Importance of

Performance
Management Process &
Best Practices To
Optimize Monitoring
Performance Work
Reviews/Feedback and
Goal Management
In today's workplace, performance improvement
and the role of performance management is an
increasingly popular topic. Why the intense focus
on performance management now? Business
pressures are ever-increasing and organizations are
now required to become even more effective and
efficient, execute better on business strategy, and do
more with less in order to remain competitive.
While human resources professionals clearly
understand the importance of optimal performance
management, they often face significant internal
obstacles. When someone mentions performance
management or reviews at your organization, what
is the typical response? Do employees and
managers alike cringe? Do they avoid performance
management related tasks? Do visions of tracking
down incomplete appraisal forms come to mind?
This can be changed.
Forward thinking companies are taking steps to
successfully address this negative view of
performance management. They are implementing
innovative solutions that ensure processes deliver
real results and improve performance. The purpose
of this guide is to provide concrete guidelines and
practical steps that can be used to improve the
performance management processes at your
organization. In addition, a new class of automated
performance management solutions has emerged to
specifically address small- and medium-sized
businesses. We conclude this guide with a few tips
for selecting an automated performance
management system to implement best practices
across your company.

The Performance ReviewOnly Part of an

Ongoing Process
Frequently when performance management is
mentioned, people think of the employee
performance appraisal or review. Performance
management, however, involves so much more.
Properly constructed appraisals should represent a
summary of an ongoing, year-round dialogue.
Focusing only on an annual appraisal form leads to
misunderstanding and under appreciation of the
benefits of performance management.
An effective performance management process
enables managers to evaluate and measure
individual performance and optimize productivity
by:

Aligning individual employee's day-to-day

actions with strategic business objectives
Providing visibility and clarifying
accountability related to performance
expectations

Documenting individual performance to

support compensation and career planning
decisions

Establishing focus for skill development and

learning activity choices

Creating documentation for legal purposes,

to support decisions and reduce disputes

"As shown in Watson Wyatt's Human Capital

Index research report superior human capital
practices not only are correlated with financial
returns, but also are a leading indicator of increased
share holder value" WorkUSA 2004: An Ongoing
Study of Employee Attitudes and Opinions
www.Watsonwyatt.com.
Many of the practices that support performance also
positively impact job satisfaction, employee
retention and loyalty. Recommended practices
include:

Delivering regular relevant job feedback

Setting and communicating clear
performance expectations

Linking performance to compensation

clearly

Identifying organizational career paths for

employees

Evaluating performance and delivering

incentives in a fair and consistent manner

Providing appropriate learning and

development opportunities

Recognizing and rewarding top performers

Consequences of a Poorly Structured Process

What is the impact of a poorly structured
performance management process? If individual
goals are not aligned with business strategy, then
time and resources are wasted. Low employee
engagement levels may mean that individuals are
not performing at their best. Inconsistent evaluation
criteria and rewards can lead to mistrust, lower
productivity and higher attrition. If top performers
see no differentiation in performance ratings,
opportunities and compensation from
underperformers, morale can suffer. Lack of
documentation, visibility, and accountability can
negatively affect stakeholders who are demanding
more and more transparency. If accurate
performance information is unavailable or difficult
to access, training and development decisions along
with project assignment decisions may not be made
in the company's or the individual's best interests.
An annual process will not adequately alert
managers to problems in a timely manner. Last, but
not least, a lack of proper documentation related to
performance may result in legal issues.
Management "buy-in" is equally important to the
performance management process. If management
does not understand the importance and value of the
process, it can lead to consistently late or
incomplete appraisals, mistrust, avoidance of
performance discussions, and a lack of honest
performance-related discussions. Often managers
may feel unprepared to deliver quality feedback and
oversee effective performance discussions.
A Closer Look at the Importance of Performance
Management

The primary reason to make sure performance

management processes are functioning properly is
to tighten the link between strategic business
objectives and day-to-day actions. Effective goal
setting (including timelines), combined with a
method to track progress and identify obstacles,
contributes to success and bottom line results.
Regularly tracking progress against performance
goals and objectives also provides the opportunity
to recognize and reward employees for performance
and exceptional effort, contributing to job
satisfaction and productivity. Employees want to
feel successful, to do well at their job and feel they
are making a valuable contribution. In order to
ensure this happens, employees need a clear
understanding of individual goals and how they fit
into the larger organization. New technology-based
solutions offered can provide goal visibility across
entire organizations, offer extensive reporting
options and can reduce paperwork by as much as
90%.
Clear visibility, regular individual analysis, and
company-wide employee appraisals help identify
corporate competencies and skill gaps. With this
valuable data in hand, companies can identify
training and development plans.
When effectively implemented, performance
management best practices result in a wide range of
benefits for employees, managers and companies.
Organizationwide

Supervisors /
Managers

Employees

Savings

Time Savings

Clarification of
Expectations

Accuracy

Reduced
Conflicts

Improved Selfassessment

Accountability

Visible
Accountability

Improved
Performance

Productivity

Efficiency

Career Paths

Retention

Consistency

Job Satisfaction

Communication Performance
Performance
10 Ways To Optimize The Performance Review
Process

