Other financial service activities, except insurance and pension funding industry leads the sector

Preliminary results of the 2012Census of Philippine Business and Industry showed that a total of 1,066 establishments with total employment of 20 and over were engaged in Financial and Insurance Activities.

Other financial service activities, except insurance and pension funding comprised 520 (48.7%) of the total number of establishments. This was followed by establishments engaged in monetary intermediation with 309 (29.0%). Ranked third are establishments engaged in insurance activities with 87 (8.2%).(See Figure 1)

 

 

Majority of establishments are in the National Capital Region (NCR)

At the regional level, the NCR had the most number of establishments with 40.3 percent (430).CALABARZON and Central Luzon placed far second and third with 9.3 percent and 7.4 percent, respectively. MIMAROPA region had the least with only 12 establishments. (See Table 2)

 

Monetary intermediation activities industry employs the highest number of workers

The sector employed a total of 248,227 workers in 2012. Of the total,almost all (99.6%) were paid employees and the rest were working owners or unpaid workers.

Monetary intermediation activities, despite ranking second in number of establishments employed more thanhalf of the number of workers 127.2 thousand (51.2%). Other financial service activities, except insurance and pension funding activities followed with 87,441 employees (35.2%). Ranked third is insurance activities with 14,545 employees or 5.9 percent.(See Fig. 2)

 

 

Region wise, the NCR recorded the biggest share in employment comprising more than three fourths (79.5 %) of the total workforce. Central Visayas placed far second with 3.2 percent (7,954) and CALABARZON third, with 2.8 percent (7,029). CAR registered the least with 625 employees.

 

Workers in monetary intermediation are the highest-paid employees

The sector paid in 2012 a total compensation of PHP126.8 billion, equivalent to an average annual compensationof PHP512.9 thousand per paid employee.

Industry wise, monetary intermediation paid the highest compensation of PHP81.7 billion comprising almost two thirds (64.4%)of the total. Other financial service activities, except insurance and pension activitiesplaced far second with PHP20.1billion or 15.9 percent. Insurance activities ranked third with PHP9.6 billion or 7.6 percent. On the other hand, pension funding recorded the lowest amount of PHP103.1 million (0.1%).

Among regions, the NCR spent the biggest share in total compensation amounting to PHP117.6 billion (92.7%). Central Visayas and CALABARZON were in second and third place with PHP1.8 billion (1.5%) and PHP1.3 billion (1.02%), respectively.

Workers in activities of holding companies were the highest-paid employees receiving an average annual compensationof PHP4,151thousand per annum surpassing the sector’s average of PHP513 thousand per annum. Employees of trusts, funds and other financial vehicles and insurance activities followed next with PHP1,817 thousand and PHP670 thousand, respectively. However, those employed inpension funding activities were paid only PHP233 thousand.(See Fig. 3)

 

 

Employees working in the National Capital Region received the highest average annual compensation of PHP596 thousand while those employed in Northern Mindanao received the lowest with PHP117 thousand.

 

Monetary intermediation activities contribute the biggest share in income and expense

Gross incomerealized by the sector reached PHP963.1 billion in 2012. Monetary intermediation activities had the biggest share with PHP503.1 billion or 52.2 percent of the total. Activities of holding companies ranked second with PHP169.2 billion (17.6%). Insurance activities ranked third with PHP130.4 billion (13.5%).

Total expenses incurred amounted to PHP698.5 billion in 2012. Being the major contributors in income, monetary intermediation activities and insurance activities also had the largest proportion in expense with PHP364.2 billion (52.1%) and PHP113.8 billion (16.3%), respectively. However, pension funding activities incurred the lowest cost of PHP358.9 million (0.05%). Figure 4 shows the top five industry groups in income and expense.

 

 

Value added amounts to PHP473.1billion

Value added realized by Financial and Insurance sector totaled PHP473.1 billion in 2012.

