Philippines Observation 1: The socioeconomic conditions of the country October 15, 2008Posted by Jeff Block in Economics, Travel.
Tags: Economics, minimum wage, Philippines
Part 1 of an eight part series on observations of the Philippines. View the index of all eight entries.
I have to admit that prior to our consideration to adopt from the Philippines, I neither thought much nor knew alot about the country. I’m embarassed to say that I don’t even think I could have located it on an unlabeled map. I knew it was a pacific island nation, that it was an Asian country and culture, and that it was very impoverished. Since then, I have basically considered it to be A) a third world nation, and B) full of very kind and courteous people. I was pretty much correct on both fronts.
The poverty of many of the people in the Philippines is not obvious from the airport, as would be the case in many nations. However, my first clue was the time I spent in the Philippine Airlines ticketing office. The giveaway was the computers. They were *ancient* green screen monitors that clearly gave me the impression that brand new Dells running the latest in airline reservation software technology was probably not something they were able or willing to afford.
The hotel in Manila, and surrounding restaurants, malls and commercial buildings (many skyscrapers) were also deceptively posh. We were located in Makati, the financial district of the city, so it’s no surprise things were pretty upscale. There were lots of nice cars there, nice parking garages, even a few nice parks (which I never really saw elsewhere).
Driving to the hotel from the airport was a different story. We were in a nice car (sent from the hotel), but there were lots of jeepneys and tricycles on the road that catered to a lower economic class. The roads were lined with shanties, both where people lived and where they sold their wares. Even the 20 minute drive to the hotel had the same feel as driving in some of the poorer areas of Chicago – the feeling that things are generally rundown; that there is no ability to repair and keep maintained the buildings or vehicles or sidewalks, etc; and that you generally wouldn’t be safe walking the streets.
Back to the shanties… Of course I’d heard of shanty towns and seen them in movies / on TV. The example that springs to mind is the recent Hulk movie, in which David Banner is hiding in Honduras. In the movie, they show pictures of hillsides just covered in wall-to-wall little houses, which clearly indicates that a lot of people are packed like rats into a very small area. I saw many stretches of road in the Philippines (particularly around the cities) which felt like they were created and maintained (and ultimately made necessary) by even fewer resources than I would assume those had who lived in those houses in Honduras. Many of the homes I saw in these shanty towns were little more than wooden boxes with some kind of roof – like a piece of metal or some thatch. The most predominant other dwellings I saw were single story houses, scattered throughout the countryside. They were similar to houses in the US, but clearly rundown most of the time. There were also high-rise residential areas in Manila, some nice, some not. Just like Chicago. And also in the country we drove once on a private road as a shortcut between two highways (to avoid construction; I’m sure we were not really supposed to be there), and I saw some mansions (comparatively). Also saw one (what I would call) plantation off the road north to Laoag from Manila. But clearly the majority of the homes I saw housed impoverished people.
The exchange rate between USD and PHP was about 1:47. So, a $100 bill translated to 4700 pesos. The smallest bill there was 20 pesos, but they also had 1, 5 and 10 peso coins, as well as their version of “cents”, called “centavos” (Spanish). Even natives didn’t care much about centavos, but the Philippines does the same thing we do in pricing products at P99.95 instead of P100, so you get a 5 centavo piece back (which you can almost throw away, given that it translates to about 1/10th of a cent).
To give you a sense of comparison… Food was typically cheaper. You could get a value meal at McDo for P120, which translates to $2.55. A bottle of water was about P20, or $0.43. Gas was about the same as here, actually. It was 90% ethanol and cost about P50 per liter, which translates to $4.03 per gallon. I was fascinated by that. Electronics were actually more expensive than in the US by about 10%. I priced TV’s, portable DVD players, and a couple other things I don’t even remember and consistently came to that conclusion. Clothes were also very cheap. We bought John-John shoes for the equivalent of about $7, and priced pants (but didn’t buy them) for him at about $10. But we bought luggage locks at a wopping $10/piece (equivalent). I found the exact same locks on Amazon for $7 when we got home. Lastly, when we bought souvenirs, most of them felt very reasonably priced to me (read: cheap). We bought quite a few things for not a lot of cash.
To put the value of money into perspective, let’s talk about wages. Obviously, I have very little frame of reference here because people didn’t go around talking about and I didn’t go around asking what people made. However, I did learn from one man who was a server at the poolside restaurant at the InterContinental that he works for minimum wage. I later found out that minimum wage is P350 a day … not per hour, per day. That’s $7.50 or so. I also learned that his days were 12 hours long, 6 days a week. So, it costs P120 ($2.55) for a McDonald’s value meal in the Philippines, compared to a minimum wage of P350 ($7.50) a day. By comparison, it costs $6 or so in America to buy the same value meal (which is actually bigger from a portions perspective) compared to a minimum wage of $6.55 an hour or $52.40 for an 8 hour day, or $104.80 for a 12 hour day, considering that the last 4 hours would be time-and-a-half overtime in most places. So, in the Philippines, the McDo value meal costs 35% of a days wage. In America, the same worker would only pay 5.8% of his daily wage for the same value meal. That means the Philippino spent > 6 times as much on his McDonalds compared to his salary.
Now that’s not a perfect analysis, but it definitely drives the point home that there’s a big ole’ honkin’ gap. I think it also drives home the point that we’re not as bad off here in America as some people want you to believe, but that’s another topic all together.
Moving on… Another economic observation was related to the food. All the food had pork fat or pig knuckles or fish in it. Obviously, taste, tradition, and a bunch of other things play into the contents of meals, but almost everywhere the selection of food seemed like it was rooted in being cheap. Rice and leftover pig parts don’t sound very expensive to me.
Another indicator of poverty was a lack of heavy equipment on the roads. This is a technology thing too and I might discuss it more on that observation, but the net is that I saw very few big machines. Roads were always under construction, and instead of seeing high-tech machinery operated by a few people working on the roads, I saw 50 guys out there with picks and shovels. This also indicates lower economic status to me.
The markets indicated poverty as well. Meat hanging in the open air. Eggs not refrigerated. A/C was practically non-existent. Dirt floors. You just felt like you were somewhere very poor when walking through the markets. We bought a few trinkets for souvenirs in the market in Laoag, and Jackie tried to haggle over price for us (which is their custom and totally expected). But I was totally uncomfortable, given all we have, bickering over a few pennies for a hand-crafted basket someone probably slaved over for hours.
The last thing that spoke to me on an economic basis there was the prolific use of jeepneys and tricycles for transportation. Most of these things were clearly old and run down, made a lot of polution, and were very much utilitary in nature, not owned for style. What was very interesting to me as well was that every 20th vehicle was a brand-new, polished-with-a-diaper Japanese or European car. So, I felt clearly connected to a sense of class division watching the traffic flow by.