outlook of the Philippines because the workforce is becoming more and more educated. And I'll give you an example. I have two people on my team in the Philippines. They're married, they send their daughter to a really high end private school school. She's getting a world class education, winning international competitions, and this is the future of the Philippines. So then let's talk about the cost of living difference. In the Philippines, cost of living is about 190% different than the US cost of living or meaning that stuff in the US costs about four times more. 100% difference would mean twice as much. 200% difference would be four times as much. And that's about what I have seen. I have someone on my team that bought a lot next door to them. It cost US$25,000 and he's in a pretty well developed neighborhood, kind of an upper middle class neighborhood. And $25,000 for a lot. Well, that lot's probably about $100,000 or $200,000. In a similar neighborhood in the U.S. at a typical restaurant you're going to eat for two to $4, which is probably similar to four times less than where two would eat at in the U.S. so the cost of living is significantly lower. However, there are some things where the cost is the same. Specifically, electricity is actually more expensive in the Philippines than it is in the US and Internet is typically about the same cost as in the us so for someone working as a virtual assistant, those are two really big costs that they have to fit into their budget. So to summarize, is the Philippines a third world country? No. It is an emerging economy and there are a number of factors that have contributed to this, including very high education rates, partly because the government is on board. They've had significant investments made into infrastructure development which is driving overseas investments into the Philippines. Thousands or millions of jobs coming to the Philippines because of the talented workforce, the high speed Internet, the reliable infrastructure, and it's all creating a really good stable middle class of people with middle class incomes and actually who are also becoming higher class people with higher class incomes and contributing to the overall economy. They're traveling internationally, they're buying cars, they're buying houses. So that emerging economy is really thriving. Interested in learning more about the Philippines? Subscribe below. If you're interested in learning more about hiring someone from the Philippines like a virtual assistant or a programmer or a designer, check out onlinejobs phone.