1. Set Goals Effectively

Goals are the basis of an effective process. There
are two key elements to consider when developing
goals. First, are goals written clearly and
objectively? Second, are they directly contributing
to the achievement of business strategy?
Clearly communicating strategic business objectives
is the first step to creating alignment. Providing
visibility to goals set by departments across the
organization furthers alignment. Typically the
process begins with departmental managers setting
goals for their departments, based upon
organization-wide goals, which support the general
business strategy. Making departmental goals
accessible to all managers ensures there is no
overlap, reduces conflict, and allows members of
different departments to see where they support
each other and ensure they are not working at cross
purposes. Each manager in turn shares the overall
goals with his/her department and meets with
employees to identify individual performance goals
and plans.
When setting goals, key job expectations and
responsibilities should act as the main guide and
reference. Goals should be set that not only address
what is expected, but also how it will be achieved.
For example, the "what" covers quality or quantity
expected, deadlines to be met, cost to deliver, etc.
The "how" refers to the behavior demonstrated to
achieve outcomes, for example, focus on customer
service. In addition, some organizations choose to
include competencies within performance
expectations, to reinforce the link to business
strategy, vision and mission.

managers choose to further define goals with a start

and finish date with milestones in between. As we
have mentioned, goals must be achievable and
realistic. An unachievable goal is just that. An
employee knows when he/she does not stand a
chance of reaching it, and their effort to achieve the
goal will be affected. In addition, goals must reflect
conditions that are under the employee's control and
the R's (results oriented, realistic and relevant)
should definitely consider these conditions.
Sometimes the focus on the outcome of the goals
can overshadow the necessary steps to achieve
them. Action plans to support each goal can include
documentation of the steps necessary to achieve a
goal. By keeping goals relevant, a manager
reinforces the importance of linking to strategic
objectives and communicating why the goal is
important. Some organizations have suggested the
use of SMARTA, or SMARTR with the additional A
standing for aligned and the R standing for reward.
A focus on objective, behavioral-based, and
observable outcomes that are job-related helps
ensure fairness of the process and reduces
discrepancy. Although sometimes difficult to hear,
objective feedback supported with regular
documentation is difficult to dispute. This is also
where an understanding of the organization's overall
objectives and goals and how individual efforts
contribute becomes essential. If for example, an
individual understands that their actions support an
area of the business then it is easier to understand
the impact when deadlines are not met. Using the
SMART framework provides clarity up front to
employees who will be evaluated against these
goals.
2. Begin with Performance Planning

An accepted framework to use to help write

effective goals is the "SMART" goal:
S - Specific
M - Measurable
A - Achievable/Attainable
R - Results oriented/Realistic/Relevant
T - Time bound
The inclusion of the above criteria results in a goal
that is understandable and easily visualized and
evaluated. Making a goal specific, measurable, and
time bound contributes to the ability to make
progress on the goal and track that progress. Some

Using established goals as a basis, performance

planning sets the stage for the year by
communicating objectives, and setting an actionable
plan to guide the employee to successfully achieve
goals.
Performance planning, as with all other steps, is a
collaborative process between the manager and
employee, although there will always be some
elements that are non-negotiable. Begin with the job
description and identify major job expectations;
expectations then can be clarified for each major
area.

Under each key contribution area, it is important to

identify long-term and short-term goals, along with
an action plan around how they will be achieved.
Goals can be weighted to identify priorities. Discuss
specific details related to how progress against
goals will be evaluated. Next steps include
determining any obstacles that would stand in the
way of these goals being achieved. If an obstacle is
knowledge, skills or behaviora plan should be
developed to overcome, i.e.; training, mentoring,
etc.
Using the performance planning document as a
reference document, the employee and manager
then should regularly monitor progress against
goals, problem solve road blocks, re-assess goals,
change goals as business direction changes, and reevaluate training and resource needs. This is where
the conversation is critical and often where the
follow through sometimes falls down. Performance
planning and ongoing performance feedback are
critical because they facilitate continuous
improvement and aid open communication.
3. Ensure an Ongoing Process
As the following diagram illustrates, goal setting,
performance planning, performance monitoring,
feedback and coaching is ongoing and supports the
creation of the performance appraisal, which in turn
supports processes related to rewards, learning and
development. Performance monitoring, feedback
and coaching creates a separate feedback loop
within the larger loop which should take place more
often, allowing for necessary adjustments to
performance planning as conditions dictate.

4. Improve Productivity Through Better Goal

Management
Regular goal tracking allows for the opportunity to
provide feedback as needed, make adjustments to
performance plans, tackle obstacles and prepare
contingencies for missed deadlines. Without a
mechanism to regularly track progress against
goals, the ongoing, cyclical nature of the process
falls apart.
Goal progress discussions, along with all

