The Philippines’ creeping unemployment rate, which is the highest in the region, has been ironic and flagrantly discounting the country’s sterling GDP growth, which is also the fastest in the region. In a services-led economy, growth heavily favors the more educated and makes opportunities for the unskilled impossible. Growth goal has become more exclusive.
Thus, the call to revive the manufacturing sector cannot be underestimated otherwise the economy will continue to stay on its course for a jobless growth.
Edgardo B. Lacson, president of the Employers Confederation of the Philippines (ECOP), has bewailed what he called a “jobless growth” economy.
“Ironically, the country’s sterling GDP growth rate has not been reflected in its unemployment rate, which is the highest in southeast Asia. We are very proud of our GDP which is sterling 7 percent and yet it is jobless. The unemployment figure remains the same, the poverty level is increasing and yet we are saying there is growth,” Lacson noted.
The unemployment rate of over 7 percent translates to around 3 million Filipinos without jobs. Including underemployed of 7 million Filipinos, the country has a staggering total of unemployed Filipinos of around 11 million.
“And that is assuming that our definition of unemployment is correct,” Lacson said. In 2005, the International Labor Organization has changed the definition of employment to categorize those looking for work for one year as part of the workforce. Those who work for one hour in 2 weeks are also considered employed.
“That is window dressing,” Lacson said.
He cited that while jobs are created, there are also one million new entrants to the labor force every year. To be able to catch up in southeast Asia, the Aquino administration has aimed to create 5 million jobs in three years. The BPO sector expects to employ a total of 1.3 million by 2016 from the current over 700,000.
The Philippines has the highest rate of unemployment in the region at over 7 percent. The expansion in jobs creation is largely coming from the BPO and the overseas Filipino workers. But not all can work in the BPO sector or can find employment overseas.
The quickest way, Lacson said is for government to fast track the implementation of the huge infrastructure projects under the Public Private Partnership (PPP) program stressing these are going to spur manufacturing growth in the country.
“The unemployment scenario is the country will all depend on the spending habit of government. If they are serious in PPP, then they will be generating a lot of employment.
PPP will spur manufacturing of nails, roofing materials, cement, allied industries. These sectors will produce more and will hire more people,” Lacson stressed.
Lacson noted that while the private sector is also expanding, it cannot match the machinery of the government resources. In the first place, the private sector only follows the government expenditures.
“The biggest spender in our economy is the government. All countries are depending on government for large scale spending like infrastructure projects. Thus, the employment picture in this country will all depend on how the government will handle the economy in the following years. If they accelerate the PPP, the private sector is always there,” he said.
“The private sector cannot do it alone, they have to work together, but the private sector expansion is only expansion and not all are expanding,” added Lacson.
It would be of great help for the manufacturing sector also if the government can provide relief for the high cost of electricity and labor. The Philippines has the second highest power cost in the region.
Roberto Batungbacal, president of the Samahan sa Pilipinas ng mga Industriyang Kemika (SPIK), said that in the previous decade, manufacturing employment growth has plateaued, in spite of its moderate growth.
“This maybe due to job losses in less competitive industries, as well as increasing productivity and automation in competitive sectors, due to the transfer of labor from to the services sector, ant the transfer from formal sector to the informal sector,” he said. The high power cost is the biggest factor affecting competitiveness of domestic industries.
Batungbacal noted that based on data from Bureau of Labor & Employment Statistics and the National Statistics Office, manufacturing employment only grew an annual average of 0.7% in the last 10 years (2002 to 2012), while manufacturing value added grew by approx 4%(at constant 2000 prices.
The biggest contributors to the growth of industry were manufacturing and construction.
“Inclusive growth means that economic growth reaches all sectors and their constituents, not just the leading ones. Inclusive growth means decent jobs for the great majority, it means jobs for the less educated, with fewer resources and fewer choices. This brings into mind the manufacturing sector which has the highest potential to provide long-term inclusive employment to a country with persistently high unemployment and underemployment,” he said.
Thr alarming unemployment and the race towards achieving the administration’s goal towards inclusive growth has sent the Board of Investments (BOI) and the Philippine Economic Zone Authority, among other agencies, to scramble for more investments in the manufacturing sector.
DTI Undersecretary and BOI Managing Head Adrian S. Cristobal Jr. said the strong push for investments in the manufacturing sector has resulted in the inflow of some foreign firms producing for the export market.
“We see this trend continuing this year,” Cristobal said.
He, however, said there will be no shift from a services-led economy to a manufacturing-led, but both will be growth drivers.
“Both manufacturing and services sectors have shown substantial growth the past year, especially manufacturing," Cristobal said.

Source: Manila Bulletin - January 6, 2014