An Analysis of Rice Prices in Three Countries:

Hong Kong, Singapore, and the Philippines

(as of April 20, 2008)

by Thads Bentulan

streetstrategist@gmail.com

Rice Price Analysis of Three Countries

• We shall compare the rice prices of three countries, Hong Kong, Singapore, and Philippines (Prices as of April 20, 2008)

• We shall analyze their affordability from the point of view of both- domestic helpers- Janitors

in their own countries

Why Singapore and Hong Kong?

Why Singapore and Hong Kong?Because:

– They are close Asian neighbors to the Philippines– They have no natural resources, almost everything,

including rice, is imported, therefore dependent on other countries; meaning they are not self-reliant on rice production, and never intended to be self-reliant

– They are Hyperwage First World countries which are supposed to be expensive countries

– These are small countries; the law of labor supply and demand may be expected to work because of they don’t have much excess of manpower

Why DH and Janitors?

Why analyze both domestic helpers and janitors?

– Their domestic helpers are not their local citizens but imported laborers like Filipinos and Indonesians, therefore their helpers are not as protected by their govts as much as their own citizens

– There is a wide gap between DH and janitors (bec the latter are their own citizens while the former are usually imported Filipinas or Indonesians)

– To give us a flavor of the affordability from the viewpoint of DH and janitor.

– Remember DH don’t spend for their housing, clothing, transportation and food expenses on a daily basis

– Janitors, therefore, are better indicators of affordability and standard of living

Overpriced or not?• How do we know if the prices of commodities are overpriced or not, when comparing

one country with another?

• If the cost of living in the US is high, then how come an ordinary teacher there can afford to buy a car but in the Philippines even a superintendent can do so only with his retirement pay?

• How come if you open the gates, the Filipinos will be running towards the US but the Americans will not be racing to go to the Philippines?

• A method of comparing overprcing in countries was discovered and proposed by Thads Bentulan (Street Strategist) and published in 2005

• His method eliminates the difficulties faced when using only exchange rates and prices in each country.

• Instead of using price levels, his method focuses on “affordability” and uses a new metric to compare affordability.

Low Cost of Living?• Of what use are low prices if the people have no money to buy the low-

priced goods?

• Are Third World countries really cheaper than First World countries?

• That “affordability” metric is “minimum wage labor-hours” need to work for goods or services.

• In effect, he uses “labor-hours” or “labor-minutes” as a new unit of currency to compare “standard of living” conditions from country to country.

• In his book “Hyperwage Theory” he discusses this new metric in the following chapters

- Chapter 7: Labor as Unit of Currency- Chapter 8: The Mispricing of Labor- Chapter 9: The Myth of Cheap Countries- Chapter 10: The Perfect Commodity

Hyperwage Theory

• Hyperwage Theory was serialized in 2005 but is now compiled as a book.

• A PDF e-book version of Hyperwage Theory is available as a FREE download fromhttp://streetstrategist.googlepages.com

• The book provides some examples of Hyperwage Affordability Analysis (HAA) useful in appreciating the following rice analysis. It may be useful to read the book first.

Rice Prices in Hong Kong, Singapore and the Philippines

To analyze rice prices in a country, we ask the following:

How long will it take for a minimum wage worker to work for one kilogram of rice?

Hyperwage Affordability Analysis

Hyperwage Affordability Analysis taken from the book Hyperwage Theory:

1. Survey the prices of a product or service (in this case, rice) at markets commonly accessible to ordinary workers.

2. Obtain the minimum wage in the area.3. Convert the minimum wage into a “per hour” basis4. Compute how many minutes it takes for a minimum

wage worker to work for the product (one kg of rice.)5. Compare this labor-minutes data with those from

other countries.

Hong Kong

• There is no minimum wage law in Hong Kong but there is a minimum applicable for domestic helpers.

• In effect, this is Hong Kong’s minimum wage.• Latest figure is HK$3,480 per month, one-day off

per week, 10-hour day. • To get a feel for the amount, we use latest

exchange rate of HK$1=PhP5.37 • (Domestic Helper)

P18,687 per month (HK$3,480) orP71.88/hour (HK$13.38 per hour)

Hong Kong

• The janitors in Hong Kong, using Dec 2007 data from HKG Census and Statistics Department earn an average of

HK$5,241 per month (P27,777 per month)

HK$25.20 per hour (8-hr day) or (P133.54 per hour)

Singapore

• Singapore has no minimum wage law but HKG is a competitor that can lure DH away from Singapore to HKG. Thus, Singapore cannot just price their domestic helpers with lower wages without driving away potential DH to HKG.

