Call Center employees in the Philippines receive low-end jobs, low salaries

While providing a lot of support to Business Process Outsourcing Companies, the government is ignoring the oppressive working conditions of call center employees.
Call center operation in the Philippines

MANILA – The news that the Philippines has overtaken India in the number of new hires in the call center industry has prompted a labor education NGO recently to warn industry stakeholders and the government against risking its workers’ welfare for the sake of such boom, or the projected boom up to 2016.

“The welfare of workers in BPO institutions must not be compromised for the sake of attracting more investors,” said Anna Leah Escresa-Colina, executive director of the Ecumenical Institute for Labor Education and Research (EILER). Citing the inquiry of the Kabataan Partylist on the “dire conditions of call-center agents,” which served as basis for the filing of House Bill No. 2592, as well as their own research into the plight of call center employees, Escresa-Colina reminded the government that it “must not only foster a good business climate, it must also guarantee good working conditions and protection of workers’ rights.”

BPO employees seem to be little aware of their rights, said employees themselves who attended discussions about their common plight even if they are working in different companies. There are more than 300,000 employed in the sector, some lasting for as long as four years or more. Yet, so far, there is no registered union or association of employees in the industry. This gives the employees little to no say in their working condition, from restroom breaks to determining the work-quotas, length of working hours, computation of wage, overtime pay and vacation leaves, if any, to emergency leaves and being accorded due process in cases of termination or forced/extended/open-ended leaves. Current working conditions account for the high attrition rate in the industry. Company owners and executives, meanwhile, have industry associations that actively lobby for, and achieve, more and better government support for their continuous expansion and profit.

Uphill Climb for Call Center Workers’ Protection

Kabataan Party-list Representative Raymond V. Palatino sponsored the BPO Workers Welfare & Protection Act during the past Congress. This year, he and his staff have been holding roundtable discussions with employees of the BPO industry as they prepare the ground for re-filing the bill.

The said bill seems to have already been subjected to unfounded criticisms, Palatino told during one of his roundtable discussions with BPO employees. During one such discussion, employees from various BPO companies in Metro Manila confirmed the sore lack of security of tenure in the industry, whether the employee is called regular or not, the high quota-pressured night working hours, and the seeming misinformation they have been hearing against the proposed bill for BPO employees’ protection.

“The primary condition most workers have to contend with is having to work in graveyard night shifts in order to serve foreign overseas clients. Also, in order to maximize profits, many companies employ schemes to effectively force their employees to work without the benefit of regularization and tenure and a host of other benefits, from health to transportation,” read a brochure for the Kabataan Partylist representative’s HB 2592.

Although much of the provisions for the protection of call center agents Palatino seeks in the bill are already provided for by the Labor Code, BPO employees, he reasoned, have many work-related hazards and problems peculiar to and especially experienced only by these workers. And yet, “there is a lack in government measures to especially protect their rights and welfare,” said Palatino.

Instead, the BPO industry have repeatedly garnered the government’s support for its peculiar work practices. For example, the government had once granted the BPO industry an unprecedented exemption from observing a certain holiday and thus from paying its employees double their rates for having worked that day. The government has been helping the BPOs trim the cost of hiring and training by providing scholarships for those seeking call center jobs. It has also been granting ecozone status to buildings with BPO companies in it, and not just to landholdings with industrial parks, as was being done before. The status gives BPO companies certain perks and incentives. The BPO workers, meanwhile, are largely left at the mercy of these BPO companies.

“Our work condition can sometimes make you cry,” said an employee who attended the Kabataan Partylist’s roundtable discussion. She said one can only take so much insults such as, “You’re so stupid!” or “F— you!” over the phone in a single working day (or night).

Lower-end of the Global Outsourcing Industry

The Philippines’ BPO sector is reportedly a $9-billion industry employing 450,000 people. The bulk is made up of call centers, which should employ 344,000 by year-end, based on an industry association projection last September. Call centers here account for the lower end of the outsourced jobs in this global industry. So far it generates some $5 to $6 billion for the Philippines (while India’s entire BPO industry is still reportedly valued at $9billion).

The Philippine BPO industry has been positioning itself as the “preferred destination for outsourcing,” and recently has outpaced rival India in terms of call center new jobs (by a mere 1,200). However, the fact remains that it still gets mainly the low end of the business process outsourcing jobs.

The entire outsourcing industry goes beyond call centers, to include services that demand higher skills like software development, engineering design and investment research, as even the acclaimed godfather of Philippine BPO industry, former Senator Mar Roxas, said in his keynote address delivered before the industry’s executives last year.

