PH faces jobs challenge: WB

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Tuesday, February 25, 2014


IN the next four years, the Philippines will need 14.6 million jobs for the 10 million job seekers as of 2012 and the 4.6 million who enter the workforce each year, according to a study of the World Bank Philippines Office.

Senior country economist Karl Kendrick Chua said the country faces an enormous jobs challenge. “Good jobs–meaning jobs that raise real wages and bring people out of poverty–need to be provided to around 10 million Filipinos who are either unemployed or underemployed and the 1.15 million potential entrants to the labor force every year from 2013 to 2016.”

Chua made this presentation at the Regional Dialogue on Creating More and Better Jobs held at the University of San Carlos last week. His findings came from the the World Bank’s Philippine Development Report (PDR) 2013.

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According to the PDR, only about a fourth of the potential entrants to the labor force managed to get good jobs in the last decade. Of the 1.15 million entrants, slightly less than half have college degrees. Of the 500,000 college graduates every year, 240,000 are absorbed in the formal sector such as in business process management (52,000) and manufacturing (20,000). About 200,000 find work overseas while some 60,000 will be unemployed or leave the labor force. The remaining 650,000, of which half are high school graduates, will have no other options except to find or create work in the low-skill and low-pay informal sector.

Left out

Although the business process management industry has managed to provide many jobs, the report stated that majority of the Filipinos will still be left out. It noted that by 2016, some 12.4 million will still be unemployed, underemployed or would have to work in the informal sector where moving up the jobs ladder is difficult.

The report notes that the country has a wide range of assets to propel its development but has not lived up to its potential. It cites the country’s historically weak economic growth record as one of the main reasons for the subpar performance on inclusive growth when compared to its neighbors in the region.

Researchers also noted “a lack of structural transformation.” Despite being ahead of its neighbors in manufacturing, the country failed fully industrialize itself so that the share of the sector to the GDP stagnated while it increased in other countries and eventually surpassed the Philippines.

Instead of manufacturing being able to absorb excess labor from agriculture, workers turned to the services sector, with over three quarters of it composed of low-pay or low-skill jobs. The lack of good jobs among low-income earners has contributed to slower progress in reducing poverty.

The study stated that because of limited opportunities in the domestic front, 10 million Filipinos and their families have left the country to seek opportunities elsewhere.

Opportunity

Today, however, the country faces a “window of opportunity” to accelerate the needed reforms to create better jobs.

The PBR recommends that government, business, labor and civil society form a coalition to create a job creation agenda to promote the welfare of all workers, not just those employed in the formal sector.

The coalition has to agree on a win-win agreement to create more and better jobs and to be able to balance trade-offs of business and labor.

The report said that government needs to enact policies that can broaden and strengthen the reform coalition and create reform beneficiaries who will have an interest in continuing the policy. For the business sector, it encouraged businesses of all sizes to embrace the principle of a level playing field for all and to extend corporate social responsibility to their own employees, especially in core labor standards.

As for labor groups, they recommend recognizing the valid forms of flexible work contracts and reducing calls to raise minimum wages as food prices fall to facilitate the creation of more jobs.

Reform agenda

“There is no simple and effortless solution for creating more and better jobs, as this is linked to resolving deep-seated structural issues in the economy. Only a comprehensive reform agenda that is owned and supported by a broad coalition can foster a business environment conducive to private sector job creation by firms of all sizes,” Chua said.

For Cebu Chamber of Commerce and Industry president Lito Maderazo, enabling an environment for inclusive growth means translating the investment grade ratings the country has been getting into private investments through economic tools and policy.

He also noted that 61 percent of job contribution comes from micro, small and medium enterprises, which means the sector needs support, especially in starting operations, closing a business, paying taxes and access to finance.

Published in the Sun.Star Cebu newspaper on February 26, 2014.

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