Aquino on rise in joblessness: What went wrong?

CABINET PRESSED TO EXPLAIN

MANILA, Philippines—Baffled by the high unemployment rate, President Aquino on Tuesday quizzed the Cabinet on its “action plan for poverty reduction” as the benefits of a strong economy were eluding the country’s middle class and poor.
Aquino presided over a rare full Cabinet meeting that included Vice President Jejomar Binay in the Aguinaldo State Dining Room of Malacañang.

The meeting came after the media reported a finding of a Social Weather Stations (SWS) survey that the unemployment rate rose to 27.5 percent, or an estimated 12.1 million, as 2.5 million Filipinos joined the ranks of the jobless between September and December last year.

The unemployment rate soared even as the economy surprisingly grew 7.2 percent, the second-fastest after China’s, showing that the economic growth was not inclusive.

The unemployment rate was 6 percentage points higher than the 21.7 percent (some 9.6 million) in the previous quarter, according to the SWS survey.

Aquino “prayed for God’s guidance” at the start of the meeting, Malacañang said.

At press time, the Cabinet was still discussing the action plan as well as the “strategic framework of human development and poverty reduction,” Communications Secretary Herminio Coloma said in a text message he sent to members of the media.

The action plan for poverty reduction is indispensable to the Aquino administration’s goal of “inclusive growth.” Poverty incidence in the country stood at 25.2 percent in 2012.

“We are focusing on job creation in manufacturing and more highly remunerative sectors,” Coloma said, when asked by reporters why, despite the strong capital inflows, the level of joblessness was growing.

Coloma said the conditional cash transfer program and programs of the Technical Education and Skills Development Authority (Tesda) “have been expanded to ensure that children of most needy families become employable.”

Faces of poverty

Margie Sta. Ana, 55, said she did not feel the economic growth. “It’s even hard to find a job even if you are a college graduate,” said Sta. Ana, who worked as a factory worker for 30 years.

She lives with her sickly husband under the stairs of a dilapidated two-story apartment in Makati City because they can no longer afford the rent.

Like Sta. Ana, Astro Camitan, 25, said he also didn’t enjoy the benefits of the country’s growing economy.

“They (corrupt officials) pocket the people’s fund instead of using it to help the needy,” said Camitan, a father of one and works as a tricycle driver. “What progress are they talking about if they are the only ones who benefit from it?”
Allies and critics alike of the administration as well as economists and a multilateral agency put forward various proposals to address the unemployment problem.

Instead of blaming calamities for the soaring number of jobless Filipinos, the government should focus on having labor-intensive infrastructure projects that would achieve the twin goals of providing jobs and reconstructing devastated areas, said Akbayan Rep. Walden Bello.

Reacting to the SWS findings on Wednesday, presidential spokesman Edwin Lacierda said the unemployment rate increased in the last quarter because of the calamities that hit the country.

Contractualization

But while this was the case, Bello said the increasing number of the unemployed could also be attributed to existing policies on labor contractualization, a scheme in which workers are let go after six months so that employers will not hire them on a regular basis and thus pay for their benefits.

Three labor groups—Trade Union Congress of the Philippines (TUCP), Partido ng Manggagawa (PM) and Kilusang Mayo Uno (KMU)—said “jobless growth” would continue unless the primary causes of unemployment were recognized and addressed.

Trade liberalization

PM chair Renato Magtubo said that while climate change was becoming a big threat to the Philippines, the primary culprits behind the rising unemployment levels were trade liberalization, lack of an industrial program and privatization-led growth model.

Industrialization

TUCP executive vice president Gerardo Seno said the government must continue to attract new job-creating investments, build new roads, bridges, and sea ports and airports, and lower electricity rate if it wanted to effectively address the unemployment problem.

KMU attributes the high unemployment rate to dependence on foreign investments, alleged failure to implement genuine land reform and absence of national industrialization.

The Asian Development Bank (ADB), in a recent publication titled “Taking the Right Road to Inclusive Growth,” said the failure of the country to boost its industrial sector was a key reason why its economic growth remained far from being inclusive.

“The Philippine economy’s chronic problems of high unemployment, slow poverty reduction and low investment are reflections of the sluggish industrialization,” the ADB said.

Manufacturing

The ADB said the industrial sector, which included manufacturing, should be the one driving the economy to substantially reduce unemployment and poverty.

Growth of the Philippine economy over the past decade, however, has been driven by the service sector, which includes the business process outsourcing (BPO) subsector.

While the BPO sector in particular and the overall services sector in general have provided economic gains, these are not responsive to the need for inclusive growth.

According to the ADB, the industrial sector, compared with the service sector, has the better ability to create job opportunities for the poor. Also, the industrial sector has a much higher multiplier effect on the economy.

The ADB suggested more government support for the industrial sector through investments in education, skills training and infrastructure to achieve inclusive economic growth.

Economists’ take

Economists said it would take a while before the country’s economic growth would translate into significant drop in unemployment and poverty.

When an economy takes a high-growth trajectory, businesses do not immediately hire more workers. They only do so when they are convinced that robust economic growth is sustainable, said Victor Abola, an economics professor at the University of Asia and the Pacific. “Initially, they (businesses) will just require existing workers to work overtime,” Abola told the Inquirer.

Benjamin Diokno, an economics professor at the University of the Philippines, said economic growth did not always equate to a drop in the unemployment rate. In the case of the Philippines, he said, many recent investments were capital-intensive but not labor-intensive.

“Most public and private construction can be characterized as large-scale, capital intensive. Even the multibillion-peso school-building program was implemented by big-time contractors using capital intensive or labor-saving technologies,” Diokno told the Inquirer.

Diokno said the Philippines needed to invest more in sectors that were labor-intensive and job-generating in order to see a drop in the unemployment rate.

Human development

At the full Cabinet meeting that started at 10 a.m., the President was briefed on “jobs challenge and human development” by the Department of Education, Commission on Higher Education, Tesda, Department of Labor and Employment, and Department of Trade and Industry.

Other issues discussed with the President were “protecting the poor and the vulnerable (social protection).” The Department of Social Welfare and Development, Department of Health, and Housing and Urban Development Coordinating Council led the discussions.

The Department of the Interior and Local Government and Department of Science and Technology discussed “cross-cutting concerns and support for human development and poverty reduction,” while the agriculture, environment and agrarian reform departments zeroed in on “rural development and poverty focus,” said Coloma.

Coloma said a special presentation on “Fish Settlement” in the wake of Super Typhoon Yolanda was also made by the National Anti-Poverty Commission.

Besides antipoverty issues, the President and his Cabinet also tackled issues dealing with peace and order, and disasters.

The Cabinet secretaries also discussed with the President several measures that were consistent with the administration’s “social contract” with the Filipino people.

—With reports from Leila B. Salaverria and Rafael L. Antonio, Inquirer Research, Michael Lim Ubac, Jerome Aning Michelle V. Remo, Philippine Daily Inquirer

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