World-class skills need world-class pay

It has happened before with our doctors. It is happening again today with our pilots. There was a time when the brain drain of our doctors to the United States was a hot issue. It takes time and money to study medicine and the investments are made by the families of doctors. Can we blame them if they seek to recoup some return on investment even if it means leaving the country to work abroad?

The same thing is happening with the pilots of PAL. They have highly marketable skills that are not easy to get. The only difference with the doctors is that their training was bankrolled by PAL and they have a contractual obligation to work a certain number of years to pay that off. 

The international labor market is just like any market. Salaries for professionals whose skills are in high demand in the world market are necessarily high. Jobs and salaries for some professions like doctors, nuclear plant operators, airline pilots and executives of multinational corporations are set internationally rather than by domestic considerations.

It is futile for any country to think that they can depress the salaries for these professionals or prevent them from working abroad. This is more so in this country with an OFW culture. PAL really has no choice but to pay their pilots based on international standards. PAL must realize they are in competition for the services of their pilots with other airlines the world over.

The same is true with airplane mechanics. PAL was losing them too to Middle Eastern airlines until Lufthansa took over by establishing a maintenance hub here to service not just PAL but other airlines using Airbus planes.

It is a different story for flight attendants, ground personnel and office staff. They are not as indispensable as the pilots. But even in the case of flight attendants, a well trained PAL stewardess is also susceptible to being pirated by foreign airlines who want to cut the training period for cabin crew members. PAL must want to retain their experienced flight attendants.

Hotels and some top restaurants are also losing their trained staff to foreign resorts and cruise ships. They end up training raw recruits only to lose them when they are trained. At least, in the case of Plantation Bay in Mactan, they see the situation as performing a public service by training future dollar earners who can lift their families out of poverty.

I totally agree with the demand of organized labor for P-Noy to lift the six-month prior notice on the migration of workers who are categorized as mission-critical skills. If their skills are truly mission-critical, we should be ready to pay the going international salary rate or take the risk of having mediocre talent willing to accept our rates.

Partido Manggagawa chairman Renato Magtubo is correct to observe that “banning the migration of skilled workers by six months works to the disadvantage of labor and favors capital. There is an opportunity cost on workers which government and employers cannot possibly repay.”

I share Magtubo’s view that “if employers want to retain skilled workers in the country then they must match the good pay, regular status, and better working conditions offered abroad.” The law of supply and demand should benefit the workers too.

The problem with our businessmen is that they are inclined to isolate our market from the rest of the world. They want protection for their products and services. They want protection from those who would pirate their trained employees. That’s no longer possible. There is just one global market and the price for goods and services depends on international supply and demand. They must learn to compete or perish.

Then again, what the PAL pilots did is also not good because all but two of them still had contractual obligations to serve. They ought to fulfill the terms of their contracts and after everything is done, that’s the time to entertain offers to earn more money abroad.

The weird thing is, I am told the pilots understand “that PAL cannot really pay us that much compared to the foreign airlines’ packages… and yes it is not all about money.” A pilot e-mailed me to say that they considered a lot of things before deciding to leave… “living away from your family is primary and working in a foreign land is not that comfortable as we are used to being here in the Philipinnes.”

If the e-mail is to be believed, it is claimed that they got insecure about their jobs and started looking for options elsewhere. The claim was made that PAL’s A320s were being transferred to AirPhil Express and pilots assigned to those planes were being declared redundant and asked to quit PAL to move to the low cost carrier but their seniority and rate in PAL is not carried over. 

If this is what it is all about, it is just a question of PAL management reassuring their pilots about job security. PAL management should also candidly explain the AirPhil Express strategy is being done as a survival response to the new competitive environment.

Long term, PAL and other local airlines will have to rethink the salary scales for their pilots to make them competitive with rival international airlines. Training expense must not be used as an excuse for paying substandard salaries.

For PAL pilots flying international routes, getting paid international rates should be no problem because PAL charges their passengers international rates too. For domestic, local passengers will have to learn to pay higher fares. The skills required of a pilot are the same whether he flies international or domestic… so his compensation should be based on international pay standards for his services.

Rice

From former Agriculture Secretary Leonardo Montemayor: “Read your excellent column today… in addition to the 56 days supply being carried by NFA, the households and the rice traders are reportedly each holding around 25 days supply of rice, so that our total national inventory is currently about 106 days. Even if we take into account the delayed harvest this year, the 106 days supply is way above the 90 days national/total inventory we should have ideally as we enter the lean months of July-September.”

Montemayor also urged President Aquino to investigate the tariff-free importation of 200,000 metric tons of rice this year by 18 private traders, which will result in a revenue loss of around P1.6 billion and a further drop in palay prices. The former Agriculture Secretary said “this transaction authorized by the National Food Authority (NFA) Council violates the legally required 40-50 percent tariff on rice imports by the private sector”.

According to Montemayor, the NFA awarded 10 Manila-based and eight Cebu-based traders a total of 125,000 and 75,000 tons, respectively. Instead of the tariff, they were only required to pay an “equalization fee” of P2 per kilo, although P1.50 of this would be returned to those who shipped in their rice before August 15. 

The imports were consigned to the NFA (to claim the tax expenditure or zero-tariff subsidy enjoyed by the agency), but were withdrawn directly by the quota holders upon arrival in the country. According to Montemayor, the imported rice cost $350-400 per ton, or P19-21 per kilo, landed in Manila. Thus, the P2 equalization fee is a mere 10 percent of landed cost, versus the legal tariff of 40-50 percent. With rebate, this fee drops to only 2.5 percent.

He disclosed that the imported rice is reportedly being sold for as low as P1,200 per cavan, or P24 per kilo. Traders who bought palay from farmers at relatively high prices during the past harvest are now stuck with expensive inventories, since they cannot compete with the very cheap imported rice. Or, they are being forced to sell their stocks at a loss. 

Even the NFA, Montemayor said, is facing difficulty disposing of its own imports, since the private sector imports are cheaper and better in quality. The looming danger is that traders will try to recoup their losses in the coming harvest season by buying low from farmers. The NFA will find it hard to support palay prices, since its bodegas will still be awash in imported rice, even as its cash is tied up in its inventories.

Q and A

This was sent by reader Jose Villaescusa.

Q: What’s the closest thing you have similar to a woman’s period?

A: Your SALARY! It comes once a month, lasts only for about 4-6 days, and if it doesn’t come... it means you’re in a whole lot of trouble!

Boo Chanco’s e-mail address is [email protected]