What is the Philippine Labor Index (PLI)?

The Philippine Labor Index or PLI is a summary measure that monitors the progress made toward achieving the labor and employment goals of the country.  Expressed in index points, it is similar to the Human Development Index (HDI) where the perfect score is 100.  A high value of the index or the closer it gets to 100 would indicate progress while a low value or the further away it is from 100 would point to a deficit in the labor and employment situation. 

The PLI has been recognized as a pioneer effort in the international arena.  Since the ILO first proposed decent work as a unifying framework for the world’s labor and employment goals, relatively less attention has been given to the issue of indicators.  In coming up with the PLI, the Philippines surges ahead of the other ILO-member states in assessing the country’s performance on decent work and evaluating its progress over time.

In 2001, Secretary Patricia Sto. Tomas saw the need for the country to have only one measure to indicate progress in labor and employment.  During the same year, the Philippines was chosen as one of the pilot areas for the implementation of decent work, particularly its four strategic objectives of: 1) achieving universal respect for fundamental principles and rights at work; 2) creating greater employment and income opportunities for women and men; 3) extending social protection; and 4) promoting social dialogue.    

Against a policy backdrop rife for exploring the possibility of coming up with an index, the DOLE consulted with labor, management, and other government agencies.  During these consultations, there was a unanimous agreement to develop a PLI using the ILO Decent Work Framework. 

With the support of the ILO and the tripartite partners, the DOLE started developing the PLI in 2003.  Using the conceptual dimensions of decent work as basic inputs, a series of triparttite consultations and technical meetings were held during the same year.  These activities, along with the application of statistical tools, led to the formulation of the PLI. 

The country’s labor and employment situation is traditionally assessed using several statistical indicators. These include employment levels, strike incidences, unionization rate, among others.  Taken separately, these indicators may send mixed signals.   A case in point is low unemployment rate but high underemployment or part- time employment.  Since there are various indicators to describe the situation, interest groups may choose indicators to suit their particular needs.  The selection may be subjective and may lead to a biased interpretation.   

With a composite index of key labor and employment indicators, the PLI provides a more balanced and objective assessment of the collective efforts and achievements made toward attaining the country’s employment goals. Further, it relates to outcomes rather than inputs and processes. 

The PLI is not merely intended to provide useful data for researchers. More importantly, it is seen as a tool to generate awareness and advocacy among policy-makers and stakeholders so as to encourage them to focus on labor and employment priority areas.  The PLI also complements other development indicators that are used to monitor the social and economic progress of the working population, such as GDP growth or poverty incidence. 

How were the component indicators selected in the formulation of the PLI?

In determining and assessing the statistical indicators for developing a PLI, the DOLE looked into ILO Working Paper No. 2 on “Measuring Decent Work with Statistical Indicators.”  The following six dimensions of decent work were taken into account: 

Opportunities for work - persons who need work are able to find work that covers all forms of economic activity including self-employment, unpaid family work and wage employment in both formal and informal sectors.

Freedom of choice of employment - work should be freely chosen and not forced on individuals.  Bonded and slave labor as well as child labor are unacceptable and should be eliminated. (Referred to as “Work in Conditions of Freedom” in the ILO paper). 

Productive work - workers should have acceptable livelihoods that deliver fair incomes for themselves and their families while ensuring sustainable development and competitiveness of enterprises and countries. 

Equity in work - women and men need to have equality of opprotunity and treatment in work.  It encompasses absence of discrimination at work and in access to work and ability to balance work with family life.  

Security at work - safe workplaces should be ensured and workers’ health, livelihoods and pensions should be safeguarded.  There should be provisions for workers and families for adequate financial and other protection in the event of health and other contingencies.  It also recognizes workers’ need to limit insecurity associated with the possible loss of work and livelihood. 

Representation at work - workers should be  treated with respect at work.  They should be able to join organizations to represent their interests collectively, be free to voice their concerns and participate in decision making on their terms and conditions of work. (Referred to as “Dignity at Work” in the ILO paper. It was renamed “Representation at Work” as this term has more intuitive appeal than the other nomenclature.

Further, it describes better the component indicators under it).

