TUCP sees more US firms moving to RP

Published by rudy Date posted on November 14, 2006

Trade Union Congress of the Philippines (TUCP) said yesterday Filipino workers can cash in on the lower labor cost in the country and encourage more American firms to transfer operations here.

TUCP secretary general and former Sen. Ernesto Herrera said that with the rising wages in the US, many corporations there may be driven to look at other countries with significantly lower labor costs like the Philippines.

“As wages rise and margins contract in the US, corporations there will be constrained to offshore more processes to lower cost locations such as the Philippines, where they can be more gainful,” Herrera said.

Herrera issued the statement as six more US states – Arizona, Colorado, Missouri, Montana, Nevada and Ohio – raised the hourly minimum wage levels by $1 to $1.70 which is equivalent to P85.

So far, 29 of the 50 states in the US have minimum wages higher than the statutory rate of $5.15 per hour.

With the development, Herrera said many companies in the US are now under pressure to engage in “labor arbitrage” or corporations conducting operations in two or more human capital markets to earn more.

Herrera noted that wages in the Philippines and other neighboring Asian countries are way below that of the salary rate in the US.

“Our biggest rivals are actually Vietnam and China. India is not much of concern now because wages for skilled workers there have been climbing 12 to 15 percent yearly,” he said.

But he stressed Filipinos enjoy a big advantage over workers from Vietnam and China because of their ability to speak English and proficient skills. –Mayen Jaymalin, Philippine Star

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