Lessons from Europe - Part IV

Figures don't lie, so they say.

The statistics I mentioned on labor productivity in last week's edition of this column sent a strong message - we need to work on our technology of production so that our farms will be more productive.

The implications of the huge gaps in productivity between the Philippines and European countries are far-reaching.

For instance, farmers in Europe could take advantage of the so-called "economies of scale", where they can purchase their inputs cheaper because they use more of them than we do. This can include fertilizers and feeds. Also, because their governments are financially stable, they can subsidize agriculture - such as sharing part of the cost of fertilizer and feeds.

Under such a situation I really see only a slim chance for us to compete if we raise the same crops or livestock. For this matter, we don't even have to go to Europe. Do you know that the rice coming from Thailand and Vietnam cost about half of the price of locally produced rice?

Obviously, we cannot export our rice, and, for political and economic reasons, we have to protect our rice farmers by controlling the quantity of rice we import.

Let us look at labor productivity in industry. Of the three (3) countries (France, Germany, Holland), Holland has the highest labor productivity in industry - 72,000 US dollars per worker while France is at 59,000 and Germany at 43,000.

The Philippines? 6,000 US dollars per worker. Ang layo na naman. The Dutch industry worker is ten times more productive (in terms of value of production) than the Filipino worker!

If this is the case, the big question is - why would firms invest in the Philippines when labor productivity here is very low?

We still have a fighting chance, don't you worry. Our labor cost is lower, for one.

Also, the items being manufactured may be for distribution in Asia, thus lowering transport cost.

Also, the labor productivity figures hide the fact that the industry owners get most of the profits in European big business as they do everywhere. So parang may laban naman.

If we play our cards right, meaning - create the proper atmosphere for business to grow and be stable. We still stand a change. May pag-asa pa.

We can still improve on those figures because figures don't lie .