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Chapter I

Introduction

Background of the study

In status quo, garments and textiles has become essential to every day life of individuals, it

being able to not only provide comfort, but also the ability of expression and empowerment. In

some stages of history, clothing and garments were a mandate to show off a person’s position

and power. Because of this, the textile industry is one of the oldest and most essential form of

industry established in any country in its industrialization stage (Park, 1979). In some developed

countries, the textile industry has been shown to be one of the industries that spearheaded

industrialization (Sembrano & Veneracion, 1979). Because of this, the fashion industry evolved

to becoming one of the most profiting industry presently known to the world.

The textile industry, being labor intensive, generates sizable employment in the early phases

of industrialization; and being able to generate a low-cost product with an almost universal market,

it favors the shift from limited to large scale production (Sembrano & Veneracion, 1979). Therefore,

making it more essential to developing nations as employment is scarce and there is an abundant

source of labor supply.

The Philippines’ garment industry has a rich and colorful history which dates back to the

country’s pre-colonial times wherein garments were cultivated in houses and shown as status

symbols which suggested diversified production. Trading of garments between nations were also

present during these times between Philippines, China, and other neighboring countries.
Statement of the Problem

This study intent to be able to identify the economic impacts of the local garment industry

of Taytay, Rizal in the Manufacturing Sector of the Philippines. In light of this, the researchers

seek the answer to the following questions:

1. What is the current status of the manufacturing sector in Taytay, Rizal?


2. What are the patterns of change that highly influenced the current status of the garment

industry in Taytay, Rizal?


3. What are the factors affecting the total factor productivity of garments in Taytay, Rizal?
4. Is there a relationship between labor productivity and revenue?
5. What are the effects and implications of the recent reformation of the municipality of

Taytay, Rizal?
6. What are the possible measures needed for the improvement of the manufacturing

sector in Taytay, Rizal?

Hypothesis

This study will focus on the relationship of labor productivity and and the revenue of the

garment sector, and the researchers hypothesized that labor productivity has a positive

relationship with revenue.

Significance of the Study

The economy of the Philippines has been suffering from the depreciation of the

local garment specifically in Taytay, Rizal. Thus, this research is essential in respect to an
increase of productivity in our country with regards to the existence of efficiently managed

industries. The local garment industry is one of the industries that should be capitalized and

catered to, as it offers products that are vital towards the needs of an individual.

This research would be beneficial for the following: First, the entrepreneurs and

investors who seek the data that may aid them in their businesses. This study is also to

enlighten the government in improving their policies and laws for the local garment industry.

The international garment industries may also profit from this as it may result to an increase of

subcontractors.

Through this study, the knowledge of students may also expand about the local

garment industry presents in our country. The results of this study may also serve as relevant

information and make it as a reference for the future researchers.

Scope and Limitation

The researchers would like to specify that the data used to assess the garment industry

of the Philippines is only that of the area of Taytay, Rizal. Due to time constraints, the

researchers were not able to gather data from every region of the country and opted to

evaluate only the garment industry of Taytay, Rizal as it is the garment capital of the Philippines.

Secondly, the researchers mostly used secondary data from the Municipality of Taytay,

Rizal as the basis of their research. Although primary data was also used to gather first hand

information from seller on select clothing stalls of the town, the bulk of the analysis as to how
relevant the garment industry is to the town and the country is mostly based on the secondary

data gathered by the researchers.

Thirdly, since the town of Taytay is considered the garment capital of the Philippines, and

there is an abundance of clothing stalls situated within the area of the town, the researchers

focused mainly on the clothing stalls that are maganed by the government, since the data

within this area would be easily acquired as compared to the ones governed by private entities.

The goal of this study is to measure the importance, and relevance of the garment

industry to the town of Taytay, Rizal and its implications to the country. To measure the

importance, the researches used the Gross Regional Domestic Product and the employment

rate garnered within the garment sector.

Definition of Terms

1. Business Classification – a category given to any textile industry who manufacturing

activities involved the following: Specialized, if its operation involved the use of one type

of machine, say, Spinning, Knitting, Weaving, or Finishing; Semi-integrated if its activities

involved the use of two machine operations and integrated if its activities involved the

use of all the textile machine operations.