Senator Mar Roxas commented that after more than a decade as a “sunshine industry,” the country has not yet captured the somewhat higher end of the outsourcing business, such as software-writing, engineering and other higher-end development processes.

As such, most employees in Philippine BPOs are in call centers, where they are often called as “talents” and the jobs revolve mainly on answering or making phone calls, taking in orders or reservations or doing some tele-marketing for a foreign contracting company.

The level of simplicity or complexity of the information needed to respond to phone queries or to market products is used as basis for the salaries a call center agent receives. Experienced technical service representatives assisting customers in relatively complex matters such as running an equipment or program receive a relatively higher salary compared to ordinary call center agents who deal with reservations or as simple as directory assistance or processing local contracts.

Local salaries, said Kabataan Partylist Rep Palatino, are much lower compared to the salaries being received by call center workers in other countries, even in other outsourcing countries such as India, Thailand, Malaysia or Singapore.

Since early 2000s call centers have been touted as the way to go for new Filipino graduates, competing with migration as an option for some young and even middle-aged professionals. The industry boasts of high-octane come-ons such as above minimum wage rates, cool co-workers and various perks on the job, including a hefty signing bonus, etc.

Yet, it is the relatively low cost of Filipino labor and their ability to speak English and copy western culture that have been luring huge foreign companies to the Philippine contact center industry. It is at present largely owned or controlled and operated by multinational companies, if not adjuncts of the big telecom companies.

It appears that even big Indian companies with established outsourcing contracts have located their “voice” operations in the Philippines.

“More and more people are now realizing what the Philippines has to offer. All big outsourcing companies in India have operations here (in the Philippines),” said Maulik Parekh, president and CEO of SPI Global, a multinational company (check) that does “high-value work from US to the Philippines.” In this year’s CCAP conference, Parekh said he wants to take advantage not only of the “voice” in the Philippines but also of its “innate understanding of health regulations in the US” in the next 10 years.

This coincided, by the way, with the Philippine call center industry’s thrust starting this year of expanding its workers’ services to include “complex tasks such as technical support, more comprehensive customer service and higher-level programs.” This will relatively improve the low-end services the contact centers here have been selling, but not necessarily the wages of call center employees.

The move is geared more to “enable companies here to compete globally for higher valued services skills-wise, price-wise and technologically-wise,” said Jojo Uligan, executive director of the Contact Center Association of the Philippines (CCAP), in a statement given to the press during their annual conference last September. CCAP is “the oldest and primary contact center industry association” in the country, with member-firms that make up 85-percent of the call centers in the Philippines.

Comparatively Low-Salary, High-Stress, Insecure Work

Despite the supposed high salaries of Filipino call center agents, they could only out-earn their American counterparts by 2037, based on a Watson-Wyatt study released last year and published by the CCAP magazine “Connect”. At that time, the salary rate hikes for the “low-cost but qualified labor” of Filipinos were rising at 9-percent on average versus 3-percent in the US.

The average basic salaries in call centers today range between P16,000 to P17,000 ($366 to $389), estimated Uligan of CCAP, in the sidelines of their annual conference this year. Uligan’s estimated average salary falls in the middle of the “P15,000 to P20,000 ($314 to $419) average starting salaries in 2009,” which then Senator Mar Roxas cited when he warned the industry against “cost-creep”, or “labor cost inflation.”

Mar Roxas is regarded as a godfather of the country’s BPO industry, having contributed to its birth and growth when he occupied various positions in government from the Estrada to Arroyo administration. Last year he warned the industry against “pricing itself out of the market”, as the Philippines and the BPO industry then vowed to continue expanding despite or because of the financial crunch in the US and Europe.

Even as the salaries of Filipino call center employees are comparatively lower globally, since last year, the industry has taken measures to cut costs, largely through slashing its budget for salary increases, reducing paid hours such as overtime, streamlining or reducing the number of people per team – without correspondingly reducing the expected output – putting employees on extended leave or terminating employees.

Some call center companies, especially the small to medium ones with 50 to 300 seats, have also closed down as a result of the financial crisis in US and Europe, Uligan told

The industry’s employed workforce has actually went down from the 372,000 in 2008 to this year’s projected “growth” of 344,000 employed by year-end. The number of employed is not the only thing that has slid down.