performance feedback, should be delivered with

respect and should be objective and supportive.
Specific examples provide clarity and help the
employee focus on future improvements. It is
crucial that the manager listens to the employee's
perspective and incorporates the employee's
observations into future plans the employee often
experiences roadblocks the manager may not see.
5. Gather Information From a Number of
Sources
Gathering performance information from a variety
of sources increases objectivity and ensures all
factors impacting performance are considered. This
information should include objective data like sales
reports, call records or deadline reports. Other
valuable information includes: feedback from
others, results of personal observation,
documentation of ongoing dialogue, records of any
external or environmental factors impacting
performance. Many reviews also include an
employee self-evaluation. Other documents that
help define performance objectives include: past
performance appraisals, current departmental and
organizational objectives and documented standards
related to career goals.
In order to gather feedback from other employees,
organizations will often use a 360 feedback
process. Along with the completion of a selfassessment, selected peers, subordinates, and
manager(s) are asked to contribute feedback around
pre-identified areas. The feedback is based upon
specifically identified skills or competencies and the
final results are compared against the employee's
self-assessment. This type of feedback increases
self-awareness and in some cases is used to support
the performance evaluation process.
Objectivity is essential when evaluating
performance and it begins with clarity about job
expectations and evaluation methods. Certain
checks and balances can be built in to ensure
objectivity. Managers commonly make mistakes
when they conduct evaluations and the first step to
minimizing those errors is to acknowledge they
exist. Consistent processes organization-wide
contribute to fairness and objectivity. Access to
information allows others to check the validity of
the process. Obviously, not all employees need
access to other employees' performance appraisal

results, but processes like calibration meetings will

help ensure consistency. In the calibration process,
managers with employees in similar positions meet
and discuss the appraisals before they are finalized
and shared with the employees. A calibration
meeting helps establish the reasons individuals are
awarded various performance rankings, educates
managers about the process across the organization
and promotes consistency. It also provides
validation for manager's decisions, if appropriate.
Reporting is very valuable to assess the
fairness/consistency of the processfor example, to
compare ratings in one division to the next or for
one manager to the next.
6. Document, Document, Document
Note taking must be consistent and include all
significant occurrences, positive or negative.
Documentation is important to support performance
decisions, and notes should be written with the
intent to share. In addition to documenting the
details of an occurrence, any subsequent follow up
should be detailed.
The performance log is a record that the manager
keeps for each employee and is a record of
performance "events." The maintenance of a
performance log serves a number of purposes. The
manager can record successes or performance that
requires improvement. When it comes time to
complete the appraisal, the manager has a historical
record of events and will not have to rely on recent
memory. In addition, this documentation can be
used to support performance decisions or ratings.
But it also can be used as a reminder for the
managerif the log has no recordings for a period of
time, perhaps it is time to check in. If an employee
does exceptionally well, or meets deadlines
consistently, the log can be used as a reminder to
provide recognition for a job well done. In addition,
if a manager notices an area of deficiency, the log
can serve as a reminder and a record of
circumstances. The performance log can also act as
a reminder for coaching i.e.: record of upcoming
tasks, manager can make note to discuss with the
employee to ensure he/she is prepared for the
individual for a task ahead, and then follow up
discussion can promote learning and continuous
improvement.

This log should be created using the same principles

of performance management and should be
objective, based on observable, job-related
behaviors, including successes, achievements and, if
applicable, any documentation related to
disciplinary actions taken.
7. Adequately Prepare and Train Your Managers
Managing the performance of another individual is
not an easy task and requires many skills. Training
may be required to ensure managers feel adequately
prepared to effectively complete all the tasks related
to performance management. This is especially the
case for newly promoted supervisors. Managers
need to understand human behavior, how to
motivate, how to develop, provide coaching and
deal with conflict. To a great extent, managers must
be observers and able to assess a situation, provide
motivation and identify problems that interfere with
performance. In addition, managers must
understand that individuals at different levels of
comfort, ability and experience with their jobs will
require different levels of input, support and
supervision. A manager who feels adequately
prepared to provide and receive feedback, deliver a
performance evaluation and conduct a performance
evaluation meeting will be a major contributor to a
successfully functioning process.
8. The Review
The employee performance appraisal or review
should be a summary of all that has been discussed.
Based upon job expectations and key areas of
contribution, and previously discussed goals and
evaluation methods, the appraisal should be a
written confirmation of what has already been
discussed with the employee.
The form should include key job responsibilities,
current project work, relevant competencies, goals
and achievements. Previously completed
performance appraisals should be used as reference
documents. It should also contain an area to allow
employees to record their comment and input. All
comments included on the appraisal form need to be
job-related and based upon observable behaviors.
For the appraisal meeting, it is imperative to prepare
ahead of time. Schedule an appropriate place and
time with no interruptions. Ensure the employee has

the information necessary to allow them to prepare

adequately. Begin the discussion with job
requirements and strengths/ accomplishments. The
focus, as pointed out previously, should be forward
looking. The way the manager approaches this
meeting conveys a message related to its
importance and should be approached with the
appropriate level of seriousness and an open mind.
The manager must be prepared in regard to what
he/she wants to discuss, but just as importantly must
be prepared to listen.
Many suggest that it is important to first define the
purpose of the meeting and provide an agenda. A
factual discussion with a focus on job-related
behaviors will keep the discussion objective. At the
end of the meeting, key points should be
summarized. It is important to note that the
employee will be asked to sign the appraisal,
whether or not there is agreement.
9. Link Performance Management With
Rewards and Recognition
More and more, organizations are linking
performance to compensation. This link, however,
cannot effectively be established without the
existence of sound performance management
processes that are seen as fair and equitable.
Clear documentation of progress against
performance expectations also allows proper
recognition for a job well done. This can be
provided a number of ways, i.e.: formal recognition
events, informal public recognition or privately
delivered feedback.
It is important also to note the benefits of a
consistent process across the organization. A
consistent process creates a sense of fairness and
significantly increases job satisfaction. This is even
more critical if compensation is linked to
performance. Employees need to know that if an
individual in one department is identified as a top
performer and compensated accordingly, then an
employee performing at the same level in another
department will receive similar rewards.
10. Evaluate and Encourage Full Participation
and Success

