Monetary intermediation industry dominates the sector
Preliminary results of the 2010 Anual Survey of Philippine Business and Industry (ASPBI) showed that the Philippines had a total of 648 establishments with total employment (TE) of 20 and over engaged in Financial and Insurance Activities. As shown in Figure 1, monetary intermediation registered the highest, with 38.7 percent of the total. Other financial service activities, except insurance and pension funding activities, ranked second with 28.5 percent and insurance, third with 14.7 percent. (Table 1)
More than half of the establishments are situated in the National Capital Region (NCR)
Region-wise, the NCR, where the financial districts are located, registered 57.9 percent of the total Financial and Insurance Activities establishments with TE of 20 and over. This was followed by CALABARZON and Central Luzon with 7.6 percent and 5.7 percent, respectively. The rest of the regions registered less than five percent of its share to total establishments. (Table 2)
Majority of the employees worked in Monetary intermediation establishments
Establishments engaged in the Financial and Insurance Activities generated jobs for 162,492 employees in 2010. Majority (99.8%) were paid employees while the remaining 0.2 percent were unpaid employees.
Monetary intermediation, having the highest number of establishments, also employed the most number of employees with 119,116 (73.3%). Followed by other financial service activities, except insurance and pension funding activities and insurance with 16,180 employees (10.0%) and 15,337 employees (9.4%), respectively. (See Fig.2)
The ratio of employment per establishment is used to determine whether the respective industry is labor-intensive or not. An estimated 251 workers per establishment were recorded for the sector. At the industry-level, monetary intermediation and insurance recorded the high ratio with 475 and 161 workers per establishment, respectively. Take note that the two industries mentioned above, covered the company-wide report on employment and include only the total head offices for these industries. Activities auxiliary to insurance and pension funding industry ranked third with 144 workers per establishment. (Table 3)
NCR based establishments was the top employer among regions with 139,146 employees (85.6%). This was far followed by CALABARZON with 4,453 (2.7%). CAR registered the least, with only 152 employees.
Monetary intermediation establishments pay the highest compensation
In 2010, the Financial and Insurance Activities establishments spent PHP82.1 billion total compensation to its paid employees or an average annual compensation of PHP506,101. Of the total, PHP73.9 billion (90.0%) comprised the gross salaries and wages, PHP4.2 billion (5.1%) were separation, retirement or terminal pay, gratuities and others and the remaining PHP4.0 billion (4.9%) were the employer’s contribution to SSS/GSIS and the like.
By industry group, monetary intermediation paid the highest compensation to its employees amounting to PHP58.4 billion or 71.1 percent of the total. This was followed by other financial service activities, except insurance and pension funding activities which paid PHP9.2 billion (11.2%).
At regional level, NCR spent the highest compensation which amounted to PHP77.7 billion (94.6%) followed by establishments based in CALABARZON, which paid PHP831.1 million (1.0%). The rest of the region registered less than one percent share to total compensation.
Trusts, funds and other financial vehicles industry employees earns the highest
Employees in trusts, funds and other financial vehicles were the highest earners in 2010 with an average annual compensation of PHP1,059, 895. Employees in activities of holding companies establishments followed next with PHP849,390. (See Fig.3)
Across regions, workers based in the NCR registered the highest average annual compensation of PHP558,977 while employees from Region IX (Zamboanga Peninsula) received the least with only PHP123,241.
Monetary intermediation industry earns the largest revenue
The gross revenue generated by the Financial and Insurance Activities establishments amounted to PHP794.3 billion in 2010. Establishments engaged in monetary intermediation operations was the highest contributor of sector’s total revenue with PHP457.1 billion or 57.5 percent of the total. Insurance industry placed second with PHP142.2 billion (17.9%). Activities of holding companies industry ranked third with PHP66.1 billion (8.3%). (See Fig.3)
Region-wise, NCR earned the highest revenue amounting to PHP772.4 billion (97.2%). The rest of the regions registered less than one percent of its share of the sector’s total revenue.