• Filipino domestic helpers in Singapore earn from S$300-S$400 per month. (The Indonesians and Thai earn a bit lesser)– S$350 per month or P10,853.50– S$1.35 per hour or P41.74 per hour Exchange Rate: (S$1=PhP31.01)

Singapore

• In Singapore, according to a 2005 data from the Ministry of Manpower

• Janitors earn an average of S$792 / month or P24,559.92 per month

• Or S$3.81 per hour or P118.08 per hour (8-hr day)

Summary of WagesJob Wages in Local

Currency / MonthWages in

PhP / Month

Wages in Local

Currency / Hour

Wages in PhP / Hour

HKG DH HK$ 3,480 P 18,688 HK$ 13.38 P 71.88HKG Janitor HK$ 5,241 P 28,144 HK$ 25.20 P 135.31Singa DH S$ 350 P 10,854 S$ 1.35 P 41.74Singa Janitor S$ 792 P 24,560 S$ 3.81 P 118.08Phil DH P 2,000 P 2,000 P 7.69 P 7.69Phil Janitor P 8,450 P 8,450 P 40.63 P 40.63

*Philippine Janitor minimum wage is P325/day (NCR) = P8,450/month

Exch Rate HK$1 S$Pesos 5.37 31.01

The HKG Janitor earns 150% more than a HKG helper who is usually a Filipina.

The Singapore janitor earns 230% than a Singa helper who is usually a Filipina

The Phil. Janitor earns 430% than a Phil DH.

In other words, it is the foreign governments who are more protective of the lowest of the low workers who are not even their citizens. The wide gap shows how little the Phil government treats its own modern-day slaves.

Relative WagesThe HKG domestic helper earns

P 9,343.80 for every P1,000 earned by a DH in the Phils.P 1,769.24 for every P1,000 earned by a Janitor in the Phils.

The HKG janitor earnsP 17,590.11 for every P1,000 earned by a DH in the Phils.P 3,330.67 for every P1,000 earned by a Janitor in the Phils.

The Singapore domestic helper earnsP 5,426.75 for every P1,000 earned by a DH in the Phils.P 1,027.55 for every P1,000 earned by a Janitor in the Phils.

The Singapore janitor earnsP 15,349.95 for every P1,000 earned by a DH in the Phils.P 2,906.50 for every P1,000 earned by a Janitor in the Phils.

How about the prices of goods and services in Singapore and HKG?

How to analyze our economic status

Note: If we obtain the ratio of the salaries middle-level supervisors vs. janitors in each country, and then compare them across countries you will find out that the gap between the two classes are oppressively wide for the Philippines.

In comparing across countries we will find out that the Filipinos are masochists – they give themselves low salaries; which is counterproductive because this would lower the purchasing power of the group (consumer) that comprises 69% of the Philippine GDP.

This should be the kind of research that our economists should develop.

Data Survey

• The data used for this analysis come from:– Actual April 20, 2008 data from Hong Kong from “Wellcome”

Supermarket Chain– Actual April 20, 2008 data from Singapore from “Cold Storage”

chain (Singaporean sister company of Wellcome)

• These are supermarket chains, therefore the prices used here are higher than is actually available in wet markets

• The prices in the Philippines are from wet markets.• There is no sign of rice shortage in HKG and Singapore,

in fact, these actual prices are slashed down from regular prices.

Findings

• The results shown in the following pages may surprise you but those who have read Hyperwage Theory will not be surprised because these results are predicted by the theory.

• If we do the same analysis for other goods and services like gasoline, haircuts, pork, education, rent, laptops, computers, cellphones, we can get an idea of the country’s affordability numbers.

The data explained

Brands Sold in Wellcome Description 5-kg Pack HK$/kg Exchange Pesos/kg

HKG DH Wages/ month

Pesos/ Month

HKG DH salary can buy kg of HKG rice

HKG DH Minutes to work for 1 HKG kg of rice

Phil DH salary (P2,000) can buy kg of HKG rice

No Frills(Wellcome's Brand) Thai Fragrant Rice 34.90$ 6.98$ 5.37 37.48 3,480.00$ 18,687.60$ 498.6 31.29 53.36 Golden King Thai Fragrant Rice 35.90$ 7.18$ 5.37 38.56 3,480.00$ 18,687.60$ 484.7 32.19 51.87 Ng Fung Pearl Rice 38.90$ 7.78$ 5.37 41.78 3,480.00$ 18,687.60$ 447.3 34.88 47.87

