Activities of Employment Placement Agencies industry leads the sector

Final results of the 2010 Annual Survey of Philippine Business and Industry showed that a total of 6,272 establishments were engaged in Administrative and support service activities.

Activities of employment placement agencies comprised 2,442 or 38.9 percent of the total number of establishments. This was followed by establishments engaged in travel agency and tour operator activities with 876 (14.0%). Ranked third were establishments engaged in private security activities with 726 (11.6%). Business support service activities and renting and leasing of personal and household goods contributed about seven percent each while call centers and other related activities and renting and leasing of other machineries 6.5 percent each. The rest of the industries contributed about 8.4 percent of the total. (See Figure 1)

Call center activities industry employs the highest number of workers

The sector employed a total of 523,709 workers in 2010. Almost all (99.6%) workers were paid employees and the rest were working owners or unpaid workers.

Call center activities, despite ranking only fifth in number of establishments, employed the largest number of workers 221,292 (42.3 percent). Private security activities followed with 115,069 employees (22.1%). Ranked third were activities of employment placement activities with 110,332 employees or 21.1 percent. (See Fig. 2)

Other reservation service and related activities workers are the highest-paid employees

The sector paid a total compensation of PHP103.2 billion equivalent to an average annual compensation of PHP197,837 per paid employee in 2010.

Industry wise, call center activities paid the highest compensation of PHP67.9 billion comprising almost two thirds (65.8%) of the total compensation. Activities of employment placement agencies placed far second with PHP16.2 billion or 15.7 percent. Private security activities ranked third with PHP10.8 billion or 10.5 percent. On the other hand, investigation activities recorded the lowest amount of PHP13.1.

Workers in other reservation service and related activities were the highest-paid employees receiving an average of PHP355,945 per annum. Employees of organization of conventions and trade shows and call centers followed next with PHP351,764 and PHP307,461, respectively. However, those employed in investigation activities were paid only an average of PHP47,611.(See Fig. 3)

Call center activities contribute the biggest share in revenue and cost

Total revenue generated by the sector reached PHP212.0 billion in 2010. Call center activities had the biggest share with PHP129.8 billion or 61.2 percent of the total. Activities of employment placement agencies ranked second with PHP36.5 billion (17.2%). Private security activities ranked third with PHP14.9 billion (7.0%).

Total cost (excluding compensation paid to employees) amounted to PHP81.1 billion in 2010. Being the major contributor in revenue, call center activities also had the largest proportion in cost with PHP44.0 billion (54.3%). Activities of employment placement agencies followed next with PHP16.9 billion (20.8%). On the other hand, investigation activities incurred the lowest cost at PHP32.3 million. Figure 4 shows the top five industry groups in terms of revenue and cost.

Value added amounts to PHP140.5 billion

Value added realized by Administrative and Support Service Activities sector totaled PHP140.5 billion in 2010.

Industry wise, call center activities registered the highest value added with PHP91.8 billion (65.3%). Activities of employment placement agencies ranked far second with PHP20.6 billion (14.7%) while private security agencies ranked third with PHP12.8 billion (9.1%). On the other hand, investigation activities recorded the least with PHP14.6 million. (See Fig. 5)

Renting and leasing of other machinery, equipment and tangible goods n.e.c. has the highest labor productivity

Value added per employee, a measure of labor productivity, was estimated at PHP268,342. Renting and leasing of other machinery led the sector with PHP849,764 while investigation activities, the lowest with PHP52,448 only.

Gross addition to fixed assets reaches PHP5 billion

Gross addition to fixed assets (capital expenditures less sale of fixed assets) acquired by the sector reached PHP5 billion in 2010.

Call center activities acquired the biggest gross addition to fixed assets with PHP3.4 billion. This was followed by renting and leasing of other machinery, equipment and tangible goods n.e.c., and activities of employment placement agencies with PHP484.2 million and PHP430.3 million, respectively. On the other hand, combined facilities support activities had the least with PHP3.3 million.