According to a Watson Wyatt study in 2009, majority of contact centers in the Philippines decreased their original budget for salary increases for 2009 from 8.40-percent to just 5.36-percent. That was the “sharpest decline on a year on year basis and the lowest in more than 20 years,” noted Watson Wyatt. The cut was much lower than the Philippine’s projected national inflation of 8-percent, it added.’s interviews of some call center employees tend to suggest also that CCAP’s estimated average basic salaries of P16,000 to P17,000 ($366 to $389) for call center employees in 2010 may be higher than what the employees are actually getting. This reported average may only be true for those who have had at least two years’ experience and are handling more technical accounts.

For the rest who are just starting out, the salaries are much lower. A contractual call center employee in Aegis, for instance, handling a “mere local account”, receives only P9,000 ($206) a month. In a Teleperformance branch that does not regularize its employees, salaries are lower than the starting of P13,000 ($297) in other call centers.

In EILER’s survey, call centers that took advantage of the government-induced location in the “next-wave” cities of the Philippines are found to have paid their employees as low as P10,000 ($228) or less a month in 2008, when the call center boom was at its peak and the “cost-creep” in labor cost was not yet being widely aired.

CCAP’s Benedict Hernandez told that locating in cities outside of the more established Metro Manila offers only “marginal advantages” such as a reduction of 10-percent or less in labor costs. But Parekh of SPI Global said places like Dumaguete and Iloilo have “great talents,” and locating there is a “great way for employers looking at managing price pressures.” He reiterated the Philippine government’s offer of 20 other Philippine cities that are “quite open for BPOs.”

So far some 70-percent to 80-percent of call center companies are estimated to be still in Metro Manila, Uligan said. Other companies prefer the “proven locations”, said Hernandez.

Salaries, it seemed, can still be controlled in proven locations as Metro Manila, despite stiff competition for talents by call centers. Unemployment rates in the Philippines have been unprecedentedly high despite the vaunted BPOs in the past decade. There are at least 848,000 new graduates this summer seeking employment, with many aiming for call centers.

A BPO employee lamented during a Kabataan Partylist roundtable discussion that companies can bravely and easily fire employees. Its HR departments, said other long-time employees, are swimming in applications.

In a BPO company called Stellar in Metro Manila, for instance, some call center employees complained that they could not understand why their salaries amount to only P13,200 ($302) when it is supposed to be P14,00 ($320). The company gave a vague explanation that their salaries are “pro-rated.”

In other call centers, employees said they had been made to work like regular employees with peak workload during their training period, but they were only paid measly training allowances.

There are also particular work setups in some call center companies. For example at NCO, the company offered a salary amounting to P85,000 ($1,946) for 85 working days. “But you have to be young to comply with the expected output and you have to be willing to work for only a three-month program duration,” said a contact center employee. “If you are a project-based employee, you’re like a willing victim,” she concluded.

Allow BPO Workers to Form Unions and Advocacy Groups

Health issues being faced by BPO workers are also notable, according to EILER. Different institutions have cited the health risks of working in BPOs especially during graveyard shifts. EILER for one, noted how female agents usually suffer urinary tract infections due to the short break allowed for personal necessities— only10 minutes per day. The International Labor Organization (ILO) said night shift call-center agents are prone to sleep disorders, fatigue, eye strain, neck, shoulder and back pains, and voice problems, work stress-induced by harassment from irate clients, excessive and tedious workload, performance demands, monotony, and regular night work.

As a labor advocate, Escresa-Colina is critical of the lack of unions and the reported outright ban in joining unions in BPOs. No BPO company has had a union yet, Escresa noted, adding that it has been reported to them that BPO employees are being discouraged by the management from joining or forming unions during their trainings. In some companies, a no-union provision is even clearly stipulated in pre-employment contracts, said EILER. “This is a direct violation of our constitution,” Escresa said.

“BPO companies boast of having the ‘best HR practices’ as their model in managing industrial relations. It should be reiterated that no HR practice can substitute the role of unions in upholding and promoting workers rights inside the workplace. Unions are part of our democratic institutions. It plays a crucial role in achieving people-oriented development. To show the world that the Philippines is really the leader for the global BPO industry, we should show as well that we respect and uphold the rights of BPO workers in our country,” Escresa-Colina said.

EILER urged the government to work in ensuring that no rights of BPO workers are being violated or compromised. It warned that if the dismal working conditions prevailing in BPO companies will not be seriously addressed, the Philippines will be the next modern-day sweatshop for the services sector.

The Kabataan Partylist, for its part, urged call center agents to form “advocacy groups who will constantly get involved in various activities to promote the rights and welfare of call center agents in their workplaces and even among other companies.” Palatino said that “It is only through the collective action of BPO and call center employees could they ensure that a law protecting them would be enacted and implemented