There is widespread recognition that an annual

meeting to evaluate progress does not have the same
benefits as ongoing dialogue and feedback.
Feedback that is delivered when it is most relevant
enhances learning and provides the opportunity to
make necessary accommodations in order to meet
objectives. Some organizations are moving towards
conducting performance reviews twice a year, while
a small portion is trying to conduct them more
frequently. Regardless of frequency, the attitude
towards ongoing feedback is crucial. If there is
organizational recognition and support for the need
to build constructive feedback into the fabric of
day-to-day interactions combined with increased
visibility into goals, then the environment will
encourage development and drive goal-directed
performance improvement.
Design the process right. The performance
management process must add value, otherwise
problems with resistance and non-participation will
surface. In addition, the process itself must be
efficient and as simple as possible, while still
providing the necessary value. Automated
reminders and scheduling tools can help keep the
process on track.
Another element to consider that contributes to
success is upper level management support. This
support needs to take not only the form of verbal
support, but also through participation in the same
performance management process for evaluations.
In addition, consider the current culture of your
organization when it comes to performance
appraisals and performance management. Is the
"atmosphere" supportive of an effective process? Is
there a culture of open honest communication or are
employees fearful when they make a mistake?
Employees must be able to honestly discuss
performance and consider how to make
improvements in order to move forward.
Another thing to consider is the provision of a
mechanism to evaluate the process itself, whether it
consists of an annual survey, focus groups, manager
feedback, reporting, or a combination of these and
other methods.
The Next Step: Automating Best Practices With
Technology

More and more organizations are relying on

innovative technology solutions to implement
performance management best practices and
automate painful manual processes. A move to webbased, on-demand technology is making these
systems affordable, regardless of the size of an
organization, with quick implementation schedules,
no IT support requirements and automatic upgrades.
An automated system can ensure that the
performance management process is built around
world-class best practices, easy to complete,
efficient and consistent across an organization.
Necessary visibility into organizational and
departmental goals is simplified, as is access to
necessary data to support accountability, consistent
standards, (by viewing manager average ratings)
and identification of top performers. In addition,
technology enables companies, managers and
employees to address many of the issues discussed.
When selecting an automated performance
management solution make sure to do your
research. Some solutions offer nothing more than an
electronic appraisal form while others offer
complete best-of-breed goal management solutions.
The best solutions offer:

traditional paper-based forms is often too timeconsuming and costly.

Summary: Key Points
The road to effective performance management is
not always an easy one, but progressing towards a
long-term vision by making manageable changes,
step-by-step, will bring about significant results.
The points below act as a reminder of some of the
key elements of a successful process.

Communicate and understand purpose and

value of process
Set goals effectively

Begin with performance planning

Ensure an ongoing process

Gather information from a number of

sources

Document, document, document

Adequately prepare and train managers

Deliver objective reviews that summarize an

ongoing process

instant form routing and paperless processes

goal tracking and cascading functionality for
complete visibility and alignment

Link performance management with other

talent management processes

automated goal management and

performance review reminders

Evaluate the process and make it easy,

efficient and effective to ensure participation

legal scan wizards to ensure

appropriate/legal use of language

writing assistants to help managers prepare

appraisal forms

Consider the benefits of automation to save

money and resources and optimize the
performance management process.

support tools providing coaching support to

managers when they need it most

dashboards to deliver company-wide,

aggregated or individual reporting

It is especially important that technology provides

us access to performance data and the ability to
evaluate progress against goals, compare average
manager ratings, easily access performance levels
of individuals and use this data to support decision
making. Aggregating and analyzing data in

Labor Policy in the Philippines is specified

mainly by the countrys Labor Code of the
Philippines and through other labor laws. They
cover 38 million Filipinos that belong to the labor
force and to some extent, also the overseas workers.
They aim to address Filipino workers legal rights
and their limitations with regard to the hiring
process, working conditions, benefits, policymaking
on labor within the company, activities, and
relations with employers.
The Labor Code and other legislated labor laws are
implemented primarily by government agencies,
namely, Department of Labor and Employment and

Philippine Overseas Employment Agency. Nongovernment entities, such as the trade unions and
employers, also play a role in the countrys labor
policy by actively ensuring their proper
implementation and on the political level, by
lobbying for development or modification of workrelated laws.