The rice brand/ quality: N o

Frills

Price/kg in local currency: $6.98

Converted to pesos to get a feel of the magnitude of prices (in

Phils currency): P37.48

Min. wage in local currency: $3,480

How many kg of HKG rice can a HKG Domestic Helper buy with her HKG monthly salary?: 498 kg

How many minutes does the HKG DH have to work to pay for a kg of HKG rice? 31.29 minutes Just for fun: How many kg of

HKG rice can a Phil DH buy with her Phils one month wage? Only

53.36 kg

Hong Kong

Founded in 1945, Wellcome is Hong Kong's longest-established supermarket chain. Since 1964, the company has been wholly owned by Dairy Farm.Wellcome has an overall staff of 5,000 in more than 240 stores and serves more than 14 million customers every month.

Spoiled for quality choice: Actual photos of branded rice sold in Wellcome Hong Kong

HKG Domestic HelperWellcome is a neighborhood grocery chain in Hong Kong. It sells rice in 5-kg, 8-kg, or 10-kg packs. Prices as of April 20, 2008. The quality of the cheapest No-Frills brand in this survey is probably double than the Philippines’ Ganador. No chipped grains, no unhusked palay mixed, no peebles, etc..

The prices in the Philippines are near the Hong Kong prices on a peso for peso level, P34 (low quality) in Phils vs P37 (high quality) in HKG. Yet, the wages of the domestic helpers in HKG are about ten-fold than in Phils. These prices are not from wet markets.

It takes only a HKG DH about half-hour work for a kg of rice, in the Phils more than 6 hours. Is this good or bad?

A HKG DH can buy almost 500 kgs of rice with her monthly wages while a Phil DH can only buy about 60 kg with hers.

Affordability Analysis for a Domestic Helper in Hong Kong April 20, 2008Brands Sold in Wellcome Hong Kong

Description 5-kg Pack HK$/kg Exch Rate

Pesos/kg HKG DH Wages/ month

Pesos/ Month

HKG DH salary can buy kg of HKG rice

HKG DH Minutes to work for 1 HKG kg of rice

Phil DH salary (P2,000) can buy kg of HKG rice

No Frills(Wellcome's Brand) Thai Fragrant Rice 34.90$ 6.98$ 5.37 37.48 3,480.00$ 18,687.60$ 498.6 31.29 53.36 Golden King Thai Fragrant Rice 35.90$ 7.18$ 5.37 38.56 3,480.00$ 18,687.60$ 484.7 32.19 51.87 Ng Fung Pearl Rice 38.90$ 7.78$ 5.37 41.78 3,480.00$ 18,687.60$ 447.3 34.88 47.87 Cherry Blossom Japan Variety Pearl Rice 39.50$ 7.90$ 5.37 42.42 3,480.00$ 18,687.60$ 440.5 35.41 47.14 Oishii Pearl Rice 40.90$ 8.18$ 5.37 43.93 3,480.00$ 18,687.60$ 425.4 36.67 45.53 Golden Thai Thai Fragrant Rice 42.90$ 8.58$ 5.37 46.07 3,480.00$ 18,687.60$ 405.6 38.46 43.41 Golden Boat Crystal Rice 44.50$ 8.90$ 5.37 47.79 3,480.00$ 18,687.60$ 391.0 39.90 41.85 Kam Heung Thai Fragrant Rice 46.90$ 9.38$ 5.37 50.37 3,480.00$ 18,687.60$ 371.0 42.05 39.71 Kangaroo Australian Rice 46.90$ 9.38$ 5.37 50.37 3,480.00$ 18,687.60$ 371.0 42.05 39.71 Lucky Brand Thai Fragrant Rice 47.90$ 9.58$ 5.37 51.44 3,480.00$ 18,687.60$ 363.3 42.94 38.88 Yu Pin King Thai Fragrant Rice 47.90$ 9.58$ 5.37 51.44 3,480.00$ 18,687.60$ 363.3 42.94 38.88 G/Elephant Thai Fragrant Rice 48.50$ 9.70$ 5.37 52.09 3,480.00$ 18,687.60$ 358.8 43.48 38.40 Golden Phoenix Thai Fragrant Rice 50.50$ 10.10$ 5.37 54.24 3,480.00$ 18,687.60$ 344.6 45.28 36.88 Double Ram Calrose Rice 61.90$ 12.38$ 5.37 66.48 3,480.00$ 18,687.60$ 281.1 55.50 30.08 Golden Crown Australian See Mew Rice 61.90$ 12.38$ 5.37 66.48 3,480.00$ 18,687.60$ 281.1 55.50 30.08

HKG Janitor

A HKG janitors enjoys quality of life using electric polishers, working in aircon buildings with granite and marble floor, and steel and glass constructions. He works only for 17 minutes for a kg of rice.

