Spotlight on the Philippines

The Philippines has risen through the ranks to becoming one of the world’s most promising, sought-after destinations for foreign businesses looking to invest and expand. In recent years, the country has enjoyed steady upward trends in economic and financial gains, propelled by strong governance, an attractive workforce, and sound economic reforms. The economy has also proven particularly resilient against weather-related disasters and economic slowdowns, with the Philippines making an early rebound against the COVID-19 pandemic. While the domestic economy is becoming increasingly robust, there is still plenty of room for growth.

Why the Philippines?

  • The Philippines prime location is a critical entry point to over 600 million people in the vast and fast-growing ASEAN market and serves as a natural gateway to the economies of East Asia.
  • In terms of English proficiency, the Philippines ranks second in Asia and is among the top 20 in the world. Owing to this skill, the Philippines has staked its claim as a go-to destination for business process outsourcing (BPO), particularly customer-service.
  • On average, Filipinos are younger than the rest of the world with a median age of just 23.1 years old. The young, mobile-first popular is driving explosive growth in the Philippines’s digital ecosystem.
  • The United Nations Conference on Trade and Development (UNCTAD) has recognized the Philippines as part of a small group of “overperformers”, demonstrating capabilities to use, adopt and adapt frontier technologies stronger than other countries with similar economic profiles.
  • The government recently announced landmark infrastructure spending, flagship transportation projects, new special economic zones, R&D spending, and tax incentives that will help fuel economic growth for decades to come. 

Q&A with Andrew Lindquist, Partner, GoGlobal

What should employers expect when hiring in the Philippines?

The Philippines embraces a strong community culture, with employers often regarded as “patriarchal.” This means a good employer is expected to “take care” of its employees. For example, the 13th month bonus, which has been in embraced in countries around the globe, originated in the Philippines and remains mandatory.

Companies expanding to the Philippines should bear in mind that, while operating costs and salaries are relatively low in the Philippines, cutthroat corporate culture does not usually thrive. Filipinos tend to value a pleasant, satisfying work atmosphere built on mutual respect.

Employment contracts are required in the Philippines. While they may be oral or written, they must satisfy the essential requirements and minimum statutory standards laid down in the country’s Labor Code. Any element of an employment contract that fails to do so is considered invalid. Generally, employers cannot require employees to work overtime, except in certain exemptions.

Maximum working hours are generally eight hours per day or 48 hours per week. Employees are entitled to a daily unpaid meal break of at least one hour or a paid meal break of 20 minutes. The Philippines also takes termination seriously. As a result, it is an arduous process. Termination may only occur for “just” or “authorized” causes, but the employer bears the burden of proving the lawfulness of the employee’s dismissal. Employees must provide a 30-day resignation notice outlining whether it’s with just cause. Basically, there is no such thing as hire and fire “at will.”

Businesses should also consider the role that benefits play in their hiring strategy. PhilHealth is not sufficient to cover the basics. Thus, it is becoming very common to provide supplementary insurance from a private Health Maintenance Organization (HMO). Employers will normally cover the additional cost but sometimes they implement shared schemes.

What makes GoGlobal’s Employer of Record services in the Philippines unique?

Establishing an entity in the Philippines has historically been the most complex aspect of hiring in the Philippines. By implementing GoGlobal’s EOR services, businesses can build a fully compliant workforce with minimal time and expense. We begin with a phone call to the employee, explaining the arrangement. This dedicated team then remains as the point of contact throughout the lifecycle and can answer any questions about payroll, taxation, or benefits. Our local team of experts knows the business and cultural landscape in-depth, which ensures a positive end-to-end hiring experience for both our clients and the employee.

Why are so many global businesses looking at the Philippines for expansion?

Despite the cataclysmic economic effects of the COVID-19 pandemic, the Philippines remains on the top of the list for global businesses looking to invest and expand in Southeast Asia. By mid-2021, FDI flows to the Philippines surpassed pre-pandemic levels.

In particular, the English proficiency of Filipinos has empowered the country to become a global leader for business process outsourcing (BPO), even surpassing India by some measures in customer-service. We expect continued growth in this sector, with more global businesses looking to hire talent in the Philippines. Moreover, the country’s growing digital capabilities and high mobile penetration are unlocking new opportunities in emerging industries like financial services and financial technology.

Significantly, the Philippines government has implemented several measures to keep pace with the country’s fast-paced infrastructure growth, attracting many inbound investments from global businesses. Smart global businesses know that investing in a market like the Philippines – which poses high infrastructure and economic growth – gets them “in on the ground floor” and places them at a distinct vantage point.

About GoGlobal

GoGlobal is the world’s fastest growing, privately owned Global Employer of Record (EOR) service provider, with a globally distributed and remote workforce. GoGlobal’s technology-enabled EOR solution allows businesses of all sizes and geographies to hire staff globally without the need to set up a local entity, opening new doors to rapid expansion and growth. GoGlobal clients can hire top talent anywhere in the world – quickly, cost-effectively, and compliantly.