1 General Overview and Statistics

o 1.1 Labor Force
o

1.2 Employment

1.3 Unemployment and underemployment

2.1 Output Growth and

Employment

2.2 Labor Productivity

2.3 Underemployment,
Overseas Employment

2.4 Youth Unemployment, Job

and Skill Mismatch, Educated
Unemployed
2.5 Balance between workers
welfare and employment
generation

3 Labor Code in the Philippines

o

3.1 Pre-Employment Policies

3.1.1 Minimum
Employable Age

3.1.2 Overseas
Employment

3.2.5 Household helpers

3.3 Post-Employment

3.3.1 Termination by
Employer

3.3.2 Retirement

4 Labor Market Institutions

o

4.1 Government

4.1.1 Department of
Labor and
Employment(DOLE)

4.1.2 Bureau of Labor and

Employment Statistics
(BLES)

4.1.3 Technical Education

and Skills Development
Authority(TESDA)

4.1.4 Philippine Overseas

Employment Agency
(POEA)

2 Labor Issues

Contents

4.2 Labor Unions

4.3 Employers confederation

5 See also

6 References

7 External links

General Overview and Statistics

Labor Force

3.2.1 Minimum Wage

Rate

3.2.2 Regular Work Hours

and Rest Periods

3.2.3 Rest Days

The Philippines is a country that has one of the

biggest available pools of qualified workers (aged
1564) in the world in absolute terms which ranks
13th largest in the world behind countries like
Vietnam, Japan, and Mexico. In 2010 its people
qualified for work had reached 55.5M.[1] On its
working age groups ratio to the countrys total
population, it ranks 147th[2] at 61%, bordering the
middle and bottom third of the world ranking, by
virtue of its relatively large population of elderly
and children combined.

3.2.4 Nightshift
Differential and Overtime

With this large pool of available workers, the

Philippines has more than 38M people that belong

3.2 Regulation on Conditions of

Employment

to the labor force which is one of the largest in the

world almost making it to the top ten
notwithstanding a relatively mediocre participation
rate of 64.5%.[1] The labor force has consistently
grown by an average 2% for the past three years.
This labor force is dominated by people that have
an educational attainment below the tertiary level
which make up 71%.[1]

7M are underemployed . It went back up after it fell

in 2010 at 6.5M. Visibly underemployed people,
people working less than 40 hours per week, cover
57% while the rest is made up by Invisible
underemployed people, those who work over 40
hours per week but wants more hours.[3]

Employment

Output Growth and Employment

Out of this labor force 36.2M[3] Filipinos are

employed and this number has been increasing by
an average of more than 2% in the last three years.
This proportion of employed working people in the
Philippines constitutes 59%[1] of the population, a
relatively large percentage that belongs to the
upper-third in the world ranking. The Philippines
ranks relatively low in its employed worker-to-GDP
ratio with only $8,260[1] which hints about the
countrys productivity issues. Nevertheless, this
GDP per employed worker has been growing by an
average of 3% over the last decade.
Most of these employed workers are in the field of
Services (50%), followed by Agriculture (34%) and
Industry (15%) with the lowest share.[3] There has
been a considerable employment growth in each of
the Services and Industry sector of about 4% since
2009 while employment in the Agricultural sector
has been fluctuating. A large portion of these
employed workers are salary/wage workers and
then followed by self-employed people.
Unemployment and under-employment

Meanwhile there are about 2.7M Filipinos[3] that are

unemployed which constitutes about 7.4% of the
labor force. This is the lowest rate the Philippines
enjoys since 1996, before the country suffered from
the Asian Financial Crisis. After unemployment rate
peaked in 2000,[1] it has been on a steep decline by
an average of 8.5% each year through to 2010. Out
of this unemployed group of workers, 88% is
roughly split between people who at least had a
high school or a college education.[3]
A large proportion of college graduates are nursing
graduates whose numbers now sum up to about
200,000 according to a report by Philippine Nurses
Association.[4] As of 2011, it is estimated that about

Labor Issues

In the past years, the GDP of the Philippines had

grown steadily from 2001 to 2004. Though there
was a slowdown in 2005-2006, there was high
growth again in 2006 which was interrupted only by
the onset of the global financial crisis of 2008-2009.
[5]
During these periods of growth, there was a
slower pace of growth in employment. This
lagging may be due to the extreme weather
disturbances the country experienced. Considering
that a large part of the labor force is employed in
agriculture, this is valid. Another reason is the
difference between GDP and employment with
respect to their sectoral structures. Agriculture,
forestry and fishing sector contribute only less than
one-fifth (16.8%) in the countrys GDP in 2010
considering that one third (33.2%) of the total
employed is working in this sector.This lagging
could also be viewed with distinction to full-time
and part-time employment. In 2009 for instance,
employment grew by 2.9% despite the slowdown in
GDP to 1.1%. But the growth in employment
occurred almost entirely among part-time workers
(8.4%) while full-time employment actually fell (0.5%)..[5]
Labor Productivity

Total Factor Productivity (TFP), the efficiency in

use of both labor and capital, is important because
labor income depends on labor productivity growth.
This growth is the average product of labor which
correlates with labors contribution to enterprise
revenue and profits. Improvements in workers real
wages and earnings is related to labor productivity
growth and not exactly to employment growth.
Improvements in real wages, improves the poverty
incidence of the people thus helping in poverty
reduction. Canlas, Aldaba Esguerra argues that

policymakers should have a good understanding of

the sources of TFP because sustainable growth
comes from rising TFP growth. One key factor is
educated labor, which has the capacity to invent,
innovate, and master new techniques. At the long
run, it is important to educate the population and
invest in human development and research and
development to improve TFP. But there should be
care in this issue as there is the so-called job
mismatch which will be discussed later. Canlas,
Aldaba, Esguerra advise that to raise TFP growth,
monetary policy and fiscal policy should stabilize a
predictable environment for the private sector.[6]
Underemployment, Overseas
Employment

