Firms shun layoffs despite rising costs

Published by rudy Date posted on April 28, 2009

Cuts on ‘non-people-related expenses’

MANILA, Philippines — Local companies are shunning staff cuts as a means of reducing costs and are instead focusing on improving operating efficiencies, according to a survey being conducted by the Management Association of the Philippines (MAP).

Because of this, the business lobby group said it would conduct programs aimed at helping firms—especially small and medium enterprises (SMEs)—reduce business costs while reinforcing their bias against implementing socially and economically disruptive layoffs.

According to the preliminary results of the survey, which is still ongoing, 61 percent of respondent firms were resorting to “improving productivity, such as the use of automation and information and communications technology” to reduce business costs. This includes computerizing activities that were previously done manually, as well as cutting down on business travel and resorting to teleconferencing, among others.

The survey also showed that 33 percent of firms polled have resorted to “business process reengineering such as redesigning organizational processes.”

Another 21 percent of respondents have resorted to outsourcing or “out-tasking” to reduce operating expenses.

“Surprisingly, retrenchment and offshore expansion, which means moving out of the Philippines, were the last viable options being considered by companies,” MAP said in a statement.

Briefing reporters on the survey yesterday, MAP trade, industry and ICT committee chair Elizabeth Lee noted that companies in emerging economies appeared to be better prepared to cope with the global financial crisis.

Despite this, the present environment “would be a great opportunity for companies to find ways on how to lower their costs of doing business in order to survive the crisis and be more competitive,” she said, explaining the rationale of the survey.

Companies were also polled to find out the costs that local firms are most concerned about.

According to the survey, 39 percent of respondents considered electricity as the most common cost that they wanted reduced. The high cost of corporate taxes was the top concern, but this was not reflected across all companies in the survey.

Other “immediate” concerns included the cost of travel (with 43 percent of firms wanting this reduced), logistics like inventory handling (36 percent), fuel costs (33 percent), storage and rental facilities (33 percent) and marketing and advertising (33 percent).

To mitigate the effects of the crisis, MAP officials said they were encouraging their members “not to contribute to the unemployment rate,” but instead focus on reducing “non-people-related” costs of doing business.

Companies are also being encouraged to tap the support of government agencies and business organizations.

The survey covered a cross section of Philippine businesses in manufacturing and services, ranging from car manufacturing, ICT, financial institutions and service providers like logistics and BPO firms.–Daxim Lucas, Philippine Daily Inquirer

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