Industry wise, monetary intermediation activities registered the highest value added with PHP288.4 billion (60.9%). Activities of holding companies ranked far second with PHP90.3 billion (19.1%) and other financial service activities, except insurance and pension funding ranked third with PHP66.8 billion(14.1%). On the other hand,pension funding recorded the least with PHP295.5 million (0.06%). (See Fig. 5)

 

Activities of holding companies has the highest labor productivity

Value added per employee, ameasure of labor productivity, was estimated at PHP1.9 million. Activities of holding companiesled the sector with PHP60.6 million while activities auxiliary to insurance and pension funding,the lowest with PHP575 thousand.

 

Gross addition to fixed assets reaches PHP18.6 billion

Gross addition to fixed assets (capital expenditures less sale of fixed assets) acquired by the sector reached PHP18.6 billion in 2012

Monetary intermediation activitiesacquired the biggest gross addition to fixed assets with PHP10 billion.This was followed by activities of holding companies and other financial service activities, except insurance and pension funding with PHP5.6billion and PHP1.5 billion respectively. On the other hand, pension funding had the least with PHP699 thousand.

 

Total change in inventories amounts to negative PHP2.05 billion

Total change in inventories (ending less beginning inventory) amounted to negative PHP2.05 billion in 2012. Other financial service activities had the highest positive change in inventory with PHP614.6 million or 29.9 percent of the total.  Activities of holding companies followed with PHP191.2 million. On the other hand, insurance activities, together with monetary intermediation, trusts, funds and other financial vehicles and pension funding reported a negative value of change in inventories.

 

Total subsidies received from the government amounts to PHP3.9 billion

Total subsidies received from the government amounted to PHP3.9 billion in 2012.

Only three industry groups received subsidies from the government. Activities auxiliary to insurance and pension funding, other financial services, except insurance and pension funding and Insurance received PHP3.2 billion, PHP507.1 million and PHP280.3 million, respectively.

 

 

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TECHNICAL NOTES

Introduction

This Special Release presents the preliminary results of the 2012 Census of Philippine Business and Industry (CPBI) for the Financial and Insurance Activities sector for establishments with total employment of 20 and over.

The 2012 CPBI is the forerunner of the 2006 CPBI and one of the designated statistical activities of the former National Statistics Office (NSO) now Philippine Statistics Authority (PSA). Data collected from the census will provide information on the levels, structure, performance and trends of economic activities of the formal sector of the economy for the reference period 2012.  It will also serve as benchmark information in the measurement and comparison of national and regional economic growth.

To provide establishment respondents ease in accomplishing the 2012 CPBI questionnaires, the income and expense account in the Financial Statement of establishment was adopted in the design of 2012 CPBI sectoralquestionnaires. Income and revenue have the same concept in recording financial transaction of establishments while expense is cost incurred on a consumed basis.

Data collection was intensified through the use of web-based or online accomplishment of questionnaire through the NSO website and downloading of e-questionnaire and submission thru e-mail.

 

Legal Authority

The conduct of the CPBI is governed by authority of the following legislative acts and presidential directives:

• Commonwealth Act No. 591 An Act to Create the Bureau of the Census and Statistics to consolidate statistical activities of the government therein which was approved on August 19, 1940. This empowers the Bureau, among other things, to prepare for and undertake all censuses of population, agriculture, industry and commerce.

• Presidential Decree No. 418 dated March 20, 1974 reconstituted the Bureau of the Census and Statistics as a new agency to be known as the National Census and Statistics Office (NCSO), under the administrative supervision of the National Economic Development Authority (NEDA).

• Executive Order No. 121 Reorganization Act of the Philippine Statistical System, dated August 4, 1987 renamed the National Census and Statistics Office (NCSO) to National Statistics Office which shall be the major statistical agency responsible for generating general purpose statistics and undertaking such censuses and surveys.

• Executive Order 352 Designation of Statistical Activities that will generate critical data for decision-making by the Government and the Private Sector, dated July 1, 1996.

• Executive Order 5 Strengthening the National Statistics Office, dated July 29, 1998.

   

Scope and coverage

The 2012 CPBI was a nationwide undertaking confined to the formal sector of the economy and as such excluded the informal sector. The following comprise the formal sector:

1. Corporations and partnerships

2. Cooperatives and foundations

3. Single establishment with employment of 10 or more

4. Single proprietorship with branches

The scope of the ASPBI was confined to “formal sector” only, which consists of the following:.