2. Business Organization – a category given to any textile industry’s ownership such as

single proprietorship if the business is being controlled by an individual entity,

partnership if it is controlled by two individuals and corporation if it is being controlled

by three or more.
3. Economy – refers to the situational aspect of many countries in its economic stability

utilizing all the natural resources and manpower generation.

4. Fashion Trends – is a popular style or practice, especially in clothing, footwear, accessory,

make up, body or furniture.

5. Fast Fashion – is a contemporary term used by fashion retailers to express that designs

move from catwalk quickly to capture current fashion trends.

6. Garment Industry – refers to that public or private business enterprises which includes

all aspects of fabric production, decoration, and finishing from natural and/or man-made

fibers and yarn. The industry ranks priorities of industries which had been contributing

to the economic development of the country.

7. Gross output – the total value of all goods produced and services rendered by the

establishment during the year referred.

8. Integrated Mill – a textile mill whose operations include the following processes:

spinning, preparation, weaving, knitting and finishing. Preparation includes texturizing,

winding, dyeing.

9. Investment – capital formation through capital contribution.

10. Management – function of getting things done through the efforts of others. It is the

application of authority and the assumption of responsibility.


11. Manufacturing Sector – is part of the goods-producing industries super sector group,

comprises establishments engaged in the mechanical, physical, or chemical

transformation of materials or substances.

12. Market – an area within which buyers and sellers are in such close communication that

price tends to be the same throughout the area.

13. Non-integrated – a mill with only one of the operation involved in a textile mill. It is also

known as specialized mill, that is specializing in the manufacturing of sewing thread,

knitting or weaving etc.

14. Output elasticity – change in the output that results from a change in either labor or

physical capital.

15. Production cost – direct charges actually paid or payable for materials and services

consumed put into production during the year, including freight charges and other direct

charges incurred by the establishment in acquiring them.

16. Productivity – a quantitative expression of output with respect to the associated inputs

in the production process.

17. Semi-integrated – a mill with only two or three of the basic operations involved.

18. Specific Tariff – an import tax based on quantity of the imported product.
19. Subcontracting – industrial and business strategy where production process is

fragmented & its most intensive phases farmed out to work places with the lowest

wage.

20. Tangible fixed assets – land and capital assets such as buildings, machinery, equipment,

vehicles, ships, and other transport equipment durable for one year or more.

21. Total factor productivity – is the ratio of net output (real product) to weighted averages

of human (labor) and non-human (capital) tangible factor inputs.

22. Value Added – derived by subtracting the intermediated cost of production from the

value of gross output.

23. Labor Productivity- The amount of outputs made within a specific margin of labor cost.

Chapter 2

Review of Related Literature

The garment manufacturing sector of the Philippines presents conflicting views and

opinions about its current state. While some critics insists that the industry is currently at its

downfall, others presume that it still possesses the capability of beautification. The sources

listed here unto discuss about the progress of the nation’s garment industry and briefly provides

viewpoints about its potential and possible future. Therefore, the researchers deemed it

appropriate to include these sources as a basis for their research.


A historical analysis with regards to the nation’s garment industry suggests that the

country’s exportation of garments and textiles reach its peak during the administration of

Ferdinand Marcos. On 24th of May, year 1979, the Executive Order No. 537 defined the

garment and textile powers and provided funds whereas the government is to encourage

exports sales, to create the foreign exchange and maintenance of international reserves to

sustain the economic growth of the Philippines. This E.O. also engaged in the international

trade, insuring the equitable allocation of export quotas and to maintain the economic benefits

of our international agreements. Its purpose is to oversee the administration of garments and

textile agreements in the Philippines, to approve allocations of quota and to provide necessary

information and statistics on a regular basis. In addition to this, as the number of countries who

wishes to impose restraint levels on Philippine exports of garments increases, the agreement in

regards to the international trade in textiles also known as the Multi Fibre Agreement was

created.

Garments, as well as textiles, are heavily tied to the international market, establishing it

as one of the most exported good, aside from technology, from countries. Considered essential

to the every life, it is moreover, labor dependent. This, in effect, according to Myoung Kwang

Park’s thesis regarding the labor productivity of the Philippines and Korea, benefits the

developing nations relatively more than that of the developed as it not only provides revenue as

a product, but also provides employment to the mostly labor intensive developing states. The

industry, then, is three times more beneficial to developing countries as compared to the

industrialized countries.
However, in spite of the garment industry being highly beneficial to developing state, the

industry is highly depended of the trends and marketing of the product. The demand of such is

highly dependent on the market trends and labeling of products. Retailers are subjected to the

demand of the consumers, which are heavily rooted from the unpredictable and rapid changes

of fashion.

