Where are the jobs?

WITH a growth of 7.8 percent in the first quarter, it’s understandable why Filipinos become impatient when it comes to job creation. But the government and local economists pointed out that creating jobs is a Herculean task that takes time.

For an economy like the Philippines, which has mostly been driven by the Services sector in the past few years, structural changes to the economy are a necessary ingredient in creating employment for millions.

Philippine Economic Society President Alvin Ang told the BusinessMirror that structural change requires shifting the country’s economic growth to labor-intensive sources like Manufacturing and Agriculture. But this shift in growth sources takes years and even decades to occur.

“Hindi naman negative itong nangyayari sa atin, eh. Hindi negative ’yan kasi in a way, ’yang jobless growth, kasi structural nga, so ibig sabihin ’yung structure mo pag nag-adjust siya, makaka-produce din siya ng trabaho, eh. Kaya nga ’yung ginagawa mo ngayon, at the moment, is fixing the institution,” Ang said.

Fernando T. Aldaba, chairman of the Economics Department of the Ateneo de Manila University, added that one of the reasons for the decline in the number of employed Filipinos is the possibility that “bad-quality jobs” are being replaced with “good-quality jobs.”

These kinds of jobs pay better and, therefore, require higher skills. If this were truly happening, this could increase labor productivity in the Philippines, which many economists, including Ang, view as being on the downtrend in the past 20 years.

Aldaba said, however, that the economy cannot forget other workers, especially the low-skilled. Even the United Nations recognize this as a crucial step toward achieving greater equality amid fast-paced economic growth.

In fact, the primary objective of the post-2015 Development Agenda is to “leave no one behind,” not in terms of income, economic opportunities, education, health and other areas necessary to ensure the welfare of people.

“The jobs that are being generated are higher quality so kumbaga, nagtitinda ka dati ng tahong, ngayon naka-employ ka na sa isang factory, parang ganun. That’s good but then you still need to generate any kind of job. Siyempre gusto mo pa din to lower unemployment and underemployment at the same time. So we really need lots of jobs,” Aldaba said.

Labor situation

The April Labor Force Survey results showed there were more than 3 million jobless Filipinos, higher than the 2.8 million posted in April 2012. With this, the total number of employed Filipinos declined to 37.82 million in April 2013 compared to 37.84 million in April 2012.

The National Statistics Office (NSO) said the drop in the employment rate is due to the decline in employment in the agriculture sector. The number of agricultural workers declined by 624,000 to 11.84 million in April 2013 from 12.47 million in April 2012.

The NSO said agriculture jobs accounted for 31.3 percent in April 2013. This was, however, a decline from 32.9 percent in April 2012.

Data also showed that some 19.89 million Filipinos are employed in the Services sector and account for 52.6 percent of the total labor force, while 6.08 million jobs were located in the Manufacturing sector and account for 16.1 percent.

Among the regions, the National Capital Region (NCR) and Calamba, Laguna, Batangas, Rizal and Quezon (Calabarzon) had recorded an employment rate below 90 percent. But the unemployment rate in April 2013 was estimated at 7.5 percent, which is higher than the estimate for April 2012 at 6.9 percent.

Despite having the most number of employed, unemployment rates in the NCR and Calabarzon were in double digits at 10.4 percent and 10.6 percent, respectively.

The country’s employment situation is one of the factors why many Filipinos continue to be poor. The numbers of employed members of the labor force have not exceeded 95 percent at least in the past decade, and thus kept unemployment above 6 percent during the same period.

As a result, the National Statistical Coordination Board (NSCB) data showed that the country’s poverty incidence barely moved and was at 27.9 percent in the first semester of 2012. The NSCB said that when comparing this with the 2006 and 2009 first-semester figures, estimated at 28.8 percent and 28.6 percent, respectively, “poverty remained unchanged as the computed differences are not statistically significant.”

The NSCB estimates the total cost of poverty eradication, exclusive of targeting costs, is P79.7 billion for the first semester of 2012. It should be noted that the budget of the Department of Social Welfare and Development (DSWD) for the CCT was P39.4 billion for the whole of 2012.

At the regional level, the regions with the lowest poverty incidence among families in the first semesters of 2006, 2009 and 2012, continue to be the NCR, Calabarzon and Central Luzon.

