Stifling investors leads to jobless growth

There’s no denying the fact of jobless growth. The figures stare labor, business, and government leaders in the face. The Philippines in 2012 posted Southeast Asia’s fastest economic rise at 6.6 percent. But it also had the worst unemployment of seven percent, and underemployment of 20 percent.

Viewed from another angle, last year’s domestic output was the country’s second highest in two-and-a-half decades. But it meant little to the 2.89 million Filipinos without work, and 7.94 million more plodding only part-time as of January 2013.

Economists strive to explain the oddity of growth sans employment. Some external causes are being blamed, like US slowdown and European financial woes. Indeed an ASEAN neighbor that is economically as entwined as the Philippines with developed countries seems to be suffering the same fate. Indonesia came in second to the Philippines in GDP growth in 2012, with 6.2 percent; its unemployment was also second worst, 6.6 percent.

Yet, how come Thailand, Malaysia, and Vietnam with 5.7, 5.1, and 5 percent GDP, respectively, were able to keep joblessness down to only 0.7, 3.1, and 2 percent?

Jobless growth plagues other continents. Economies as varied as France, Egypt, Argentina, South Africa, and India too are searching for answers. The World Economic Forum (Davos) and the International Labor Organization had noticed the problem since the middle of last decade. Amidst youth riots and aging populations, some identified causes are mismatch of skills and job openings, stiff hiring taxes and firing laws, and high minimum wages.

The Economist magazine has been featuring troubled countries for years. Recently it analyzed the US economy on a parallel track of “jobless recovery.” Its issue this week, timed with May 1 Labor Day in many lands including the Philippines, takes yet another look, this time from the side of the youth. Citing figures from developed and developing nations, the Economist counts about 311 million youths aged 15 to 24 as NEET (Not in Employment, Education, or Training). That’s a quarter of the world’s population of that age segment.

The Philippine ratio could be similar. As in other countries, local labor laws and practices disfavor younger workers. In bad business times, hiring new young workers is postponed while retooling old ones. It is far easier to lay off the latest hires than old-timers. Creativity and productivity potentials are overlooked.

That jobless growth comes in the wake of economic liberalization makes it more puzzling. Eradicated in recent decades were monopolies in construction, telecoms, power, and transportation. New companies have entered those labor-intensive industries. Still businessmen say that liberalization has been only partial. Three problems supposedly remain unresolved.

First is dearth of investments in certain industries due to restrictive constitutional provisos. The fundamental law limits ownership of media and educational institutions, and land to Filipinos. Even 70 percent of advertising firms in reserved for citizens. Same with 60 percent of mines and utilities. Yet few Filipinos have large enough capital to go into such fields. Result: 60, 70, or 100 percent of zero equals zero.

Congress leaders propose to scrap such economic limitations, to entice foreign investments, chiefly into manufacturing. To allay fears of lifting elective term limits or fast-breaking into parliamentary-federal systems, they promise to do it via a single legislative amendment. The President has shown disinterest.

Second is neglect of agriculture and fisheries. Congress had passed in 1995 a law to modernize the twin sectors. But successive legislatures failed to fund it sufficiently. And government crooks have pocketed the meager budgets for agricultural competitive enhancement via scams in fertilizer distribution, piglet dispersal, and cold-storage construction.

Third is the malady of smuggling. Contrabandists exploit the spotty law enforcement in the archipelagic terrain to sneak in rice, vegetables, sugar, poultry, meat, fuel, and construction materials by the hundreds of container vans. Consumer prices drop, but in the end the smugglers enrich only themselves and alien workers. Left impoverished are local farmers, cattle and livestock raisers, fertilizer and feed suppliers, plantation and mill laborers, and construction factory craftsmen.

State policy makers look at unemployment alongside penury. The National Economic and Development Authority notes that today’s poverty incidence of 27.9 percent remains pretty much the same as it was at 28.8 percent in 2006. This is because major reforms take time to take root.

Only last year was a Reproductive Health Law enacted for the wellbeing of mothers, infants, and toddlers, and to plan family and population size. Yet this is tied down in litigation. Only in 2011 too was a new curriculum drawn up for a 13-year basic education, including kindergarten, from the previous inadequate ten years. And Congress agreed only last December to fund the difficult transition. Putting priority to rice production, vocational-technical training, and tourism are only now reaping benefits. Frequent job fairs keep pointing up job mismatches that private firms have tied up with schools for placement-oriented training syllabuses. –Jarius Bondoc (The Philippine Star)