The nation’s apparel industry has long been integrated to the culture and history of the

Philippines. In this regard, Ibon Foundation’s book entitled The Philippine Garment and Textile

Industry presents a worthwhile discussion on the sector’s historical background, such as its state

during precolonial times, the countries with which trading of garments were present, its peak

during the 1980s, and a brief discussion of the problems and shortcomings that led to the

decline of the Industry.

The objective discussion the book was able to present contributed to the researchers’

grasp about the industry’s past and provided insights with regards to the difficulties and

obstacles the nation’s garment sector has faced and still struggles to overcome. The data

provided were not only introduced as mere numbers and tables, but also provided analysis as to

how the country was able to garner such results and the problems it had encountered and are

still being subjected to that can potentially hamper the development of the nation’s garment

industry of the Philippines. Problems such as violations of labor laws include the means of

abuse towards the workers dire need, particularly with regard to the issue on how Filipino

workers are, more often not, subjected to harsh policies.


As the Philippines’ underemployment and unemployment rate continues its staggering

rates, the treatment of such workers should not be ill and abusive. Therefore, certain measures

were instigated by the government in order to ensure the safety of its workers, however, this led

to higher pays and an increase in labor laws, such as the increase of the minimum wage, which

are essentially beneficial for the workers, but nonetheless disincentivizes major clothing

companies to subcontract in the Philippines, opting instead to hire in countries such as

Cambodia, Laos, and China.

Given the need of the country to gain profit from manufacturing garments, and the

decline of employment this sector was able to provide. According to Inquirer and their

published editorial entitled Garment Revival, the garment industry of the Philippines once

provided employment for a million filipinos, but since the decline of the industry, employment

decreased from a million to six hundred thousand and five hundred thousand during the years

2005 and 2011 respectively.

The value of the welfare of workers and revenue should not come at the cost of the

other. However, due to the country’s lack of the ability to mass produce garments, critics

suggest that a productivity wage system be introduced to provide the country with the power

needed to compete with other neighboring countries. The productivity wage system proposes

that the compensation for the workers be based off of the output they are able to provide, and

not based on their skill and the time they allocated to work. This, in effect, provides more

avenue for the abuse of workers. The government, as the father figure of the state, should be
able to establish rules and regulations to the productivity based wage system to protect its

citizens from the possible abuse that can arise from this climate.

With the decreasing trend of subcontracting in the Philippines, the need for the

development of the apparel industry becomes more pressing in status quo. Local garment

industries have more avenues to manufacture and sell apparels that are based locally, acquiring

the opportunity to earn revenue based on apparels that are made by not only the hands of

Filipinos, but also the name and branding of the Philippine companies. The garment industry of

Taytay, Rizal can be considered as a potential candidate to pave way for the reestablishment of

the then powerful garment industry of the country.

The same editorial also discussed the matter of the local garment industry and how it

was once a major contributor to the earnings to the Philippines. Garments, which are currently

the eight biggest export product of the Philippines, accounts for more than a third of the

nation’s exports and provides employment for a million people and provisioned a revenue of

$132.4 million monthly.

The garment sector of the Philippines once garnered a total of $3 Billion during the year

2000, however, with the 10 year phase out of the Multi-Fiber Agreement, a policy designed to

set quotas and preferential tariffs on garment and textile agreements, the Philippines were

outshone by countries that possesses the technology and labor supply for mass production,

countries such as China. With the rules and regulations about quota scrapped, companies were

then incentivized to search for suppliers which are less costly and more efficient in producing
mass output. This led to the decline of the garment industry, only gaining $1.6 Billion in 2006,

$1.2 Billion in 2010, and $1.2 Billion during 2011.

The publication, in the same breath, provided a comprehensive discussion concerning

the country’s opportunity to sell garments through the generalized scheme of preferences by

the European Union provided the the Philippines comply with certain conventions such as

human rights and sustainable development. As of the year 2014, the Philippines was the only

ASEAN country participating in this agreement. However, despite this opportunity, the country’s

garment sector does not currently possess the capital and resources needed in order to trade

within the EU’s walls, thus making the opportunity moot.