Monetary intermediation industry spends the highest cost for its operation
The total costs for operating the Financial and Insurance Activities sector reached PHP487.6 billion in 2010. Establishments engaged in monetary intermediation operations incurred the highest cost with PHP275.6 billion (56.5%). This was followed by insurance industry with PHP107.8 billion (22.1%). (See Fig.4)
At the regional level, NCR spent the highest cost for operating the sector with P474.2 billion (97.3%). The rest of the regions recorded less than one percent of its share to the sector’s total cost.
Activities of holding companies industry records the highest returns
The revenue per peso cost generated by the Financial and Insurance Activities establishments amounted to 1.63 in 2010. Five industries had surpassed the national average and the highest was registered in activities of holding companies with 3.18 revenue per peso cost. (See Table 3)
Monetary intermediation industry contributes the largest value added
In 2010, the total value added contributed by establishments in the Financial and Insurance Activities was estimated at PHP417.0 billion. Establishments engaged in monetary intermediation operations contributed the largest value added among the industry with PHP245.3 billion (58.8%), followed by activities of holding companies industry with PHP59.0 billion (14.2%). (See Fig.5)
At the regional level, the NCR, being the top grosser likewise contributed the largest value added with PHP406.0 billion or 97.4 percent of the total. The rest of the regions recorded less than one percent of its share to the sectorÃƒÂ¯Ã‚Â¿Ã‚Â½s total value added.
Activities of holding companies industry have the highest revenue per employee
Labor productivity, measured in terms of revenue per employment, showed that PHP4.9 million of revenue per employee was generated by the Financial and Insurance Activities establishments. Activities of holding companies industry registered the highest revenue per employee with PHP47.2 million. Trusts, funds and other financial vehicles industry came second with PHP14.9 million.
Value added per worker, another measure of labor productivity, was valued at PHP2.6 million. Among industries, activities of holding companies industry registered the highest ratio with PHP42.2 million per worker. Establishments engaged in trusts, funds and other financial vehicles operations ranked second with an estimated ratio of PHP11.4 million per worker.
Gross addition to fixed assets totals to PHP8.2 billion
Gross addition to fixed assets in 2010 totaled to PHP8.2 billion. Monetary intermediation industry had the highest additions to fixed assets with PHP3.2 billion (39.2%). Insurance industry followed next with PHP2.0 billion (24.3%).
Government grants PHP3.1 billion to Financial and Insurance Activities establishments
The establishments in Financial and Insurance Activities received PHP3.1 billion total subsidies to support its operations in 2010. Establishments engaged in activities auxiliary to insurance and pension funding received the highest subsidies amounting to PHP2.8 billion (88.2%). Other industries which received subsidies were; monetary intermediation with PHP244.6 million (7.8%), Insurance with PHP113.8 million (3.6%) and other financial service activities, except insurance and pension funding activities with PHP12.1 million (0.4%). The rest of the industries did not receive any subsidy from the government.
The 2010 Annual Survey of Philippine Business and Industry (ASPBI), conducted in 2011 with 2010 as reference year, is one of the continuing activities of the National Statistics Office. It will be a source of benchmark levels on the structure and trends of economic activities in the country for the year 2010. Particularly, the data from ASPBI will be used in constructing national and regional income accounts in the country, determining and comparing regional economic structures, and formulating plans and policies of the government in the attainment of economic goals..
The conduct of the ASPBI is governed by legislative acts and presidential directives, specifically Commonwealth Act No. 591 which was approved on August 19,1940..
Scope and coverage
The 2010 ASPBI covered establishments engaged in 18 economic sections classified under the 2009 Philippine Standard Industrial classification (PSIC) namely:
- Agriculture, Forestry and Fishing
- Mining and Quarrying
- Electricity, Gas, Steam and Air Conditioning Supply
- Water Supply, Sewerage, Waste Management and Remediation Activities
- Wholesale and Retail Trade; Repair of Motor Vehicles and Motorcycles
- Transportation and Storage
- Accommodation and Food Service Activities
- Information and Communication
- Financial and Insurance Activities
- Real Estate Activities
- Professional, Scientific and Technical Services
- Administrative and Support Service Activities
- Human Health and Social Work Activities
- Arts, Entertainment and Recreation
- Other Service Activities
The scope of the ASPBI was confined to “formal sector” only, which consists of the following:
- Corporations and partnership
- Cooperatives and foundations
- Single proprietorships with employment of 10 or more
- Single proprietorships with branches
Like all other establishment surveys conducted by the NSO, the 2010 ASPBI used establishment as the unit of enumeration. It is defined as “an economic unit under a single ownership or control, i.e. under a single legal entity, engaged in one or predominantly one kind of economic activity at a single fixed location.”.