With the declining earnings, people are looking for

additional hours of work (underemployed), or going
abroad (overseas employment) or choose to be selfemployed. This also shows how they are not content
with the quality of employment. The self-employed
are actually indifferent between the wage
employment and self-employment that they decided
to be on their own.[6] This makes them, together
with the unpaid family workers, part of the
vulnerable employment and its earnings is weak
compared to the wage one. On the other hand, they
can be overseas Filipino workers. In 2009, it was
reported that 1.423 million Filipinos were deployed
overseas.[5] This mitigates the unemployment
problem but also poses moral hazard problems,
reducing labor force participation in the family.[6]
Youth Unemployment, Job and Skill
Mismatch, Educated Unemployed

In 2010, half of the 2.9 million unemployed

Filipinos were age 15-24.[5] More than half of the
unemployed youth are such due to lack of job
opportunities, lack of skills and the competition
with older ones. This lack of training and skills and
incompetence may be due to poor education, which
shows that indeed, education must be improved.[6]
On the other hand, theres the job and skill
mismatch. Even with the high unemployment rate,
there are actually jobs that are not filled because
there are no applicants who have the right
qualifications.[5] The improvement of education
must be well-thought so that it corresponds with
what the labor market needs. There must be

attention given to the technical and vocational

education of labor. The government should
cooperate with the private sector for better
information regarding the labor demand.[6] From
this job mismatch problem also arises the educated
unemployed. In 2010, the unemployment rate
among the college educated is about 11%. Some are
having difficulty in finding appropriate job for the
degree they have. Others on the other hand, have
higher reservation wages and can afford to wait for
better opportunities.[5]
Balance between workers welfare and
employment generation

In the past decades, the Philippines experienced that

having policies that are biased on workers welfare
and protection may hinder employment creation.
Sound policies that improves the condition of
employment and workers welfare without resulting
into too much increase in labor costs would be
better. The consequences of a rigid labor market due
to undue intervention may result in lower
investments and thus, slower growth.[6]

Labor Code in the Philippines

The Labor Code of the Philippines is the current
law governing employment practices and labor
relations in the Philippines. It also identifies the
rules and standards regarding employment such as
pre-employment policies, labor conditions, wage
rate, work hours, employee benefits, termination of
employees, and so on.[7][better source needed] Under the
regime of then dictator [Ferdinand Marcos], it was
promulgated in May 1. 1974 and took effect
November 1, 1974, six months after its
promulgation.[8]
Pre-Employment Policies
Minimum Employable Age

The minimum age for employment is 15 years old

and below that age is not allowed. Persons of age 15
to 18 can be employed given that they work in nonhazardous environments.[9]

Overseas Employment

As for overseas employment of Filipinos, foreign

employers are not allowed to directly hire
Philippine nationals except through board and
entities authorized by the Secretary of Labor. Travel
agencies also cannot transact or help in any
transactions for the employment or placement of
Filipino workers abroad. Once Filipinos have a job
in a foreign country, they are required to remit or
send a portion of their income to their families,
dependents, and/or beneficiaries in the Philippines.

work for six (6) days or forty-eight (69) hours, in

which case, they shall be entitled to an additional
compensation of at least thirty percent (30%) of
their regular wage for work on the sixth day. For
purposes of this Article, "health personnel" shall
include resident physicians, nurses, nutritionists,
dietitians, pharmacists, social workers, laboratory
technicians, paramedical technicians, psychologists,
midwives, attendants and all other hospital or clinic
personnel.

Regulation on Conditions of
Employment

Meal periods. - Subject to such regulations as the

Secretary of Labor may prescribe, it shall be the
duty of every employer to give his employees not
less than sixty (60) minutes time-off for their
regular meals.

Minimum Wage Rate

Rest Days

Minimum wage rates in the Philippines vary from

region to region, with boards established for each
region to monitor economic activity and adjust
minimum wages based on growth rates,
unemployment rates, and other factors. [1] The
minimum wage rate for Non-Agriculture
employees, in Manila region, established under
Wage Order No. NCR 15 is P404 per day, but in
May 9, 2011, a (cost of living allowance) of P22 per
day was added to P404 wage, making the minimum
wage P426 as of the current date. COLA was also
added to the previous P367 minimum wage for the
following sectors: Agriculture, Private Hospitals
(with bed capacity of 100 or less), and
manufacturing establishments (with less than 10
workers), leaving the sectors with P389 as
minimum wage.[10] The 426 combined rate is locally
referred to in the Philippines as "Manila Rate" due
to this regional disparity.[2]

All employees have the right to have a 24

consecutive hours of rest day after every 6 days of
work. Employers are responsible for determining
and scheduling the rest day of employees except
only if the employee prefers a different day based
on religious grounds. However, the employer may
require an employee to work during his/her rest day
in cases of emergencies, special circumstances at
work in which employees are seriously needed, to
prevent losses or damage to any goods or to the
employer, and other cases that have reasonable
grounds.[9]

[9]

Regular Work Hours and Rest Periods

Normal hours of work. - The normal hours of work

of any employee shall not exceed eight (8) hours a
day.