ASEAN countries started to become heavily export oriented during the years of 1970 and

1980s. According to a journal by Anisuzzaman Chowdhury titled Textiles and Electronic

industries in ASEAN, the Philippines experienced a 600% growth rate with regards to its export

per output ratio. It was stated that by the year 1970, the export per output ratio of the country

was only 3.5%, significantly lesser when compared to its neighboring countries such as

Malaysia, Singapore, and Thailand with ratios of 24.7%, 51.7%, and 13.8% respectively.

However, by the year 1980, the export to output ratio of the Philippines rose to 24.1%.

While still being relatively lesser than that of other nations, this increase marked the country’s

integration into its attempt in transitioning to a heavily export oriented country, a position that

was not maintained as of status quo.


Textiles were also highly important within the ASEAN nations. Chowdhury measured and

determined the importance of textiles by the manufacturing value added (MVA), employment,

and exports. While the Philippines garnered only 20% on their share of textiles, the

employment by which it provides accounts for more than 30%, a percentage that is greater than

of its neighboring countries. With Malaysia, Singapore, and Thailand only with 13%, 14%, and

20% respectively.

While the garment sector of the Philippines provides a significantly substantial amount

of employment, it has been slowly declining in the recent years as discussed on the earlier parts

of this chapter.

The researchers hence then view this as an evidence of the potential of the industry to

rise to again its position during the 1980s, and on how avenues are readily available for the

nation to increase its competitiveness against other countries. The Philippines, being an import

dependent economy with exports on low value added products, pebbles towards the dire need

of the country to realign its manufacturing sector towards a product that has a constant

demand, accessible, and with an uncomplicated means of production.

According to SGV & Co, the value in garment are currently more reliant on the design

and the marketing of the products and Philippines should instead shift their focus to higher

value products and services. Given the weakness of the nation to mass produce due,

suggestions were made with regards to the shift of focus of the garment sector from

manufacturing the design and marketing. Large companies, more often than not, outsource
their design and manufacturing. Given that the Philippine improve the skills and technology of

its garment production process, the shift from manufacturing to designing can be accomplished.

However, this shift would hamper the current environment that was already established

with regards to the garment production of the Philippines. The Philippines, was able to excel in

the garment industry during the decades of 1980s and 1990s, and as such, already has the

knowledge essential with regards to this field. The shift of focus would suggest for expenses and

would be unpredictable as the nation would be diving into a new aspect of garment

manufacturing. It would be best to reassess the current option of the country in the field by

which they once excelled.

Technical efficient production is one of the essential factors in supporting the small and

medium enterprises (SMEs). It’s purpose is to produce the maximum level of output achievable

given the input usage using technology. Although there is an undeniable competition between

the local and international garment industry, the expansion of SMEs is proven to be more

effective than large-scale industries because it promotes income equality, higher level of

employment, also to disseminate distribution of wealth and boost the economic growth of the

Philippines. In fact, according to the Technical Efficiency Indicators in a Philippine Marketing

Sector, the government institutions and international lending institutions have aided the SMEs

in a number of developing countries including the Philippines for decades. Between 1976 -

1992, the Philippines received $140 million from the World Bank, and an additional $100 million

from the Asian Development Bank.


The textile industry was positively affected by the Multi Fibre Agreement. In 1995, it hit

its peak when the industry accumulated $2.6 billion (Antonio and Rodolfo, 2006). The garment

industry was a success and it became the country’s second largest exporter. As it reached its

golden age, it also resulted to the industry being the most geographically dispersed economic

activity and a significant source of employment in the country. In entrepreneurial interviews,

some discussed how the Philippines would not have been a success in the industry if the quota

system had not existed. The creation of detailed and controlled that specified export quota

expanded greatly due to the protection of quota holders from the international competition

under the system. (UNDP, 2007) MFA aimed to protect domestic markets through the

development of international trade flows as well as to liberalize international trade in clothing.

The agreement also provided the primary guidelines for global trade in garment. As the Multi

Fiber Agreement phased out, the garment sector of the Philippines is now struggling to survive

the international competition. The production that was once sourced to our country is now

redirected to countries like China and Vietnam resulting to a massive impact to the labor sector.

Collins (2003) states that heavy reliance on labour as a factor of production has driven the

garment industry firms to seek cheap labour throughout the developing world.