The first two conceptual dimensions are concerned with the availability of work and the acceptable scope of work.  The other four dimensions are concerned with the extent to which the work is decent or the quality of employment. 

What are these component indicators?

The 18 component indicators were drawn from an inventory of statistical indicators and from the suggestions of the participants in the consultations leading to the formulation of the PLI.  These indicators reflect the dimensions of decent work. These indicators are widely accepted by the public.  To gauge its general acceptability, the inventory of statistical indicators for the development of the PLI, including those suggested by the ILO indicators, were presented in a series of consultations with stakeholders.

Freedom of Choice of Employment

- economic activity rate of children 10-14 years old
- school attendance rate of children 10-14 years old

Productive Work

- percentage of employed working 40 to 48 hours a week to total employed
- visible underemployment rate
- percentage of low-paid employees to total employees

Equity in Work

- female-male ratio in non-agricultural wage employment
- industry-agriculture hourly basic pay ratio
- female-male hourly basic pay ratio for clerical, sales, and service occupations

Security at Work

- percentage of permanently employed to total employed
- percentage of workers covered by social security schemes to total self-employed and employees
- permanently displaced workers due to economic reasons per 1,000 wage and salary workers in private establishments

Representation at Work

- union density rate in private and government  establishments
- collective bargaining coverage rate in private establishments
- workdays not worked due to strikes and lockouts per workers
- percentage of worker association membership to total employed

The shortfall or gap approach, also used for the HDI, was considered in the construction of the dimension indices.  In this approach, each component indicator is assigned with minimum and maximum values or benchmarks. 

How were the benchmarks established?

What problems were encountered in the  computation of the PLI?

The unavailability of long running data series, timeliness in the release of statistics, and revision in the data values by source agencies were raised during the index construction. With the absence of statistics for some indicators, the PLI was computed from 2001 – 2004 only. With the new definition of unemployment that took effect in April 2005, the PLI data series would have to be moved to 2005 to ensure data comparability

What strategies were done to address these problems?

Toward ensuring timeliness in the release of statistics, the social partners are one in saying that intensive dialogues with data producers of the statistical indicators used in the computation of the index will have to undertaken as soon as possible.  These agencies have to be encouraged to strengthen their data collection system not only for the component indicators of the PLI but also on the supporting indicators that will sharpen the analysis of decent work status in the country.\

How do you interpret the PLI?  What score or index point can be considered a good or poor performance?

As mentioned earlier, the PLI is similar to the HDI and therefore has a perfect score of 100.  A high value of the index or a value closer to 100 means a more favorable labor situation.  

To illustrate, a score of 60 would mean that we are 40 points away from the ideal situation.  However, we cannot say with certainty whether this is good or bad because this entails a value judgment.  

Performance vis-à-vis the desired targets, particularly looking into progress or deficit concerns, may also be compared over time by looking at the magnitude and direction of the index from one year to another.  For example, an increase in the index from 60 to 65 indicates an improvement of 5 index points or 35 points closer to the ideal score of 100.  The direction of change is also important in interpreting the result. 

How reliable is the PLI as a measure of labor and employment situation?

Does the PLI measure government performance relative to the labor and employment situation?

A low index does not necessarily mean government or governance measures have failed.  Neither does a high index mean that government has done its job well.  The PLI gauges outcomes rather than inputs and processes toward the attainment of labor and employment goals.  Such outcomes may be the result of multi-sectoral efforts and should therefore not be solely credited or debited to government performance. The index, therefore, cannot adequately encompass the whole governance spectrum that would necessarily also include other factors not countenanced by the indices.   

As a pioneer effort, the PLI only describes the labor and employment situation in the country.  It cannot however be used as a point of comparison with other countries.  Comparisons may only be done using internationally accepted indicators and benchmarks. There are current efforts to undertake the construction of a Decent Work Index (DWI) that measures changes in employment and labor conditions on a country-by-country basis.  

Have other ILO member-countries developed a labor index?  Can the PLI be used as a reference for other countries? 

Some countries have compiled data on decent work indicators and are in the process of developing their own decent work indices.  As a pioneer effort, the PLI may be used as a model in constructing other countries’ Labor Indices.  But as countries around the world have varying institutional and structural characteristics, they would expectedly have different sets of indicators and benchmarks