Total change in inventories amounts to PHP272.5 million

Total change in inventories (ending less beginning inventory) amounted to PHP272.5 million in 2010. Renting and leasing of other machinery, equipment and tangible goods n.e.c. had the highest change in inventory with PHP302.7 million. Cleaning activities, travel agency and tour operator activities and private security activities followed with PHP9.6 million, PHP7.7 million and PHP7.5 million, respectively. On the other hand, business support service activities, n.e.c., call center and other related activities, security systems service activities and investigation activities reported negative values of change in inventories.

Total subsidies received from the government amounts to PHP1.4 million

Total subsidies received from the government amounted to PHP1.4 million in 2010.

Only two industry groups received subsidies from the government. Activities of employment placement agencies and private security agencies received PHP1.2 million and PHP200 thousand, respectively.

TECHNICAL NOTES

Introduction

The Annual Survey of Philippine Business and Industry (ASPBI), conducted in 2011 with 2010 as reference year, is one of the continuing activities of the National Statistics Office. It will be a source of benchmark levels on the structure and trends of economic activities in the country for the year 2010. Particularly, the data from ASPBI will be used in constructing national and regional income accounts in the country, determining and comparing regional economic structures, and formulating plans and policies of the government in the attainment of economic goals..

The conduct of the ASPBI is governed by legislative acts and presidential directives, specifically Commonwealth Act No. 591 which was approved on August 19,1940..

Scope and coverage

The 2010 ASPBI covered establishments engaged in 18 economic sections classified under the 2009 Philippine Standard Industrial classification (PSIC) namely:

• Agriculture, Forestry and Fishing
• Mining and Quarrying
• Manufacturing
• Electricity, Gas, Steam and Air Conditioning Supply
• Water Supply, Sewerage, Waste Management and Remediation Activities
• Construction
• Wholesale and Retail Trade; Repair of Motor Vehicles and Motorcycles
• Transportation and Storage
• Accommodation and Food Service Activities
• Information and Communication
• Financial and Insurance Activities
• Real Estate Activities
• Professional, Scientific and Technical Services
• Administrative and Support Service Activities
• Education
• Human Health and Social Work Activities
• Arts, Entertainment and Recreation
• Other Service Activities

The scope of the ASPBI was confined to “formal sector” only, which consists of the following:

• Corporations and partnership
• Cooperatives and foundations
• Single proprietorships with employment of 10 or more
• Single proprietorships with branches

Like all other establishment surveys conducted by the NSO, the 2010 ASPBI used establishment as the unit of enumeration. It is defined as “an economic unit under a single ownership or control, i.e. under a single legal entity, engaged in one or predominantly one kind of economic activity at a single fixed location.”.

Classification of Establishments

Before the actual selection of samples, the establishments listed in the frame were classified based on economic organization (EO), legal organization (LO), industrial classification, employment size, and geographic location.

Economic organizations relates to the organizational structure or role of the establishment in the organization. The following are the types of economic organization:

• Single establishment is an establishment which has neither branch nor main office
• Branch only is an establishment which has a separate main office located elsewhere
• Establishment and main office, both located in the same address and with branches elsewhere
• Main office only is the unit which controls, supervises and directs one or more establishments of an enterprise
• Ancillary unit other than main office is the unit that operates primarily or exclusively for a related establishment or group of related establishments or its parent establishment and provides goods or services that support but do not become part of the output of those establishments

The legal organization provides the legal basis for ownership of the establishment. The following are the types of legal organization:

• Single Proprietorship (LO = 1)  -  refers to a business establishment organized, owned, and managed by one person, who alone assumes the risk of the business enterprise. The establishment name is that of a person, or it has words such as Owner, Proprietor or Operator.
• Partnership (LO = 2)  -  refers to an association of two or more individuals for the conduct of a business enterprise based upon an agreement or contract between or among them to contribute money, property or industry into a common fund with the intention of dividing profits among themselves. The establishment name includes words such as Owners , Partners, Limited or LTD., Associates or ASSOCS.
• Government Corporation (LO = 3)   -  - a corporation organized for private aim, benefit or purpose with the government as the majority stockholder, regardless of whether they are stock or non-stock corporations. The establishment name includes words such as Corporation or Corp., Incorporated or Inc.
  