With clothing being a product by which individuals consider essential to their everyday

life, similar to other manufactured goods, it is heavily reliant on consumers and demand which

then begs the question on what factor is the most influential in the deciding factor of the

consumer. Pradip Mehta’s book entitled An Introduction on the Quality Control for the Apparel

Industry, provides an in depth discussion on the value and implications of quality with regards
to the businesses and countries. Furthermore, it raises the issue of how written materials on

quality discuss more on the notion of fabrics, yarns and clothes and not necessarily its

transformation to apparels. The book focuses on how quality, more often than not, is

compromised for the value of cost minimization and optimization of outputs, and this, while it

produces more outputs, hampers the branding and garners more unsatisfied consumers.

According to MarketLine, the forces that drive the demand patterns with regards to the

apparel retail industry are, namely, buyer and supplier power, degree of rivalry between

companies, substitutes of goods, and new entrants to the industry. Demand patterns are highly

susceptible to branding and labeling, which then, in effect, weakens buyer power. Despite this

premise, it should be noted, that garments, in so far as they differ in the production and

labeling, it is still highly reliant on the demand of its consumers, just as any other industry.

Fashion trends are dictated by the community, which are the consumers. More often

than not, choices and preferences of garments are high reliant on the current trend exhibited.

This causes the retailers and suppliers to accommodate and provide product which are in line

with the current trend exhibited.

Quality, has become, if not the top, one of the important criteria considered by

consumers. Surveys were presented in the book with regards to the opinions of U.S. consumers

as to the willingness to pay more for a product which possesses higher quality is not an

uncommon decision made by customers. This, then, instigates that quality, in as much as the

maximization of outputs and production costs, should be taken into consideration, it caters to

the consumer satisfaction, a factor that is correlated with the sales of a certain company. The
book, moreover, elaborates on how certain executives in companies situated in the United

States claims the quality plays a crucial role in establishing the brand of their company, the basis

of consumer loyalty can be directly traced towards the quality of the product, specifically, the

clothing, by which their enterprise is able to provide.

A company then needs take into consideration the quality by which their products

possess. While quality, according to Harvard expert David Garvin, can be divided into eight

dimensions, namely, performance, features, reliability, conformance, durability, serviceability,

aesthetics, and perceived quality. According to the Mehta, quality is also defined as the

characteristic or properties of a product that makes it usable, and the extent to which a product

successfully serves the purpose of the user during usage is referred as the fitness for use.

Certain attributes are sought for in a product in order to assess and evaluate the level of quality

that it possesses. Price, Technology, Psychology, Time Orientation, Contractual, and Ethics are

factors that influence quality and these, according to the Mehta, should be considered as these

factors correlates to consumer decision making and satisfaction.

Mehta’s book also discussed about the United States of America’s recognition on the

value of quality and the role it plays with regards to the nation’s competitiveness, as the country

has long compromised the quality of its products for the optimization of output which are said

to be detrimental as other foreign competitors, particularly European countries, based their

products not on its affordability, but towards the quality.

Brian Toyne’s book entitled the Global Textile Industry, published in the year 1984,

provided a conceptual approach as to how textile is developed in various countries of the world.
The stages of development manifests qualities of the modernization development theories and

models. One of the stages exhibits the system of the Philippine as more advanced production of

fabric and apparel. An advancement of domestic production improves a great deal in quality

and elegance that may increase foreign exchange. In summary, the garment industry becomes

larger, more varied, and internationally active. As the level of production increases, the

government encourages that our foreign imports be replaced with domestic production. Aside

from this, the Philippines also possesses an abundance of its local textiles such as silk, piña, and

ramies, textiles which are not only unique, but also environmentally safe and is in line with the

international convention of sustainable development.

In addition to the garment and textile industry of the Philippines, the apparel retail

industry of the nation also possesses a significant impact concerning the country’s earnings.

According to a published journal by the MarketLine entitled, Apparel Retail in Philippines, the

Philippine apparel retail industry, consisting baby clothing, toddler clothing, casual wear,

essentials, formal wear, formal wear occasion, and outwear for men, women, boys and girls, is

experiencing strong growth in the recent years and is forecast to progress even further by the

year 2020. Harboring a total income of $5.2 billion during the year 2015, with a compound

annual growth rate of of 10.8% from the years 2011 and 2015, with Indonesia and China with

18.9% and 9.6% respectively.

