The government needs to strongly adopt measures to speed up the revival of the local manufacturing industry in order to address the big number of unemployed "employable" labor force, business leaders said. The country's jobless growth situation is expected to persist unless the government treads a new path in developing and promoting the manufacturing industry, a sure job creator but which has been neglected as economic development strategy has put more focus on the services sector.
"It is still a jobless growth because our growth is coming from services, not from the manufacturing sector, which is the biggest job creator," said Edgardo B. Lacson, president of the Employers Confederation of the Philippines (ECOP).
Data from the National Statistics Coordination Board showed that the country's unemployment rate has been static. In July 2012, the unemployment rate stood at 7.0 percent from 7.1 percent in July 2011 and 7 percent in July 2010.
The same NSCB data showed there are 64 million labor force in the country out of the over 92 million population. The country has an employment rate is 93 percent, but the underemployment rate is a high of 22.7 percent.
Underemployed people are those who rendered work for even an hour only in two weeks.
The underemployed are already considered employed based on the definition by the International Labor Organization.
This makes the country's unemployment picture questionable, Lacson said. And yet, underemployment has been increasing in the past two years from 17.9 percent in July 2010 to 19.1 percent in July 2011.
Of the three (agriculture, services, industry) major groupings, the services group employs over 18 million Filipinos but it is composed of 11 services sectors. The agriculture group employs over 12 million Filipinos.
But of the more than 5 million Filipinos employed in the industry group, the manufacturing sector employs the most with over 3 million. Other sectors under this major grouping include mining and quarrying; electricity, gas and water; and construction.
Lacson noted that while BPO is a great economic driver, these investments are cost-based. "They can easily pack up and to relocate where it is cheaper."
The manufacturing sector, which entails the installation of capital equipment and machinery, cannot just abandon operations easily. The entry, however, of manufacturing projects has been hampered by the country's high power cost.
To resolve this situation, Lacson said the government must encourage local investments in the country noting that the country's major taipans have bigger investments in China than in the Philippines.
"The Philippines should be able to adopt new strategy to attract Filipino businessmen to invest in their native country because our big Filipino businessmen are going out and investing more abroad. We should be able to attract more investments from local businessmen," said Lacson, who represents the voice of over 42 regular member associations.
"Local investors are a more stable source of investments," adds Lacson noting the economic difficulties in Europe and problems in the US.
The Philippine Exporters Confederation (PhilExport) with over 4,000 corporate members and employment (direct and indirect) of over 4 million has experienced static employment growth. PhilExport members account for 70 percent of the country's total exports.
"Why in spite of our high GDP, it is still a jobless growth," Ortiz-Luis asked.
"It is because more micro and small enterprises are closing down or downsizing because they are not competitive," Ortiz-Luis answered his own question.
Gross domestic product (the value of all goods and services produced domestically; the sum of gross value added of all resident institutional units engaged in production plus any taxes, and minus any subsidies, on products not included in the values of their outputs) grew 7.1 percent in the third quarter this year and is expected to settle for 6.5 percent strong finish.
Ortiz-Luis noted that PhilExport members have been changing identities over the years with the old ones closing and new ones coming in while some have downsized or shifted operations. Thus, whatever was lost has been replaced by new ones but the number of people employed has not really increased.
"What has been lost could not also be captured because exporters have become secretive, but over the years we have seen MSMEs come and go," said Ortiz-Luis, who admitted that once an exporter closes an operation it would be difficult to stage a come back.
Exporters have been complaining against the strong peso as this makes their products more expensive compared to products from other ASEAN countries. The peso has strengthened to R40. Exporters have been pushing for at least R42.50 rate to a US dollar.
Trade and Industry Undersecretary Cristino L. Panlilio has already sounded off government's serious efforts at reviving the domestic manufacturing, but the response has been at a snail paced.
"We are creating a roadmap on how we can import substitute, what are the necessary ingredients, incentives to attract investments for manufacturing," Panlilio said.
Panlilio admitted that the government has forgotten the manufacturing sector in the past two years as the phenomenal BPO sector took centerstage.
"The BPO sector, banking services and insurance productivity are very good but we just cannot rely on services because these sectors only employ college graduates, what about the less educated Filipinos?" Panlilio said.
For one, Panlilio noted that while the electronics sector exports $25 billion worth of goods, it also imports $18 billion worth of inputs. This makes the country a mere assembly point with no available downstream industries that produce primary and intermediate parts to support local manufacturing.
"Why can't we manufacture inputs for the electronics sector to create jobs. Imports are a deterrent to the Philippine economy because it is killing our local companies and jobs," stressed Panlilio, who will be leaving the government mid this month after over two years of service.
Panlilio said that one of the roadmaps in the ongoing efforts to create specific industry roadmaps, which is spearheaded by the DTI, would tackle the issue of "import substitution".

Source: Manila Bulletin - January 2, 2012