• All establishments with total employment (TE) of 10 or more, and; 

• All establishments with TE of less than 10, except those establishments with Legal Organization = 1 (single proprietorship) and Economic Organization = 1 (single establishment), that are engaged in economic activities classified according to the 2009 Philippine Standard Industrial Classificatin (PSIC). 

The initial count of the 2012 List of Establishments (LE), the frame used to draw the sample establishments for the 2012 CPBI, registered a total of 945,000 establishments in operation nationwide in 2012.  Out of this number, 72 percent or 680,400 establishments belong to the informal sector and only 28 percent or 262,800 establishments made up of the formal sector.

Listed below are the 18 economic sectors within the scope of the 2012 CPBI classified under the 2009 Philippine Standard Industrial Classification (PSIC).

• Agriculture, Forestry and Fishing (A) 

• Mining and Quarrying (B) 

• Manufacturing (C)

• Electricity, Gas, Steam and Air Conditioning Supply (D)

• Water Supply; Sewerage, Waste Management and Remediation Activities (E) 

• Construction (F)

• Wholesale and Retail Trade; Repair of Motor Vehicles and Motorcycles (G)

• Transport and Storage (H)

• Accommodation and Food Service Activities (I) 

• Information and Communication (J)

• Financial and Insurance Activities (K)

• Real Estate Activities (L)

• Professional, Scientific and Technical Activities (M) 

• Administrative and Support Service Activities (N)

• Private Education (P)

• Human Health and Social Work Activities (Q) 

• Arts Entertainment, and Recreation (R)

• Other Service Activities (S)

 

Unit of Enumeration

The unit of enumeration for the 2012 CPBI was the establishment. An establishment is defined as an economic unit, which engages, under a single ownership or control, in one or predominantly one kind of activity at a single fixed physical location.

 

Classification of Establishments

An establishment is categorized by its economic organization (EO), legal organization (LO), industrial classification, employment size, and geographic location.

Economic organization (EO).   This refers to the organizational structure or role of the establishment in the organization. The following are the types of economic organization:

• Single establishment (EO=1) is an establishment which has neither branch nor main office.  It may have ancillary unit/s, other than main office, located elsewhere. 

• Branch (EO=2) is an establishment which has a separate main office located elsewhere.

• Establishment and main office (EO=3) is one where the establishments is located in the same address as the main office and with branch/es elsewhere.

• Main Office (EO=4) is a unit which controls, supervises and directs one or more establishments of an enterprise.

• Ancillary unit other than Main Office (EO=5) is a unit that operates primarily or exclusively for a related establishment or group of related establishments or its parent establishment and provides services that support those establishments.

Legal organization (LO) This refers to the legal form of the economic entity provides the legal basis for ownership of the establishment. The following are the types of legal organization:

• Single Proprietorship (LO=1) refers to a business establishment organized, owned, and managed by one person, who alone assumes the risk of the business enterprise.  A sole propietorship must apply for a business name and be registered with the Department of Trade and Industry (DTI). 

• Partnership (LO=2) 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. 

• Government Corporation (LO=3) also called Government-Owned or Controlled Corporation (GOCC) refers to a corporation organized for private aim, benefit or purpose with the government as the major stockholder, regardless of whatever they are stock or non-stock corporations. 

• Stock Corporation (LO=4) refers to 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.

• Non Stock, Non-profit Corporation (LO=5) refers to a business corporation which does not issue stock to its members and are 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.

• Cooperative (LO=6) refers to an organization composed primarily of small producers and/or consumers who voluntarily join together to form a business enterprise which they themselves own, control and patronize.

• Others (LO=7) refer to an organization not classified in any of the above classification. It includes private associations, foundations, Non-Governmental Organizations, or other forms of legal organizations.

Industrial Classification.  The Industrial Classification of an economic unit is determined by the activity from which it derives its major income or revenue. The 2009 PSIC which was approved for adoption by government agencies and instrumentalities through NSCB Resolution No. 2 Series 2010 was utilized to classify economic units according to their economic activities.