However, despite the nation’s growth rate exceeding that of China, it should be noted

that the overall value of the apparel retail industry of the country is significantly lesser than that

of the other nations. The value of the apparel retail industry of the Philippines accounts to only
$5.2 Billion whilst Indonesia and China’s are valued at $26.3 Billion and $211.2 Billion

respectively.

Ergo, it can there be inferred that even in the instance wherein the nation’s growth rate

persists, the value of the nation’s apparel industry would then only be valued at $8.5 Billion, still

being significantly lesser than that of Indonesia and China, given their expected worth by the

year 2020 of $57 Billion and $336.6 Billion respectively.

The issue concerning the improvement of the apparel retail industry of the Philippines

should be taken into account. While the country is subjected into an emergence of apparel

retail stores in status quo, with stores such as Zara and H&M, both of which harbored a revenue

of $66 Million during the year 2015, these enterprises are only mostly concentrated in the areas

of Metro Manila, while cities such as Cebu and Davao are mostly overlooked. It can then be

suggested that these establishments be introduced to other urbanized areas of the country.

Moreover, it was further elaborated that amongst the apparel industry, women’s wear

constitutes for 51% of the its revenue, with a corresponding value of $2.7 billion, while men’s

and children wear only accounting to 30.9% and 17%, tantamounting to $1.6 billion and $800

million respectively. Women’s apparel, being the most accessed product within the

establishments, establishing women as the foremost consumer within the apparel industry.

Women do not only account as consumers, rather, they are likewise involved in the

manufacturing process of garments. According to Madelaine Sembrano’s book titled The textile
industry and its women workers: The Philippine Study, women comprise majority of the labor

force in the garment manufacturing sector.

Vivien Tolentino’s thesis concerning the Profile, Problems, and Prospects of the Garment

Manufacturing Industry in Rizal provided an economic analysis as to the subcontracting industry

of Rizal. Subcontracting, as mentioned earlier, has become a viable strategy for companies in

outsourcing their labor. Amongst the reasons in accordance as to why individuals and collectives

subject themselves into subcontracting are, namely, the sure market of products, the

continuous orders from suppliers allows for the market problem the least of issues. Low working

capital requirement is also considered as one of the main reasons why individuals work in

subcontracting. More often than not, he materials and accessories are already provided by the

contractor, allowing for the labor and machines to comprise most of the capital involved.

Theoretical Framework

The Solow Model is a neo-classical growth model that expounds on the idea that in the

long run, the Gross Domestic Product increases because of three basic sources: Labor, Capital

Accumulation, and Technology. In the context of the garment industry which focuses mainly on

the said sources, Solow Model provides how underdeveloped countries would become at par

with the developed nations through the advancement of technology.

The foundation of this model is Cobb-Douglas production function wherein it represents

the technological relationship between labor and capital.


whereas Q represents the quantity generated by the inputs of K and L. K is the amount of capital

input (equipment, or a particular machine). L represents the amount of allotted labor that is

expressed in hours. A, which reflects the change in output that isn’t the results of inputs, also

called the total labor productivity. While, the Greek characters alpha and beta measures the

output elasticity of the inputs.

This theory is relevant because this model substantiate that labor and capital, which is present

in the garment sector of Taytay, Rizal, are essential in order to attain permanent economic

growth. This also suggests that technological progress is effective in the development of one’s

sector.

f =¿ Number of Registered Workers+ Wage- Equipment

The equation listed above was developed by the researchers to measure labor

productivity using the number or amount of registered workers, the wage by which the workers

are compensated for their labor and the equipment and materials they possessed. These are

the factors that the researchers deemed relevant in measuring labor productivity in order to

assess its relationship with the revenue and the Gross Regional Domestic Product of Taytay,

Rizal.
The number of registered workers , defined in this research refers to the sellers and the

individuals producing or sewing the garments. The number of producers will be used in the

labor production, whilst the number of registered works, including, the sellers in the clothing

stalls, will be used to measure the employment rate, which will be essential in measure the

share of employment in the garment sector of Taytay, Rizal is able to provide its people. This

variable is hypothesized to be positively correlated as more workers available to produce

garments would, in effect, lead to increase in the amount output produced.

