MANDAUE CITY, Cebu - The government is being strongly encouraged to establish a clear linkage between economic growth and poverty reduction by creating more job opportunities for many Filipinos, leveraging on the country's dynamic growth.
"Now is the time for the Philippines to translate economic growth benefits down to the ordinary people if the country wants to take the right road to inclusive growth," said Norio Usui, senior country economist of the Asian Development Bank (ADB), who spoke at yesterday's Mandaue Business Summit 2013 at the Cebu International Convention Center.
Usui said that the strong growth performance of the Philippines continues to lack an inclusive growth dimension, and that means creating jobs.
Industry records show that the Philippines unemployment rate stands at 7.3 percent and underemployment rate at 21 percent.
Usui recommends for the Philippines to "walk on two legs," which means that apart from developing the service sector, government must also take focus on traditional growth engines like manufacturing, to pave the way for a higher, sustained, and more inclusive growth.
"The problem here is that growth has depended more on services, mainly on the business process outsourcing (BPO). Create job opportunities not just to the specific educated people but for a wider range where manufacturing industries could come in," he stressed.
Since the early 2000s, according to Usui, the BPO industry has mushroomed and the country has become the second largest global BPO destination.
However, the BPO industry still employs less than 1 percent of the total labor force, and its labor demand is biased toward relatively skilled workers.
"Therefore, given the large amount of underutilized unskilled labor and the prospect of a further increasing labor force in the country, it is difficult to expect the BPO industry to be a savior for the Philippine economy," Usui added.
A strong growth in the manufacturing sector is still key to address the country's long-term development challenges of job creation and poverty reduction.
He said the manufacturing has the capacity to absorb those that are migrating from the agricultural sector.
"What the Philippines needs to do is to facilitate diversification in the manufacturing sector. It is diversification not specialization," he said, which means that the country does not have to veer away from the kind of products it is already manufacturing and exporting.
"The Philippine Government, together with the private sector, needs to step-up now and boost more development in the manufacturing sector so that, together with the already growing services sector, the country can walk on two legs," he said.
Likewise, Usui said that the Philippines has the potential to even go beyond the 7-percent gross domestic product growth, however, this is hindered by persistent problems on chronic productivity growth deficit due to stagnant industrialization, in particular slow product diversification.
This, on top of prevailing concerns on high power cost, poor business and investment climate, red tape, corruption, among others.

Source: Manila Bulletin - August 17, 2013