Size (SZ) of the Unit of Enumeration.  The size of an economic unit is determined by its total employment (TE) as of specific date. Total employment (TE) refers to the total number of persons who work in or for the establishment/enterprise. This includes paid employees, working owners, unpaid workers and all employees who work full-time or part-time including seasonal workers. Included also are persons on short term leave such as those on sick, vacation or annual leaves and on strike.

The following are the size codes and corresponding total employment used in the 2012CPBI: 

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 & Over

Geographic Classification.  Establishments are also classified by geographic area using the Philippine Standard Geographic Code (PSGC) classification. The PSGC contains the latest updates on the official number of regions, provinces, cities, municipalities, and barangays in the Philippines. The latest PSGC as of September 30, 2012 was used for the 2012 CPBI.

 

Sampling Design

Selection of sample establishment for the 2012 CPBI was done using stratified systematic sampling with 3-digit or 5-digit PSIC serving as industry strata and employment size as the second stratification variable.

 

Response Rate

Field operations of the 2012 CPBI were scheduled from April to July 2013. As of July 2013, only 61.2 percent of the total sample questionnaires were received at the Central Office. About 90.2 percent collection of questionnaires was achieved only on November 2013.

Total response rate for Real Estate Activities sector was 95.2 percent (1,768 out of 1,858 establishments).  This included receipts of "good" questionnaires, partially accomplished questionnaires, reports of closed, moved out or out of scope establishments.

Of the total responses, 26 establishments responded online and none accomplished e-questionnaire.  Others convert accomplished questionaires to portable document format (PDF) and submit through e-mail.  

For establishments with TE 20 and over, the response rate was 96.6 percent.

 

CONCEPTS AND DEFINITIONS OF TERMS

 

Economic activity is the establishment’s source of income. If the establishment is engaged in several activities, its main economic activity is that which earns the biggest income or revenue.

Total employment is the number of persons who worked in for the establishment as of November 15, 2012.

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, receiving pure commissions only, and workers on indefinite leave.

Compensation includes salaries and wages, separation/retirement/terminal pay, gratuities, and payments made by the employer in behalf of the employees such as contribution to SSS/GSIS, ECC, PhilHealth, Pag-ibig, etc.

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.

Income or Revenue refers to cash received and receivables for goods/products and by-products sold and services rendered.

Cost refers to all expenses incurred during the year whether paid or payable. Valuation is at purchaser prices including taxes and other charges, net of rebates, returns and allowances. Goods and services received by the establishment from other establishments of the same enterprise are valued as though purchased.

Expenses refers to cost incurred by the establishment during the year whether paid or payable. This is treated on a consumed basis.

Intermediate cost refers to expenses incurred in the production of goods such as materials and supplies purchased, fuels purchased, electricity purchased, and agricultural/forestry/fishery and industrial services done by others plus beginning inventory of materials, supplies and fuels less ending inventory of materials, supplies and fuels.

Value added This is gross output less intermediate cost. Gross output for the financial and insurance activities is value of output plus non-industrial services done for others (except rent income from land). Intermediate input is intermediate cost plus non-industrial services done by others (except rent expense for land) and other costs.

Value of output represents the sum of the receipts from products and by-products sold, agricultural/forestry/fishery services rendered, industrial services, and goods sold in the same condition as purchased less the cost of goods sold; and value of fixed assets produced on own account and change in inventories of finished products and work-in-progress.

Gross addition to tangible fixed assets is equal to capital expenditures less sale of fixed assets, including land.

Change in inventories is equivalent to the value of inventories at the end of the year less the value of inventories at the beginning of the year.

Inventories refer to the stock of goods owned by and under the control of the establishment as of a fixed date, regardless of where the stocks are located. Valuation is at current replacement cost in purchaser prices. Replacement cost is the cost of an item in terms of its present price rather than its original cost.

Subsidies are all special grants in the form of financial assistance or tax exemption or tax privilege given by the government to aid and develop an industry.

 

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Source:   Philippine Statistics Authority - National Statistics Office
               Manila, Philippines