Blog: Inefficiency and the Financial Cost to the Philippine Economy

Yesterday morning, I was riding a jeep to catch an appointment. The jeep was already full of passengers, mostly ordinary employees trying to make it to work before 9 a.m. I remember the jeep had nine people crammed in the left, while the other side only had eight passengers in the right. The driver insisted on waiting for one more passenger, even if many other potential passengers are waiting for another jeep, since this one was already quite full. I took out my watch to see how much time would be wasted because of a driver’s insistence to earn the additional Php8 fare. After six minutes, a person in a hurry boarded the said jeep, and the jeep rushed to where it was going. However, to all the passengers’ dismay, instead of heading straight to where it was going, the jeep driver suddenly made a right towards a gas station, where two other jeeps were waiting for their turn to gas up. Again, I took out my watch to see how much time will be wasted. The queue took around three minutes, and the actual process of putting Php150 worth of gas took around a minute. The driver counted coins and even waited for his receipt. The running total of time wasted for this journey was 10 minutes.

I believe this is a common occurrence, and many people feel frustrated about time wasted. However, maybe it would be best to look at this from a finance perspective, in order to quantify how much the financial cost to the Philippine economy of those wasted 10 minutes were. The jeep had 17 passengers at the back and two in front, while waiting for the last person to board. That would mean about 194 minutes in wasted time for all 20 people (10 minutes each for the 19 people and 4 minutes for the last passenger). Assuming that a Filipino worker gets paid Php466 for eight hours of work, this translates to Php58.25 per hour. 194 minutes is more than three hours, which means Php174.75 in total wasted by the inconsiderate jeep driver.

This amount seems very small to merit attention, but if we consider the number of jeeps in Metro Manila (48,366 according to a 2007 study by Salanguit and dela Torre), and if we assume that only 1% of jeeps (a very small assumption) are engaged in these practices of waiting for passengers even if the jeep is already full and gassing up even if the jeep is full of rushing passengers, then daily, we waste about Php84,500 in lost productivity. Assuming we have 20 working days in a month, the total amount wasted is Php1,690,000  in a month.

There are many other small leakages in the Philippine economy, which can be solved if people and institutions were only more considerate. Another example would be flight delays in our airports and train delays from our LRT system. When I was a student in the Ateneo, I would often see this notice flashing in Katipunan station: “Train to Recto in a short while.” I find this statement most absurd because even the train station personnel cannot accurately determine when the next train would come. Another practice would be one of standing on the right of an escalator if a person is not in a hurry. This practice is strictly observed in many progressive countries, and it allows people in a hurry an open path so he or she could rush to his or her destination. In the Philippines, we don’t see this kind of etiquette being practiced. I remember being very frustrated as I was late for a meeting, and people were blocking the left side of the escalator, and even if you say “Excuse me,” Filipinos don’t really give way. This lack of mutual respect for people’s time leads to a loss of productivity. If these costs can be quantified, perhaps Philippine systems would be more efficient, leading to optimal use of very scarce resources.