Wage, included in the production function above, is hypothesized to be positively

correlated as this would attract more workers to allot labor in the garment manufacturing

sector. Wages, in this researched, are assumed to be of minimum wage of the rural sector of

Taytay, Rizal for the purpose of consistency and reliable analysis.

Equipment and materials that are provided to the workers, particularly those who are

sewing the garments to be sold by different individuals or collective, are included in the function

and is hypothesized to be negative as this variable is part of the cost allotted to acquire output.

In effect, the more equipment and materials, the higher the cost is per product.

f =Number o f Registered Sellers+ Labor Productivity−Rent


The function listed above will be used in the measurement of the revenue the garment

industry of Taytay, Rizal is able to produce. This will further be elaborated as the researchers

intend to measure the share of the garment industry is to the Gross Regional Domestic Product.

Labor productivity, measured from the last function, will be used in measuring the

revenue of the town’s local garment industry. This is hypothesized to be positively correlated as

a increase in the labor productivity would necessitate to an increase in the efficiency of the

production of the products.

The number of registered sellers are included in the function for the assessment of the

amount of clothing stalls and their respected earnings. This is hypothesized to have a positive

relationship with the revenue of the industry, as the increase of the amount of sellers will

necessitate in more sold products, which will then, in effect, lead to an increase of the revenue

acquired by the sector.

Rent, as defined in the production function above, is negatively correlated to the

revenue as the increase in rent would be a disincentive to the entry of new sellers in the sector.

The lower the rent is in the sector, the more sellers would be able to be attracted in setting up

their clothing stalls in the main areas of Taytay, Rizal wherein clothing stalls are more evident.
Conceptual Framework

Gross Regional Domestic


Product of Taytay, Rizal

The number of registered workers, their wages, and their equipment are essential

factors in labor productivity. With the labor productivity, the researchers would then include

variables such as rent and the number of sellers to measure the total revenue the garment

industry of Taytay , Rizal and its importance to the town and the Philippines.

In order to assess the importance of the garment industry to the nation, the researchers

deemed it fit to measure its relevance to the town of Taytay, Rizal through its percentage on the

town’s Gross Domestic Product.


Chapter 3

Methodology

Introduction

The following chapter will focus on the chosen method used for this research and a will

provide a comprehensive discussion as to why the study would benefit from said method. This

chapter will also elaborate on the kind of instruments and data used as a basis for the

researchers’ analysis with regards to the chosen topic of the study.

Research Design

The researchers decided to use descriptive quantitative method as the basis for their

research. As the study will focus mainly on the assessment of the financial capability and

relevance of the garment sector of the Philippines, the researchers then deemed it fit to use

both primary and secondary data for this thesis.

The primary data acquired were gathers based on interviews and surveys conducted by

the researchers to selected sellers in the clothing stalls in Taytay, Rizal. In order to decide which

and how many respondents would be included in this study, the researchers decided to gather

data from the municipality of Taytay, Rizal with regards to the amount of sellers in the area.

The secondary data would mostly be focused on the financial statements of the clothing

stalls in the town of Taytay, as the researchers would use it as data for the analysis of the

revenue acquired by the municipality with regards to the garment industry.


Sources of Data

The researchers were able to acquire the data in this study thru the Municipality of

Taytay, Rizal and first hand distribution of questionnaires and conducting of interviews to select

clothing stalls in the town.

Statistical treatment of Data

To answer specific problems mentioned in the first chapter of the study, the following

statistical methods are employed:

1. Percentage. This is to measure the share of revenue the garment industry of Taytay,

Rizal is able render to the Gross Regional Domestic Product.

Formula:

Percentage (%)= f/N x 100

Where:

f - Stands for the frequency of responses

N- Number of participants

2. Weighted Mean. The researchers will be using the weighted mean in determining

the ranking of the answers from the questionnaire distributed as a means to gather

information.
Formula:
WM= TWF/N
Where:
WM- Weighted mean
TWF- Total Weighted Frequency
N- Number of Respondents

3. Regression Analysis. To measure the correlation of the variables involving labor

productivity and revenue with regards to the Gross Regional Domestic Product of

Taytay, Rizal. The researchers decided to utilize the Statistical Package for the Social

Sciences as a means to perform the regression analysis used in the study.

Formula:

Y= a+bX+e

Where:

y- Independent variableY intercept

a- Slope of the line

X- Independent variable

e- Error