Affordability Analysis for a Janitor in Hong Kong April 20, 2008Brands Sold in Wellcome Hong Kong

Description 5-kg Pack HK$/kg Exch Rate

Pesos/kg HKG Janitor Wages/ month

Pesos/ Month

HKG Janitor salary can buy kg of HKG rice

HKG Janitor Minutes to work for 1 HKG kg of rice

Phil DH salary (P2,000) can buy kg of HKG rice

No Frills(Wellcome's Brand) Thai Fragrant Rice 34.90$ 6.98$ 5.37 37.48 5,241.00$ 28,144.17$ 750.9 16.62 53.36 Golden King Thai Fragrant Rice 35.90$ 7.18$ 5.37 38.56 5,241.00$ 28,144.17$ 729.9 17.10 51.87 Ng Fung Pearl Rice 38.90$ 7.78$ 5.37 41.78 5,241.00$ 28,144.17$ 673.7 18.53 47.87 Cherry Blossom Japan Variety Pearl Rice 39.50$ 7.90$ 5.37 42.42 5,241.00$ 28,144.17$ 663.4 18.81 47.14 Oishii Pearl Rice 40.90$ 8.18$ 5.37 43.93 5,241.00$ 28,144.17$ 640.7 19.48 45.53 Golden Thai Thai Fragrant Rice 42.90$ 8.58$ 5.37 46.07 5,241.00$ 28,144.17$ 610.8 20.43 43.41 Golden Boat Crystal Rice 44.50$ 8.90$ 5.37 47.79 5,241.00$ 28,144.17$ 588.9 21.19 41.85 Kam Heung Thai Fragrant Rice 46.90$ 9.38$ 5.37 50.37 5,241.00$ 28,144.17$ 558.7 22.34 39.71 Kangaroo Australian Rice 46.90$ 9.38$ 5.37 50.37 5,241.00$ 28,144.17$ 558.7 22.34 39.71 Lucky Brand Thai Fragrant Rice 47.90$ 9.58$ 5.37 51.44 5,241.00$ 28,144.17$ 547.1 22.81 38.88 Yu Pin King Thai Fragrant Rice 47.90$ 9.58$ 5.37 51.44 5,241.00$ 28,144.17$ 547.1 22.81 38.88 G/Elephant Thai Fragrant Rice 48.50$ 9.70$ 5.37 52.09 5,241.00$ 28,144.17$ 540.3 23.10 38.40 Golden Phoenix Thai Fragrant Rice 50.50$ 10.10$ 5.37 54.24 5,241.00$ 28,144.17$ 518.9 24.05 36.88 Double Ram Calrose Rice 61.90$ 12.38$ 5.37 66.48 5,241.00$ 28,144.17$ 423.3 29.48 30.08 Golden Crown Australian See Mew Rice 61.90$ 12.38$ 5.37 66.48 5,241.00$ 28,144.17$ 423.3 29.48 30.08

HK$5,241 average monthly income of janitors per HKG Census and Statistics Department (Dec 2007)

Singapore

The name “Cold Storage” is an icon and its story is unique in the corporate histories of Singapore. The Company had humble beginnings - a small depot storing and selling mainly frozen meat from Australia. From that, it has grown to become the premier player in retailing in Singapore.

Operates 30 Cold Storage, The Fresh Food People supermarkets strategically located across the island in city center, affluent suburbs and HDB estates.

Operates 5 Market Place stores: Jasons The Gourmet Grocer, Tanglin Market Place, Paragon Market Place and Jasons Market Place and an organic and wellness-focussed store - naturally marketplace by cold storage.

Operates 48 Shop N Save supermarkets islandwide.

Quality Rice Choices from Cold Storage Singapore

Singapore Domestic HelperAffordability Analysis for a Domestic Helper in Singapore April 20, 2008Brands Sold in Cold Storage Singapore