  Specifically, a Government-Owned or Controlled Corporation (GOCC) as defined under Presidential Decree No. 2029 of 1986 , is “a stock or a non-stock corporation, whether performing governmental or proprietary functions, which is directly chartered by special law or, if organized under the general corporation law, is owned or controlled by the government directly or indirectly through a parent corporation or subsidiary corporation, the extent of at least a majority of its outstanding capital stock or of its outstanding voting capital stock.” Any subsidiary of a GOCC shall also be deemed a GOCC.

  Under the same PD No.2029, a GOCC may be classified as a parent or subsidiary corporation. A parent corporation is one which is created by special law, whereas a subsidiary corporation is one created pursuant to law where at least a majority of the outstanding capital stock or outstanding voting capital stock of which is owned by parent government corporation and/or other government- owned subsidiaries.

  Memorandum Circular No. 64 of 1993 expanded the definition as follows:” ... a corporation created by special law or incorporated and organized under the Corporation Code and in which government, directly or indirectly, has ownership of the majority of the capital stock or voting stock”.

• Stock Corporation (LO = 4)  -  an ordinary business corporation organized by private persons, created and operated for the purpose of making a profit which may be distributed in the form of dividends to stockholders on the basis of their invested capital. The establishment name includes words such as Corporation or Corp., Incorporated or Inc.
  

  For the purposes of the 2010 ASPBI, corporations organized under foreign laws are to be classified under Stock Corporation. These are:

  1. Branch Office  - a foreign corporation organized and existing under foreign laws that carries out business activities of the head office and derives income from the host country. It is required to put up a minimum paid up capital of US$200,000, which can be reduced to US$100,000 if activity involves advanced technology, or company employs at least 50 direct employees. Registration with the SEC is mandatory.
  2. Representative Office   - a foreign corporation organized and existing under foreign laws. It does not derive income from the host country and is fully subsidized by its head office. It deals directly with clients of the parent company as it undertakes such activities as information dissemination, acts as a communication center, and promotes company products, as well as quality control of products for export. It is required to have an initial minimum inward remittance in the amount of US$30,000 to cover its operating expenses and must be registered with the SEC. Under Republic Act (RA) 8756, any multinational company may establish a Regional Headquarter (RHQ) or Regional Operating Head Quarter (ROHQ) as long as they are existing under laws other than the Philippines, with branches, affiliates, and subsidiaries in the Asia Pacific Region and other foreign markets.
  3. Regional Headquarters (RHQs)   - undertakes activities that shall be limited to acting as supervisory, communication, and coordinating center for its subsidiaries, affiliates, and branches in the Asia-Pacific Region. It acts as an administrative branch of a multinational company engaged in international trade. It does not derive income from sources within the Philippines and does not participate in any manner in the management of any subsidiary or branch office it might have in the Philippines. Required capital is US$50,000 annually to cover operating expenses.
  4. Regional Operating Headquarters (ROHQs)  - performs the following qualifying services to its affiliates, subsidiaries, and branches in the Philippines: general administration and planning, business planning and coordination, sourcing/procurement of raw materials components, corporate finance advisory services, marketing control and sales promotion, training and personnel management, logistic services, research and development (R&D) services and product development, technical support and communications, business development, derives income in the Philippines. Required capital is US$200,000 - one time remittance.
     
     • Non-Stock, Non-Profit Corporation (LO = 5)  - a business corporation which does not issue stock to its members and is created not to profit but for the public good and welfare. Of this character are most of the religious, social, charitable, educational, literary, scientific, civic and political organizations and societies. The establishment name includes words such as Corporation or Corp., Incorporated or Inc.
     • Cooperative (LO = 6)   - an organization composed primarily of small producers and/or consumers who voluntary join together to form a business enterprise, which they themselves own, control and patronize. The establishment name includes words such as Cooperative or COOP
     • Others (LO = 7)   - an organization not classified in any of the above classification. It includes private associations, foundations, Non-Governmental Organizations, or other forms of legal organizations.

     The industrial classification of an economic unit is determined by the activity from which it derives its major income or revenue. The 2009 PSIC is utilized to classify units according to their economic activities.

     The 2009 PSIC consists of an alpha character and 5 numeric digits. The alpha character, which represents the major division, is denoted by the characters A to S. The first two numeric digits represent the division; the first three numeric digits, the group; the first four digits, the class; and the 5 digits, the sub-class.

