PHILIPPINES

d. Minimum Age for Employment of Children

The Constitution contains prohibitions against employment of children below age 15, except under the sole responsibility of parents or guardians and then only if the work does not interfere with schooling.

e. Acceptable Conditions of Work

Despite the minimum wage laws, substantial numbers of workers mostly laborers, janitors, messengers, drivers, and clerk-typists, earn less than the law stipulates. The standard work week is 48 hours. The law mandates a full day of rest per week. Employees with more than one year on the job are entitled to five days of paid leave. A comprehensive set of enforceable occupational safety and health standards is in effect, and the standards for protecting workers against hazards of the workplace and harmful substances are relatively advanced.

f. Rights in Sectors with U.S. Investment

Worker rights conditions in goods-producing sectors with U.S. investment tend to be better than those in Philippine industry taken as a whole. Firms with U.S. investment are extensively organized by all of the unions within the broad spectrum left to right of local labor organizations. Nearly all of these firms have concluded collective bargaining agreements. The labor relations scene in companies with U.S. capital is as active as that in industry generally. This is a result of workers' greater expectations regarding pay, benefits, and fair play in dealing with U.S. joint venture management.

Philippine

Firms with U.S. investment have acquired a reputation for being responsible and responsive in dealing with the workforce. The prevailing lowest wages in companies with U.S. capital are generally much higher than the legal minimum wage. Employees in most of these firms work a 40-hour week with premium pay for overtime. All of the largest firms with U.S. participation apply U.S. standards of worker safety and health, mainly because of the requirement of their U.S. insurance carriers.

53-153 0-92-6

Source: U.S. Department of Commerce, Survey of Current Business August 1991, Vol. 71, No. 8, Table 11.3

124

1,091

1/ On a historical basis, from the U.S. Commerce Department's "Survey of Current Business." However, an Embassy survey of U.S. firms in Singapore indicated total cumulative investment was US$9 billion in 1990.

Singapore is a small island-nation with three million people and no natural resources, except for a magnificent harbor and a skilled and hardworking labor force. Trade and shipping have been its lifeblood since its founding as a British colony in 1819. At independence, facing a dearth of physical resources and a small domestic market, the Government of Singapore had no alternative but to adopt an outward-looking, export-oriented economic policy. That policy has been a resounding success. Total trade in 1990 was more than three times the country's gross domestic product (GDP), and Singapore has become a major center for light manufacturing, oil refining and financial services, acting as a hub for the growing Southeast Asian market. Except for a brief but deep recession in 1985-86, real growth of GDP has averaged nearly 9 percent over the last decade.

Singapore's formula for success has been an open trade and investment environment; a corruption-free, pro-business regulatory framework; political stability; public investment in infrastructure; high savings and prudent fiscal management; relatively low cost, efficient, and strike-free labor; and significant tax concessions to foreign investors. The government has run budget surpluses in most years since independence. Compulsory savings in the form of employer and employee contributions to the Central Provident Fund (a form of social security) have formed the basis of a national savings rate exceeding 40 percent of GDP.

In

The Monetary Authority of Singapore (MAS), the country's central bank, engages in limited money market operations to influence interest rates and ensure balanced liquidity in the banking system. There are no controls on capital movements, which limits the scope for an independent monetary policy. fact, the government does not set targets for monetary aggregates. Money supply and domestic interest rates are primarily determined by international, rather than local, conditions. The exchange rate is the MAS's most important tool for controlling inflation.

Inflation, though moderate by international standards, has become an increasing headache for the monetary authorities over the last two years as an acute labor shortage has induced

SINGAPORE

a sharp run-up in wages. The MAS has kept inflation relatively under control to date by maintaining a strong currency. But this could erode Singapore's export competitiveness in the long run. The government is therefore encouraging industry to move more labor-intensive operations offshore while promoting services and high-technology industries at home. The government also aims to engineer a gradual slowdown to a more sustainable economic growth rate of around 5 percent. In fact, growth has already slowed from a peak of 11 percent in 1988 to less than 7 percent by the second half of 1991.

2. Exchange Rate Policies

The MAS uses currency swaps and direct purchases or sales of foreign exchange (principally U.S. dollars) to keep the Singapore dollar within a desired trading range with respect to an undisclosed trade-weighted basket of currencies. The U.S. dollar is the benchmark currency. Exchange rates with other currencies are determined by the daily cross rates in the international foreign exchange markets. The Singapore dollar is freely convertible, and there are no multiple rates. Forward quotations against the world's major currencies are available in the very active local foreign exchange market.

The Singapore dollar has appreciated nearly 20 percent against the U.S. dollar since 1988 as the MAS has acted to restrain inflation in the face of rising wages. This should make U.S. products more competitive in the Singapore market. In October 1991, the U.S. dollar hit an all-time low of S$1.68, down from S$1.79 in March and S$2.18 at the end of 1986. By 1990, authorities were beginning to worry about the effect of this currency appreciation on Singapore's trade competitiveness. According to official calculations, Singapore's unit labor cost in U.S. dollar terms increased 8.1 percent in 1990 relative to the other Asian newly industrialized economies (Hong Kong, Taiwan and South Korea). There has been little apparent impact on Singapore's export performance to date. But a clear trade-off has developed between export competitiveness and internal price stability.

3. Structural Policies

The

Singapore's prudent economic policies have allowed for steady economic growth and a reliable market, to the benefit of U.S. exporters. Singapore was the eleventh biggest U.S. export customer in the first half of 1991. Prices for virtually all products are determined by the market. government maintains tariffs on a few products (notably automobiles) and levies excise taxes on cigarettes, alcohol, petroleum products and motor vehicles. There are no non-tariff barriers to foreign goods.

Sound economic management has been a key factor in attracting U.S. investment, which totals about US$9 billion, according to a 1990 U.S. Embassy survey. More than 800 U.S. companies have operations in Singapore, and a significant share of U.S.-Singapore trade is accounted for by