Description 5-kg Pack S $/kg Exch Rate

Pesos/kg Singa DH Wages/ month

Pesos/ Month

Singa DH salary can buy kg of Singa rice

Singa DH Minutes to work for 1 Singa kg of rice

Phil DH salary (P2,000) can buy kg of Singa rice

Jin Huang Thai Fragrant Rice 8.60$ 1.72$ 31.01 53.34 350.00$ 10,853.50 203.5 76.66 37.50 Double FK Fragrant Rice 8.70$ 1.74$ 31.01 53.96 350.00$ 10,853.50 201.1 77.55 37.07 First Choice Thai Fragrant Rice 9.10$ 1.82$ 31.01 56.44 350.00$ 10,853.50 192.3 81.12 35.44 Golden Eagle New Crop Rice 9.15$ 1.83$ 31.01 56.75 350.00$ 10,853.50 191.3 81.57 35.24 G Pineapple Thai Rice 10.10$ 2.02$ 31.01 62.64 350.00$ 10,853.50 173.3 90.03 31.93 Golden Eagle Fragrant Rice 10.15$ 2.03$ 31.01 62.95 350.00$ 10,853.50 172.4 90.48 31.77 Flying Man Rice 10.25$ 2.05$ 31.01 63.57 350.00$ 10,853.50 170.7 91.37 31.46 Paddy King Premium Calrose Rice 10.25$ 2.05$ 31.01 63.57 350.00$ 10,853.50 170.7 91.37 31.46 Calrose Australian Calrose Rice 10.45$ 2.09$ 31.01 64.81 350.00$ 10,853.50 167.5 93.15 30.86 New Moon Premium Fragrant Rice 10.50$ 2.10$ 31.01 65.12 350.00$ 10,853.50 166.7 93.60 30.71 Songhe Thai Fragrant Rice 10.80$ 2.16$ 31.01 66.98 350.00$ 10,853.50 162.0 96.27 29.86 Golden Pineapple Thai Fragrant Rice 10.80$ 2.16$ 31.01 66.98 350.00$ 10,853.50 162.0 96.27 29.86 Songhe New Crop Rice 10.80$ 2.16$ 31.01 66.98 350.00$ 10,853.50 162.0 96.27 29.86 Golden Leaf Rice 11.20$ 2.24$ 31.01 69.46 350.00$ 10,853.50 156.3 99.84 28.79 Paddy King Thai Jasmine Rice 12.30$ 2.46$ 31.01 76.28 350.00$ 10,853.50 142.3 109.65 26.22 Paddy King New Crop Rice 13.20$ 2.64$ 31.01 81.87 350.00$ 10,853.50 132.6 117.67 24.43 No Frills(Wellcome's Brand) Thai Fragrant Rice 13.75$ 2.75$ 31.01 85.28 350.00$ 10,853.50 127.3 122.57 23.45

S$350 average salary of DH (there is no minimum wage law in Singapore)

The Singapore domestic helper (who is a Filipina anyway) has to work for 77 minutes for a kilo of rice while (as we can see later) a Filipino domestic has to work for 265 minutes. Is this good or bad?

Even the most expensive rice in Singapore can bought with 123 minutes of work by a Singapore DH.

Singapore JanitorAffordability Analysis for a Janitor in Singapore April 20, 2008Brands Sold in Cold Storage Singapore

Description 5-kg Pack S $/kg Exch Rate

Pesos/kg Singa Janitor Wages/ month

Pesos/ Month

Singa Janitor salary can buy kg of Singa rice

Singa Janitor Minutes to work for 1 Singa kg of rice

Phil DH salary (P2,000) can buy kg of Singa rice

Jin Huang Thai Fragrant Rice 8.60$ 1.72$ 31.01 53.34 792.00$ 24,559.92 460.5 27.10 37.50 Double FK Fragrant Rice 8.70$ 1.74$ 31.01 53.96 792.00$ 24,559.92 455.2 27.42 37.07 First Choice Thai Fragrant Rice 9.10$ 1.82$ 31.01 56.44 792.00$ 24,559.92 435.2 28.68 35.44 Golden Eagle New Crop Rice 9.15$ 1.83$ 31.01 56.75 792.00$ 24,559.92 432.8 28.84 35.24 G Pineapple Thai Rice 10.10$ 2.02$ 31.01 62.64 792.00$ 24,559.92 392.1 31.83 31.93 Golden Eagle Fragrant Rice 10.15$ 2.03$ 31.01 62.95 792.00$ 24,559.92 390.1 31.99 31.77 Flying Man Rice 10.25$ 2.05$ 31.01 63.57 792.00$ 24,559.92 386.3 32.30 31.46 Paddy King Premium Calrose Rice 10.25$ 2.05$ 31.01 63.57 792.00$ 24,559.92 386.3 32.30 31.46 Calrose Australian Calrose Rice 10.45$ 2.09$ 31.01 64.81 792.00$ 24,559.92 378.9 32.93 30.86 New Moon Premium Fragrant Rice 10.50$ 2.10$ 31.01 65.12 792.00$ 24,559.92 377.1 33.09 30.71 Songhe Thai Fragrant Rice 10.80$ 2.16$ 31.01 66.98 792.00$ 24,559.92 366.7 34.04 29.86 Golden Pineapple Thai Fragrant Rice 10.80$ 2.16$ 31.01 66.98 792.00$ 24,559.92 366.7 34.04 29.86 Songhe New Crop Rice 10.80$ 2.16$ 31.01 66.98 792.00$ 24,559.92 366.7 34.04 29.86 Golden Leaf Rice 11.20$ 2.24$ 31.01 69.46 792.00$ 24,559.92 353.6 35.30 28.79 Paddy King Thai Jasmine Rice 12.30$ 2.46$ 31.01 76.28 792.00$ 24,559.92 322.0 38.76 26.22 Paddy King New Crop Rice 13.20$ 2.64$ 31.01 81.87 792.00$ 24,559.92 300.0 41.60 24.43 No Frills(Wellcome's Brand) Thai Fragrant Rice 13.75$ 2.75$ 31.01 85.28 792.00$ 24,559.92 288.0 43.33 23.45