For the same period in 2012, the Autonomous Region in Muslim Mindanao consistently figured in the bottom (poorest) cluster of regions with the highest poverty incidence among families between 42 percent and 47 percent in the first semesters of 2006, 2009 and 2012.

“While it might seem that there are no changes in poverty conditions, data show that Caraga improved its poverty incidence significantly from 43 percent in the first semesters of 2006 and 2009 to 34 percent in the first half of 2012. The same can be said for the Ilocos region, which also registered significant improvement in its poverty incidence from the first semester of 2006 to the first half of 2009,” the NSCB said.

Reforms take time

In order to cover all jobless Filipinos, Socioeconomic Planning Secretary Arsenio M. Balisacan said the economy needs to create 1 million to 2 million jobs every year. This amount can cover not only the existing jobless Filipinos but also the new entrants or graduates who join the work force every year.

The World Bank estimates that, in total, the Philippine economy needs to create some 14.6 million jobs until 2016. This will cover the existing unemployed Filipinos, the underemployed who need better jobs and the new entrants to the labor force in the medium term.

To create this many jobs, Ang said the government is on the right track in instituting reforms such as the K to 12, which aims to address the jobs-skills mismatch which has been regarded as one of the main factors why many Filipinos could not find jobs.

Ang explained this is actually the root of the country’s jobless growth. While there were many Filipinos graduating, their courses and skills are not compatible to what the industries’ needs.

Due to the mismatch, Ang said the Bureau of Labor and Employment Statistics (BLES) data showed as much as 25 percent of job vacancies in the Philippines and 80 percent in Metro Manila are left unfilled.

The Aquino administration is also trying to change this through a good-governance platform. The main campaign slogan of the President when he ran for office in 2010—Kung walang corrupt, walang mahirap—seemed to have been enough to encourage investors and the international community, in general, to give the Philippines a second look.

Since he assumed the presidency, Mr. Aquino instituted good-governance reforms that eventually led to two credit-ratings upgrades to investment grade from international credit-rating agencies: Moody’s, which gave its positive verdict in March, and Standard & Poor’s in April.

What the Aquino administration is waiting for are the actual investments. Once those investments come online and are already on the ground, the government hopes to be able to increase the jobs, particularly in the manufacturing sector.

“In addition to addressing the critical constraints to private investments, we will also put emphasis on innovation, technology, and research and development. We will facilitate the improvement in labor productivity by investing in human capital and providing the capacity for the labor force to engage in higher-value activities. What all these demands is a greater sense of urgency among us in the government, as well as better coordination between and among the various agencies charged with implementing programs and projects,” Balisacan explained at the briefing on the National Income Accounts in May.

Balisacan noted that moving forward, the government intends to focus on job-creating sectors to ensure not only economic growth but also employment for Filipinos who are looking for jobs.

He said the government will focus on priority sectors that are potential growth drivers and job-generators, such as infrastructure, manufacturing, agriculture, tourism, logistics, BPO/IT, shipbuilding, housing and the halal food industry.

“[The administration is] changing the institutions; changing the way of doing things. Kaya ’yung adjustment [can only be done] over time. Hindi na talaga pwedeng one year, two years tapos na ’yung problema,” Ang said.

Outlook

Since the Philippines’s employment problems are deeply rooted in structural problems in the economy, seeing a significant change in the country’s labor situation will not be possible in the near term.

Economists believe that in the coming quarters of 2013 or in the medium term, unemployment will continue to be a problem. Only when the government’s efforts are sustained and would bear fruit can a significant, decline in unemployment become evident.

But Aldaba believes that with all the projects, programs, and commitment of the Aquino administration, there will be some improvement in the number of the unemployed by 2016.

Aldaba added that sustained high economic growth at the 7 percent-to-7.5 percent level is necessary to make a dent on unemployment in the medium term. But what is more important is for the economy to be able to create all kinds of jobs that will accommodate the low-, semi- and high-skilled workers.

“We could have some dent but, of course, it will take longer. Sa low-quality jobs, siguro unemployment will be reduced [by 2016],” Aldaba said. “There will be some dent as long as we continue our growth at that level, mga 7 percent to 7.5 percent, we will make a dent, I’m sure.” –Businessmirror