The coverage of the Financial and Insurance Activities for this survey round are: All establishments with Economic Organization (EO) 1, 3 and 4, i.e., excluding branches and ancillary units, for: Other monetary institutions (K6419); Credit card activities (K64921); Other financial service activities,.(K6499) except Mutual building and loan association operation (K64991), Non-stock savings and loan association operation (K64992), Credit cooperative activities (K64993); Life and non-life insurance companies (K651); Life and non-life reinsurance companies (K652); Pre-need plan activities; Insurance agents and brokers; Insurance activities, n.e.c. (K662). Thus the report for all data items collected for the industries mentioned above is consolidated or company-wide. All other establishments with EO 1, 2 and 3 such as: Other Credit granting establishments (K6492), Pawnshop operations (K64930), Mutual building and loan association operation (K64991), Non-stock savings and loan association operation K64992), Credit cooperative activities (K64993) are also covered and the data collected is the individual report of the establishments only..
Classification of Establishments
Before the actual selection of samples, the establishments listed in the frame were classified based on economic organization (EO), legal organization (LO), industrial classification, employment size, and geographic location.
Economic organizations relates to the organizational structure or role of the establishment in the organization. The following are the types of economic organization:
- Single establishment is an establishment which has neither branch nor main office
- Branch only is an establishment which has a separate main office located elsewhere
- Establishment and main office, both located in the same address and with branches elsewhere
- Main office only is the unit which controls, supervises and directs one or more establishments of an enterprise
- Ancillary unit other than main office is the unit that operates primarily or exclusively for a related establishment or group of related establishments or its parent establishment and provides goods or services that support but do not become part of the output of those establishments
The legal organization provides the legal basis for ownership of the establishment. The following are the types of legal organization:
- Single Proprietorship refers to a business establishment organized, owned, and managed by one person, who alone assumes the risk of the business enterprise. The establishment name is that of a person, or it has words such as Owner, Proprietor or Operator
- Partnership refers to an association of two or more individuals for the conduct of a business enterprise based upon an agreement or contract between or among them to contribute money, property or industry into a common fund with the intention of dividing profits among themselves. The establishment name includes words such as Owners , Partners, Limited or LTD., Associates or ASSOCS
- Government Corporation is a private corporation organized for private aim, benefit or purpose and owned and controlled by the government. The establishment name included words such as Corporation or CORP., INCORPORATED or INC
- Stock Corporation is an ordinary business corporation organized by private persons, created and operated for the purpose of making a profit which may be distributed in the form of dividends to stockholders on the basis of their invested capital. The establishment’s name includes words such Corporation or Corp, Incorporated or INC
- Non-Stock, Non-Profit Corporation is a business corporation which does not issue stocks to its members and is created not to profit but for the public good and welfare. Of this character are most of the religious, social, charitable, educational, literary, scientific, civic and political organizations and societies. The establishment’s name includes words such as Corporation or Corp., Incorporated or Inc.
- Cooperative is an organization composed primarily of small producers/consumers who voluntarily join together to form a business enterprise, which they themselves own, control and patronize. The establishment’s name includes words such as Cooperative or COOP
- Others are organizations not classified in any of the above classification. It includes private associations, foundations, Non-Governmental Organization, or other forms of legal organizations.
The industrial classification of an economic unit is determined by the activity from which it derives its major income or revenue. The 2009 PSIC is utilized to classify units according to their economic activities.
The 2009 PSIC consists of an alpha character and 5 numeric digits. The alpha character, which represents the major division, is denoted by the characters A to S. The first two numeric digits represent the division; the first three numeric digits, the group; the first four digits, the class; and the 5 digits, the sub-class.