S$792 Is janitor income average from Singapore Govt survey

The Singapore janitor has to work only for 27 minutes for a kilo of rice and his monthly salary can buy 460 kg of rice. The Filipino janitor will have to work for almost double (around 50 minutes). If you work for 10 years in Singapore, it is like working for 20 years in the Philippines as a janitor.

The Filipino will have to waste his entire prime of youth (20 years) before he attains the wealth of the equivalent Singaporean.

Phil. Domestic Helper

Why is rice in an agricultural country like the Philippines more expensive than in Hong Kong with zero square meters of ricefields? The Ganador rice is P39/kg in wet markets whose quality is half than the No-Frills brand in Hong Kong being sold at around P37/kg only.

Shouldn’t Phil rice prices be only 1/10th of the HKG price because Phil DH’s wages are only 1/10th too?

Affordability Analysis for a Domestic Helper in the Philippines April 20, 2008Philippine Prices in Wet

MarketsPeso/kg Phil DH

Wage Phil DH

Wage Phil DH salary

can buy kg of Phil

rice

Phil DH Minutes to work for 1 kg of Phil

rice

HKG DH salary

(P18,687) can buy

kg of Phil rice

Any brand/quality 25.00 2,000.00 2,000.00 80.0 195.00 747.50 Any brand/quality 26.00 2,000.00 2,000.00 76.9 202.80 718.75 Any brand/quality 27.00 2,000.00 2,000.00 74.1 210.60 692.13 Any brand/quality 28.00 2,000.00 2,000.00 71.4 218.40 667.41 Any brand/quality 29.00 2,000.00 2,000.00 69.0 226.20 644.40 Any brand/quality 30.00 2,000.00 2,000.00 66.7 234.00 622.92 Any brand/quality 31.00 2,000.00 2,000.00 64.5 241.80 602.83 Any brand/quality 32.00 2,000.00 2,000.00 62.5 249.60 583.99 Any brand/quality 33.00 2,000.00 2,000.00 60.6 257.40 566.29 Ilo-ilo Rice quality 34.00 2,000.00 2,000.00 58.8 265.20 549.64 Sinandoming Quality 35.00 2,000.00 2,000.00 57.1 273.00 533.93 Any brand/quality (Per Phil Daily Inq Apr 20, 2008) 36.00 2,000.00 2,000.00 55.6 280.80 519.10 Any brand/quality 37.00 2,000.00 2,000.00 54.1 288.60 505.07 Any brand/quality 38.00 2,000.00 2,000.00 52.6 296.40 491.78 Ganador Quality 39.00 2,000.00 2,000.00 51.3 304.20 479.17 Any brand/quality 40.00 2,000.00 2,000.00 50.0 312.00 467.19 Any brand/quality 41.00 2,000.00 2,000.00 48.8 319.80 455.80 Any brand/quality 42.00 2,000.00 2,000.00 47.6 327.60 444.94

Phil. JanitorAffordability Analysis for a Janitor in the Philippines April 20, 2008

