The Philippines is a developing country in Southeast Asia.  It is home to 93 million Filipinos spread across 116,000 square miles of land. For comparison, the US has about 3.5 million square miles. The Philippines is about the same total size as Arizona. Every year, about 380,000 Filipinos graduate from college across all professions.  Since the English language is primarily taught in schools in the Philippines since pre-school, Filipino professionals are good candidates to work for foreign companies, call centers, BPOs, and outsourcing.

More than the English speaking skills of Filipinos, a lot of foreign investors outsource jobs to our country because the labor here is a lot cheaper than in their own country.  They get the same quality of work for a much cheaper rate.

We all know that what governs employee rates/salaries is the cost of living in a particular country.  In a country where the cost of living is high, companies need to pay employees more in order for them to live comfortably with their incomes.  In developing countries like the Philippines, the cost of living is not as much as in highly developed countries, thus, employee rates are a lot lower.

I will be discussing the costs of common commodities in the Philippines in this post.  This is the first of a series of posts that will eventually help foreign employees determine the right rate to give Filipino online freelancers.

To determine the cost of living, one has to consider the cost of basic commodities (e.g. food, clothing), rent and utilities (e.g. water, electricity, telephone, cable, internet), transportation (e.g. cost of gas, car maintenance, cost of public transport), child care, etc.

Food

Let me first list the average cost of food in the Philippines.  The average meal for an individual will cost P70.00 ($1.40) if the meal is bought raw and prepared at home.  If one eats out in a fast food restaurant, they will spend P120.00 ($2.50), if in an average-cost restaurant, P200.00 ($4.00).  To give you a better idea, a Big Mac meal at McDonalds that costs $5.50 in the US only costs $2.50 in the Philippines.

Home & Utilities

To rent a decent house in the Philippines, where a family of five can live comfortably, will set you back P10,000-P15,000 ($200.00-$300.00) depending on the location of the property being rented.  The average cost for a water connection per month is P600.00 ($12.00).  The average monthly electrical bill if one has a TV, small refrigerator, and 1HP airconditioner will cost you P2,000.00 ($40.00).  Telephone service starts at P600.00 ($12.00), for a basic land line service which excludes long distance calls.  A broadband/DSL internet service with unlimited connection time costs P1000.00 ($20.00) per month.

Child Care

Another thing to factor in to determine the cost of living is child care.  Once people join the work force, it is inevitable that they will soon marry and have children.  The cost of rearing a child involves a lot of things, the most common being infant formula, diaper, and eventually, tuition and matriculation fees once they reach school age.

There are two types of schools in the Philippines – public schools and private schools.  Unlike in the US, where the quality of education one gets from public schools is comparable to private schools, there is a huge margin of difference in the quality of education between public and private schools in our country.  That is why, if one can afford to, they will always choose to send their children to a private school.  Private schools in the country charge an average of P40,000 ($800) per school year.  That is roughly P4,000 ($80) per month.  That includes school supplies and miscellaneous expenses.

Transportation

Public transportation is also relatively cheap in the Philippines.  A taxi ride starts at P45.00 ($0.90) for the first 4 kms and P10.00 ($0.20) per kilometer there after.  One can also take the public utility jeepney (PUJ) around the city, and that will cost around P8.00 ($0.16) per destination.  There are also buses that travel to the provinces and within the provinces, there are “tricycles/motorcabs”.

Based on all the figures I quoted above, one will have a fair idea of the cost of living in the Philippines.  Armed with this knowledge, one can deduce the right amount of compensation a Filipino would need to cover for basic needs and expenses.

On my next post, I will be discussing the average salaries for the different jobs and industries in the Philippines.