ADB: Not enough jobs under Aquino

NO LINK SEEN BETWEEN GROWTH, POVERTY REDUCTION

The local economy may be growing but not enough jobs are being created “to link economic growth to poverty reduction,” the Asian Development Bank (ADB) said in a report released yesterday.

The ADB in its update of Asian Development Outlook 2012 noted that despite the number of new jobs growing by 1 million over the past year, it only slightly exceeded the overall growth in the labor force, and mainly reflected a rise in part time employment with 1.5 million positions created.

“Full-time jobs fell by 500,000 in the same period,” according to ADB.

A positive first half performance has bumped up gross domestic product (GDP) growth forecasts from 4.8 percent to 5.5 percent in 2012, but the economy needs to create more job opportunities, the ADB report said.

“The key challenge is to link economic growth to poverty reduction. Despite solid economic growth, job generation remains inadequate, reflected in rates of unemployment and underemployment. The incidence of poverty remains high at 26.5 percent in 2009, compared to 26.4 percent in 2006 and 24.9 percent in 2003,” Neeraj Jain, ADB’s country director for the Philippines, said.

President Aquino had relied mainly on the business process outsourcing (BPO) for its job creation program but employment in the sector relies mainly on English proficiency of which mainly middle and upper class Filipinos are capable.

Aquino even recently boasted about business processing and outsourcing (BPO) companies investing in the Bangsamoro (formerly the Autonomous Region in Muslim Mindanao) with the forging of the Framework Agreement between the Philippine government and the Moro Islamic Liberation Front (MILF). In his speech during the 4th International Outsourcing Summit Tuesday evening held at the Makati Shangri-la Hotel, Aquino said the IT-BPO sector is an all-important tool as catalysts for extending growth especially in the countryside.

“We are fully committed to meeting these projections. We see your sector as an all-important driver of inclusive growth — as catalysts for extending prosperity outside the traditional hubs of commerce and industry in our country,” he said.

The service sector is expected to continue to benefit from robust private consumption and investment. The BPO industry employed approximately 638,000 Filipinos in 2011 and this number is expected to rise by at least 20 percent by year’s end.

The ADB said manufacturing will also benefit from a gradual recovery in exports and growth in domestic demand. Construction, meanwhile, will benefit from public infrastructure spending and implementation of public-private projects, it added.

“Increased business confidence bodes well for investment and future jobs,” ADB chief economist Changyong Rhee said. “But the Philippines must guard against weaknesses outside its own economy that could have a knock-on effect,” he added.

The ADB said the local economy continues to show strength despite global and regional economic slowdown with stronger than expected economic growth in the first half of 2012 was broadly based. Private consumption was buoyant, fixed capital investment quickened, public spending rebounded, and net exports contributed to growth. Inflation remains under control at 3.5 percent for 2012.

GDP growth for 2013 is forecast at five percent, unchanged from early projections. In 2013, inflation is forecast at 4.1 percent on the back of higher global food prices, as well as pressures from sustained strength in domestic demand.

Softer demand from industrialized countries than forecast in the report could undermine export and investment prospects for the Philippines, the ADB report added.
“In view of the performance so far this year, and taking into account more moderate expansion expected for the second half, the GDP growth forecast is revised up to 5.5 percent. The forecast for next year is kept at five percent,” it said.

While upgrades in indicators of competitiveness and sovereign ratings reflect an improved investment environment, the progress on the government’s public-private partnership (PPP) projects has been slow, the report indicated.

Inflation ebbed to 3.2 percent in July, a percentage point lower than at the end of 2011, even with the uptrend in domestic demand, according to ADB.

It said the forecast for inflation this year is trimmed to 3.5 percent and with sustained growth in domestic demand in 2013, together with higher prices for imported food, inflation will likely rise enough to keep the April forecast of 4.1 percent.

Remittances from overseas Filipinos climbed by 5.3 percent to $11.3 billion in the first half and receipts from the BPO sector, whose revenue rose to $11.0 billion in 2011 and is expected to increase by 20 percent annually through 2016. –Chito Lozada, Daily Tribune