Philippine Prices in Wet Markets

Peso/kg Phil Janitor Wage in

Local Currency /

Month

Phil Janitor Wage in

PHP / Month

Phil Janitor salary

can buy kg of Phil

rice

Phil Janitor Minutes to work for 1 kg of Phil

rice

HKG DH salary

(P18,687) can buy

kg of Phil rice

Any brand/quality 25.00 8,450.00 8,450.00 338.0 36.92 747.50 Any brand/quality 26.00 8,450.00 8,450.00 325.0 38.40 718.75 Any brand/quality 27.00 8,450.00 8,450.00 313.0 39.88 692.13 Any brand/quality 28.00 8,450.00 8,450.00 301.8 41.35 667.41 Any brand/quality 29.00 8,450.00 8,450.00 291.4 42.83 644.40 Any brand/quality 30.00 8,450.00 8,450.00 281.7 44.31 622.92 Any brand/quality 31.00 8,450.00 8,450.00 272.6 45.78 602.83 Any brand/quality 32.00 8,450.00 8,450.00 264.1 47.26 583.99 Any brand/quality 33.00 8,450.00 8,450.00 256.1 48.74 566.29 Ilo-ilo Rice quality 34.00 8,450.00 8,450.00 248.5 50.22 549.64 Sinandoming Quality 35.00 8,450.00 8,450.00 241.4 51.69 533.93 Any brand/quality (Per Phil Daily Inq Apr 20, 2008) 36.00 8,450.00 8,450.00 234.7 53.17 519.10 Any brand/quality 37.00 8,450.00 8,450.00 228.4 54.65 505.07 Any brand/quality 38.00 8,450.00 8,450.00 222.4 56.12 491.78 Ganador Quality 39.00 8,450.00 8,450.00 216.7 57.60 479.17 Any brand/quality 40.00 8,450.00 8,450.00 211.3 59.08 467.19 Any brand/quality 41.00 8,450.00 8,450.00 206.1 60.55 455.80 Any brand/quality 42.00 8,450.00 8,450.00 201.2 62.03 444.94

* Daily wage P325/day for NCR

It takes about 45 mins to 60 minutes for a janitor in the Philippines for work for a kilo of rice. How many hours more to work for electricity, fare, food, water, and cellphones and computers? Or is he even allowed the luxury of ever buying a computer? Is this the attitude of government towards the aspirations of its people?

Working in the US for 1 year is equivalent to working in the Philippines for 10 years. Who in his right mind will not grab this market opportunity if given the chance to work abroad? Will this ever end? The broken families, the pregnant daughters, the drug-addicted sons, the unfaithful wife or husband left behind?

The GDP supposedly grew by 7.3% (I suspect this figure) but has it resulted in 7.3% quality of life? Or has it merely given the people 7.3% more bago-ong, 7.3% more tuyo, or 7.3% more galunggong?

And how much of the 7.3% actually went to the poor when the distribution ratio is something like 1:9.5 in favor of the top 5% rich?

SummaryJob Wages in Local

Currency / MonthWages in

PhP / Month

Wages in Local

Currency / Hour

Wages in PhP / Hour

Price of Rice in PhP/kg

Minutes to work

for 1 kg of rice

HKG DH HK$ 3,480 P 18,688 HK$ 13.38 P 71.88 37.48 31HKG Janitor HK$ 5,241 P 28,144 HK$ 25.20 P 135.31 37.48 17Singa DH S$ 350 P 10,854 S$ 1.35 P 41.74 53.34 77Singa Janitor S$ 792 P 24,560 S$ 3.81 P 118.08 53.34 27Phil DH P 2,000 P 2,000 P 7.69 P 7.69 34.00 265Phil Janitor P 8,450 P 8,450 P 40.63 P 40.63 34.00 50

*Philippine Janitor minimum wage is P325/day (NCR)

The Philippines cannot claim to be a low cost country. In the book Hyperwage Theory, the myth of Third World countries being cheap countries has been shattered by showing the comparison of a few goods such as Big Mac, electricity, and petroleum. This Hyperwage Affordability Analysis (HAA) can be extended to all products such as vegetables, rent, laptops, heavy equipment, medicine, cellphones, massage, and rice.

The prices of rice are at par with that of Hong Kong (even more expensive because in Phil wet markets it is P39/kg for Ganador which is an inferior quality to that sold in supermarkets in HKG for P37).

It takes only 17 minutes in HKG, 27 mins in Singapore but 50 minutes in the Phils for a janitor to work for a kilo of rice. Thus, Phils is 300% more expensive than HKG and 185% more expensive than Singapore as far as rice is concerned.

From the DH’s point of view, Phils is rice is 850% (!!) more expensive than HKG, and 350% more expensive than Singapore.