     The size of the establishment is determined by its total employment (TE). The following are the employment size classification used in the 2010 ASPBI:

     

     The geographic or physical location of the establishments was classified in accordance with the Philippine Standard Geographic Code (PSGC) as of December 31, 2010 which contains the latest updates on the number of regions, provinces, cities, municipalities and barangays in the Philippines.

     The geographic domains of the 2010 ASPBI for establishments with TE of 20 and over are the 17 administrative regions while the whole country serves as the geographic domain for establishments with TE of less than 20.

     Hence, the samples of the 2010 ASPBI with TE of 20 and over shall provide data for 17 administrative regions. For samples with TE of less than 20, the data that will be presented is limited only at the national level.

     Response rate

     A total of 1,509 or 94.49 percent of sample establishments responded. These include receipts of “good” questionnaires, partially accomplished questionnaires, reports of closed, moved out or out of scope establishments.

     CONCEPTS AND DEFINITIONS OF TERMS

     Economic activity or business is the activity of the establishment as classified under the 2009 Philippine Standard Industrial Classification (PSIC). Generally, the main activity of the establishment is the establishment's principal source of income. If the establishment is engaged in several activities, its main activity is that which earns the biggest income or revenue.

     Total employment is the number of persons who worked in or for this establishment as of November 15, 2010.

     Paid employees are all persons working in the establishment and receiving pay, as well as those working away from the establishment paid by and under the control of the establishment. Included are all employees on sick leave, paid vacation or holiday. Excluded are consultants, home workers, workers receiving pure commissions only, and workers on indefinite leave.

     Salaries and wages are payments in cash or in kind to all employees, prior to deductions for employee’s contributions to SSS/GSIS, withholding tax, etc. Included are total basic pay, overtime pay, and other benefits.

     Revenue is the value of goods, products/by-products sold and/or services rendered to others whether paid in cash or is considered receivable by the establishment. Valuation of products/by products sold should be in producer’s price (ex-establishment), net of discounts and allowances, including duties and charges but excluding subsidies. It also include goods transferred and/or services rendered to other establishment belonging to the same enterprise as the said establishment which should be treated as sales or as if sold to a customer; and revenue from products on a contractual basis from materials supplied by the establishment.

     Cost refers to all expenses excluding compensation incurred during the year whether paid or payable. Valuation should be at purchaser price including taxes and other charges, net of discounts, rebates, returns and allowances. Goods received from and services rendered by other establishment of the same enterprise are valued as though purchased.

     Valued added is gross output less intermediate cost.

     Gross output is equal to the sum of total revenue (less rent income from land, royalty income and franchise income), capital expenditures of fixed assets produced on own account, and change in inventory.

     Intermediate cost is equal to the sum of the following cost items: materials and supplies; fuels, lubricants, oils and greases; electricity and water; cost of industrial services done by others; cost of non-industrial services done by others (less rent expense for land); research and experimental development expense; environmental protection expense; royalty fee; franchise fee and other cost; less change in inventory of materials and supplies; fuels, lubricants, oils and greases; and goods for resale.

     Tangible Fixed assets are physical assets expected to have productive lives of more than one year and intended for use and/or being used by the establishment. Included are land, buildings, other structures and land improvements, transport equipment, machinery and equipment, furniture, fixtures, and other tangible fixed assets.

     Book value of tangible fixed assets is the initial value or acquisition cost of tangible fixed assets less the accumulated depreciation.

     Gross additions to tangible fixed assets is the sum of cost of new and used fixed assets acquired during the year, cost of alteration and improvements done by others and cost of fixed assets produced by the establishment less the value of sales of fixed assets during the year.

     Inventories refer to the stocks of goods owned by and under the control of the establishment as of a fixed date, regardless of where the stocks are located. Valuation should be at current replacement cost in purchaser's price at the indicated dates. Replacement cost is the cost of an item in terms of its present price rather than its original price.

     Change in Inventories is equivalent to the value of inventories at the end of the year less the value at the beginning of the year.

     Subsidies are special grants in the form of financial assistance or tax exemption or tax privilege given by the government to aid and develop an industry or production and to protect it against competition.