Nightshift Differential and Overtime

Employees are also given additional wages for

working in night shifts. The night shift starts from
10 oclock in the evening until 6 oclock in the
morning, and employees will receive 10% more of
his/her regular wage rate. Overtime work for
employees (beyond 8 hours) is allowed and workers
shall be paid with his/her regular wage plus an
additional 25% of the regular wage per hour worked
or 30% during holidays or rest days.[9]
Household helpers

Health personnel in cities and municipalities with a

population of at least one million (1,000,000) or in
hospitals and clinics with a bed capacity of at least
one hundred (666) shall hold regular office hours
for eight (8) hours a day, for five (5) days a week,
exclusive of time for meals, except where the
exigencies of the service require that such personnel

Household helpers, or maids, are common in the

Philippines. Household helpers are those that
deliver services at the employers home, attending
to the employers instructions and convenience. The
minimum wage of household helpers is P800 per

month for some cities in metro manila, while a

lower wage is paid to those outside of metro manila.
However, most household helpers receive more than
the minimum wage; employers usually give wages
ranging from P2,500 and above per month. On top
of that, employers are required to provide food,
sanitary lodging, and a just treatment to the
household helper.[9]
Post-Employment
Termination by Employer

The employer has the right to terminate an

employee due to the following reasons: serious
misconduct or disobedience to the employer,
neglect of duties or commission of a crime by the
employee, and such gives the employer a just case
to terminate the services of the employee. [9]
Retirement

The retirement age for an employee depends on the

employment contract. Upon retirement, the retired
employee should be given his/her benefits
according to the agreement or contract between the
employer and the employee. However, if there is no
existing retirement plan or agreement for the
employee, he/she may retire at the age of 60, given
that he/she has served the employer for 5 years, and
shall be given a retirement pay of at least half a
months salary for every year of service ( 6 months
of work given is considered as 1 whole year for the
retirement pay).[9]

Labor Market Institutions

Government

The Philippine government greatly affects the Labor

market through its policies and interventions. It
plays a role in job creation through generating a
formidable environment for investment; in ensuring
the workers welfare through policies like the Labor
Code; in improving the education of the labor; in
informing regarding the jobs available to match the
skills of the people; in implementing expansionary
fiscal and monetary policies to reduce
unemployment rate. Though, there must be care in
using fiscal and monetary policies because it may
result in high inflation rate in the long-run.[6] Below

are some government agencies concerned with the

labor market.
Department of Labor and
Employment(DOLE)

Founded on December 8, 1933, DOLE is the

government agency overseeing the labor market of
the Philippines. It is tasked to implement the Labor
Code and other labor and employment-related
policies of the government. They have different
programs for job generation, skills training for
workers, job fairs and placements, for overseas
workers, and others that helps enhance the labor
market of the Philippines.[11]
Bureau of Labor and Employment
Statistics (BLES)

Under the DOLE, BLES gathers data and research

regarding the labor market. These statistics are
important in making sound policies (Aldaba,
Canlas,Esguerra). One example of data is that
regarding job vacancies. One reason of vacancies in
spite of unemployment is that people do not know
where to look for the right job. BLES gather
information on vacancies and applicants and submit
this to DOLE for dissemination.[3]
Technical Education and Skills
Development Authority(TESDA)

The Technical Education and Skills Development

Authority (TESDA), under the supervision of
DOLE, is the government agency mandated to
oversee the development of technical education and
skills development (TESD) of the labor force of the
Philippines. TESDA aims to train skilled workers
especially on technical and vocational services in
which our country is lacking.[12]
Philippine Overseas Employment
Agency (POEA)

The POEA is DOLE's arm that administers to the

overseas employment of Filipino workers. It aims to
ensure and protect the migrant workers' rights and
welfare. It is also tasked to promote, develop and
supervise the government's overseas employment
program.[13]

Labor Unions

Trade or Labor unions in the Philippines are

organizations sanctioned by Labor Code of the
Philippines as an acknowledgment of Filipino
workers freedom to self-organize. Trade unions aim
to promote enlightenment among Filipino workers
concerning their wages, hour of work, and other
legal rights.[9] They aim to raise awareness on their
obligations as union members and employees, as
well. Moreover they serve as legitimate entities that
negotiate with employers in policy-making with
regard to terms and conditions of employment.
These negotiations formally take place in the
process of Collective Bargaining Agreement.
Trade unions are granted with a right to go on a
strike,[9] a temporary stoppage of work by the
employees when there is a labor dispute. Labor
disputes are defined as situation when there are
controversies surrounding negotiations and
arranging of the terms and condition of
employment. The union, however, must file a notice
of strike or the employer must file a notice of
lockout with the Ministry. But when a strike or
lockout is deemed to compromise national interests
or interests of the Filipino public (for instance, the
case of health workers), the Secretary of Labor and
Employment has the authority to prohibit it and
deliberately enforce resumption of regular
operations.
In the Philippines, TUCP (Trade Union Congress of
the Philippines) is the largest union and
confederation of 30 labor federations in the country
which come from a wide range of sectors.[14] As of
2009, there are a total of 34,320 unions with consist
of members summing up to 2.6 million.[15]
Employers confederation