Questions for ThoughtQuestions:

1. Will increasing the minimum wage ten-fold result in inflating the prices of commodities also ten-fold? Note that HKG helpers get P18T while Phil helpers get even less than P2T, yet the price of rice in HKG is about the same as the price of rice in Philippines. The Filipino consumers are paying the same First World prices (world market) for durable and non-durable goods like computers, bulldozers, cellphones, software, etc. using their Third World salaries. The prices are not ten-fold; they are about the same.

2. Which country is affordable for its citizens? Low-wage countries or high-wage countries? Note that it takes only 17 mins for a HKG Janitor while it takes 50 mins for a Phil janitor to work for a kilo of rice.

3. Is self-reliance on rice production a necessary step before a country attains First World status? Hong Kong and Singapore concentrate on adding value to foreign investors by providing business friendly, low tax, low tariff regimes. They leave the low added-value production like rice to the poor countries who do not value their labor cost.

4. Is quality of life better in low wage countries? Note the helpers and janitors in HKG and Singapore are working in aircon flats and buildings using washing machines and electric polishers.

5. Do high wages result in high inflation? HKG and Singapore have very low inflation growths compared to Third World countries like the Phils.

6. Does a country need natural resources to attain First World status? HKG, Singapore and Taiwan are high labor cost countries with no natural resources yet they value their citizens by giving them high wages which gives the workers high purchasing power creating a strong domestic demand thus creating a strong domestic economy.

Questions…

7. Should increasing cash wages be avoided? Every price increase of imported raw material increases the price of goods and service so the worker’s purchasing power is reduced because the companies simply pass on the new costs to the consumers. This in turn reduces consumption which reduces the GDP. Increasing wages will not necessarily increase the prices by the same percentage multiple. Increasing wages increases purchasing power, increasing consumption expenditure which in turn comprises about 70% of the GDP of most economies in the world. (In the Philippines, consumptions contributed 69% to the GDP last year.

9. Should the government give only non-wage benefits instead of cash? This merely shows that the govt thinks that increasing the cash wages of the lowest stratum of society, the helpers and the janitors, is a bad policy. Is this a correct mindset for a govt to have?

10. Are HKG and Singaporean citizens happier because they are wealthier? Not necessarily. Happiness is an individual choice. But they have lesser deaths dues to cellphone robber inside dirty jeepneys, they have lesser street children dying of dengue fever, they have lower growth rates in population because they are conscious of high costs, they have lesser petty corruption by lowly-paid bureaucrats, they have lesser family arguments arising out of money problems, they have no brownouts. And their governments treat their citizens with more respect because they are all economically empowered, with greater self-esteem because their teachers are not cleaning toilet bowls in other countries.

Wrong economics?• Have you noticed that the Philippine economists are “descriptive” rather than “normative or prescriptive?” The government leaders and policy makers are good in describing

how poor the country is but not in prescribing solutions to its poverty. I call them “descriptive economists.” How much longer should we give them to correct our economic problems, another 75 years?

• If they do have so-called solutions they are usually “bad economics” such as subsidies that affect only 1% of the people, or fraught with loopholes and susceptible to corruption, and solutions that beat-around-the bush, that don’t address the lack of purchasing power of the people and perpetuate the “strategy of poverty” (keeping people at low salaries to show the world the Phils is a low-wage country.

• Conclusion: The workers in First World countries have more purchasing power. It is a myth that Third World countries are cheap.

• Policy implications: Instead of focusing on controlling inflation, the government should focus on raising wages and increasing purchasing power. But why is the government afraid? Is it because they are brainwashed that increasing wages ten-fold will automatically proportionally increase prices ten-fold?

Wrong economics?

Philippine GDP 2007

GDP = Consumption +Investment

by Business

+Govt

Expenditure+ (Export - Import)

100% = 69% + 14.7% + 9.8% + (41.0% - 41.8%

* 6.8% cannot be accounted for; smuggling?

Note: The single most important number for a college student is his average grade, for the economy that number is the GDP.

As you can see in the equation below, it is ‘correct economics’ to increase the wages because the consumers will spend and give it back to businesses in less than 30 days, anyway.

(Consumption comprises 69% of the Phil. Economy).

Runaway inflation does not happen because right now, rice and computers are more expensive in the Phils than in HKG.

Final Thought

Finally, forget about purchasing power affordability ratios, forget about slavery wages of domestic helpers in the Philippines, forget about the shortage in Philippine harvest of rice, forget about Hyperwage Theory . . .

Why is it that Hong Kong, one of the most expensive places on Earth, and the Philippines, one of the cheapest nations in the world, have the same price level of rice today?

Note: the HKG prices are from supermarkets while the Philippine prices are from wet markets.

-The End-

Thads Bentulan

streetstrategist@gmail.com