The size of the establishment is determined by its total employment (TE). The following are the employment size classification used in the 2010 ASPBI:
|TE Code||Total Employment||TE Code||Total Employment|
|0||1 - 4||5||100 - 199|
|1||5 - 9||6||200 - 499|
|2||10 - 19||7||500 - 999|
|3||20 - 49||8||1000 - 1999|
|4||50 - 99||9||2000 and Over|
The geographic or physical location of the establishments was classified in accordance with the Philippine Standard Geographic Code (PSGC) as of December 31, 2010 which contains the latest updates on the number of regions, provinces, cities, municipalities and barangays in the Philippines.
The geographic domains of the 2010 ASPBI for establishments with TE of 20 and over are the 17 administrative regions while the whole country serves as the geographic domain for establishments with TE of less than 20.
Hence, the samples of the 2010 ASPBI with TE of 20 and over shall provide data for 17 administrative regions. For samples with TE of less than 20, the data that will be presented is limited only at the national level.
A total of 477 or 92.4 percent of sample establishments with Total Employment of 20 and over responded. These include receipts of “good” questionnaires, partially accomplished questionnaires, reports of closed, moved out or out of scope establishments.
CONCEPTS AND DEFINITIONS OF TERMS
Economic activity or business is the activity of the establishment as classified under the 2009 Philippine Standard Industrial Classification (PSIC). Generally, the main activity of the establishment is the establishment's principal source of income. If the establishment is engaged in several activities, its main activity is that which earns the biggest income or revenue.
Total employment is the number of persons who worked in or for this establishment as of November 15, 2010.
Paid employees are all persons working in the establishment and receiving pay, as well as those working away from the establishment paid by and under the control of the establishment. Included are all employees on sick leave, paid vacation or holiday. Excluded are consultants, home workers, workers receiving pure commissions only, and workers on indefinite leave.
Salaries and wages are payments in cash or in kind to all employees, prior to deductions for employee’s contributions to SSS/GSIS, withholding tax, etc. Included are total basic pay, overtime pay, and other benefits.
Revenue is the value of goods, products/by-products sold and/or services rendered to others whether paid in cash or is considered receivable by the establishment. Valuation of products/by products sold should be in producer’s price (ex-establishment), net of discounts and allowances, including duties and charges but excluding subsidies. It also include goods transferred and/or services rendered to other establishment belonging to the same enterprise as the said establishment which should be treated as sales or as if sold to a customer; and revenue from products on a contractual basis from materials supplied by the establishment.
Cost refers to all expenses excluding compensation incurred during the year whether paid or payable. Valuation should be at purchaser price including taxes and other charges, net of discounts, rebates, returns and allowances. Goods received from and services rendered by other establishment of the same enterprise are valued as though purchased.
Valued added is gross output less intermediate cost.
Gross output is equal to the sum of total revenue (less interest income, rent income from land, dividend income, royalty income and franchise income), capital expenditures of fixed assets produced on own account, and change in inventory of goods for resale; less cost of goods purchased for sale.
Intermediate cost is equal to the sum of the following cost items: materials and supplies; fuels, lubricants, oils and greases; electricity and water; cost of industrial services done by others; cost of non-industrial services done by others (less rent expense for land); research and experimental development expense; environmental protection expense; royalty fee; franchise fee and other cost; less change in inventory of materials and supplies; fuels, lubricants, oils and greases.
Tangible Fixed assets are physical assets expected to have productive lives of more than one year and intended for use and/or being used by the establishment. Included are land, buildings, other structures and land improvements, transport equipment, machinery and equipment, furniture, fixtures, and other tangible fixed assets.
Book value of tangible fixed assets is the initial value or acquisition cost of tangible fixed assets less the accumulated depreciation.
Gross additions to tangible fixed assets is the sum of cost of new and used fixed assets acquired during the year, cost of alteration and improvements done by others and cost of fixed assets produced by the establishment less the value of sales of fixed assets during the year.
Inventories refer to the stocks of goods owned by and under the control of the establishment as of a fixed date, regardless of where the stocks are located. Valuation should be at current replacement cost in purchaser’s price at the indicated dates. Replacement cost is the cost of an item in terms of its present price rather than its original price.
Change in Inventories is equivalent to the value of inventories at the end of the year less the value at the beginning of the year.
Subsidies are special grants in the form of financial assistance or tax exemption or tax privilege given by the government to aid and develop an industry or production and to protect it against competition.