Thursday, March 7, 2013

Personal Services Are Cheap Here (and Related Observations)

Many, many years ago, on my first visit here, I was observing a construction site in Manila, fascinated by what seemed to be thousands (hyperbole alert) of workers, and very little heavy machinery – they were employing construction techniques that might have been practiced in the US before I was born. My wife-to-be wondered what I found so interesting, and I answered that I’d explain it in the US.

A few months later, we passed a building site in downtown San Francisco, and I pointed to the small number of workers – most of them operating various pieces of equipment. She was amazed that a huge building could be built by so few people.

My comment at the time was that the difference was that in the US, machines are (relatively) cheap and people are expensive; in the Philippines, machines are expensive, but people are cheap.

Which leads to the point that anything that is labor-intensive, such as personal services, is a bargain here.

I still get mailings from Groupon for hot deals in Chicago, and a couple days ago, I got one offering a one-hour massage for $28. I sneered as I deleted it, since there are probably a dozen massage parlors within an easy walk of my apartment, none of which charge over 400 pesos (ten bucks) for an hour massage

I should add, as an aside for American readers, that massage parlors here are 100% legit – no sex on sale. Given that massage parlors in many US cities are the most common venue for prostitution, it surprises an American that here, where there is so much prostitution highly visible, the massage parlors are for massage only.

But sex, of course, is also a personal service, and it too is a bargain here. In the course of the less than ten minutes it takes me to walk from my apartment to Mango Avenue (a major street) at night, I will be offered sex at least two or three times. Often there are as many as a dozen hookers. The asking price is usually about 800 pesos ($20), though as soon as I decline the offer, the price comes down to 500 ($12). In less ritzy parts of town, 500 is the starting point.   

Haircuts (which include a very pleasant shoulder, neck, and scalp massage) cost 50-70 pesos – with a generous tip maybe 100 or so (about $2.50).

When my daughter was here, she got a manicure and pedicure. She went high-end, in a salon at the posh mall on Fuente, and paid about 400 pesos with tip. She could have gotten it for less than half that.

Most expats here who have families have at least one maid and/or yaya (nanny). A law was recently passed mandating a minimum wage of 2500 pesos/month ($60) with one day off per week for domestic workers. The expats I know say they already pay that much or more, but I often hear that many domestic workers are (and will continue to be) paid far less. My wife told me once that many maids here are happy to be paid anything – they just want to have a place to live and to be fed.

Minimum wage for other jobs varies by city/region, with the highest in Manila. Here in Cebu City, it is 327 pesos/day ($8). Since wages are per day rather than per hour, many employers require a long day (10 hours or more is common) by US standards.

In any case, only foreign companies and other high-profile businesses actually comply. A person working in a run-of-the-mill store, for example, might be paid 3000-3500 pesos/month for six 10-hour days per week, which is about 125-150 pesos/day (less than half the minimum) and works out to thirty or thirty-five cents per hour.

Going back to the construction site at which we began, it’s easy to understand the thinking of Philippine construction managers: What’s the point of investing in expensive equipment (which would cost much more than in the US, because of heavy tariffs), when wages are so low? In fact the same thinking seems to permeate all businesses, not just those that might involve machinery. Most Philippine businesses that I’ve observed are incredibly inefficient, but there’s little incentive for managers to seek efficiency – if the job isn’t getting done, just hire more workers.


  1. Okay, that was a test. It will be a long time before I'm willing to pay 60 bucks for a manicure and pedicure in the US again.