In the Philippines, there are also employers

confederation in order to lobby the protection of
firm owners; this confederation represents the
business sector and employers in the country. The
most known of which is the Employers
Confederation of the Philippines. ECOP is leading
in being the voice of the employers in labor
management and socioeconomic development.[16]
Last September 27, 2011, ECOP had a dialogue
with Labor secretary, Rosalinda Baldoz regarding

different issues on labor like the Pregnant Women

Workers Act, impact of too many holidays on
business, wages, ongoing review of DOLE
Department Order No. 18-02, and employment and
competitiveness. ECOP stressed that DOLE should
consider the business community when issuing
policies.[17]
The person receiving a salary is not paid a
smaller amount for working fewer hours, nor
is he paid more for working overtime.
Someone who is paid wages receives a pay
rate per hour, multiplied by the number of
hours worked. This person is considered to
be a "non-exempt" employee.
12 Paid Holidays
New Year's Day
Lee-Jackson Day

Martin Luther King, Jr. Day

George Washington Day

Memorial Day

Independence Day

Labor Day

Columbus Day

Veteran's Day

Thanksgiving (2 days)

Christmas Day

Deferred Compensation

The Commonwealth's Deferred Compensation Plan

(DCP) is a voluntary tax-deferred retirement
savings program that is available to individuals who
are employed by the Commonwealth of Virginia in
either a salaried or wage position. Additional
information...
Disability - Long Term & Short-Term

The Virginia Sickness and Disabiilty Plan(VSDP)

provides state employees with income security
when they cannot work because of a partial or total
disability. The program includes sick, family and
personal leave; short-term disability benefits; long-

term disability benefits and a long-term care

program. VSDP benefits cover non-work-related
and work-related conditions.
The VSDP focuses on helping employees make a
safe return to full duties following a disability.
Return-to-work plans, such as job modifications or
vocational/medical rehabilitation, may be developed
in consultation with the employer and treating
healthcare or medical professional to assist in the
employee's recovery and return to a regular
schedule. Additional information ...
Education Assistance

Virginia State Government provides provisions for

educational assistance. Such assistance varies and is
dependent upon the policies and procedures of
individual state agencies. Additional information ...
Employee Assistance Program (EAP)

The employee assistance program provided to

health plan members offers up to four visits at no
cost to you or members of your household for
counseling in such areas as mental health, substance
abuse, work and family issues, and financial or legal
matters. Get additional information on the
Employee Assistance Program.
Flexible Spending Program

Enrolling in a health and/or dependent care flexible

spending account (FSA) allows employees who are
health plan members to set aside part of their salary
on a pre-tax basis each pay period to pay for certain
out-of-pocket expenses. You can use a health FSA
to pay for medical, dental and vision care expenses
not covered by your health plan. A dependent care
FSA can be used to reimburse eligible child care or
dependent self-care expenses so that you and your
spouse can work or actively look for
work. Additional information ...
Group Life Insurance Plans

Upon employment full-time classified employees

automatically are enrolled in a group life insurance
policy at no cost the employee. This plan provides

natural death, accidental death and dismemberment

coverage. Coverage is the equivalent of two times
the employee's annual salary for natural death and
four times the employee's annual salary for
accidental death. Get additional information on the
Group Life Insurance Plans
Health Benefits

The Commonwealth of Virginia health benefits

program offers the COVA Care, COVA
HealthAware and COVA HDHP (High Deductible
Health Plan) statewide to full-time and part-time
classified employees, early retirees and certain
family members. The Kaiser Permanente regional
health maintenance organization is available to
members in Northern Virginia only. Additional
information ...
Long-Term Care

Members of the Virginia Sickness and Disability

Program (VSDP) have long-term care insurance
paid by the state through the Virginia Retirement
System (VRS). The VRS also offers Voluntary
Group Long Term Care Insurance available for
purchase by eligible state employees, retirees and
certain family members. Additional information can
be found at www.varetire.org.
Optional Life Insurance

State employees are eligible to apply for optional

life insurance coverage to enroll themselves,
spouse, and/or eligible children. The employee pays
the premiums. Additional information
Retirement

Membership in the Virginia Retirement System

(VRS) is automatic. The VRS retirement plan is a
qualified 401(a) defined benefit plan which pays
eligible members a lifetime benefit amount based
on years of service, age, and compensation. VRS
members may also participate in the Virginia
Deferred Compensation Plan. Additional
information can be found at www.varetire.org.

Telework

As part of the Commonwealth's efforts to support

increased employee productivity and engagement,
business continuity readiness, along with reduced
traffic and wear and tear on public transportation in
the state certain employees may be designated as
eligible to telework some or all of a work week
from home or an alternate work location. Additional
information...
Wellness Program

Changes in your lifestyle can have a big impact on

your health. The CommonHealth employee
wellness program strives to make a difference in the
health of employees and the workplace by
integrating health into the work culture. More than
40 different health promotion services are offered to
state agencies,, including fitness and stress
management, personal health and safety, and weight
control and nutrition.