Wanted: Quality jobs

OFFICIAL statistics indicate that nearly half (more than 430,000) of the new jobs created in our economy last year were in trade and private household employment. The numbers suggest that a great number of Filipinos turned to informal buying/selling or vending activities and domestic household jobs to cope with the overall economic slowdown.

On a brighter note, over a hundred thousand new jobs were created in the “real estate and business activities” category, apparently dominated by the business process outsourcing (BPO) industry, including the now ubiquitous call centers. But the next biggest contributor was “transport, communication and storage” (with just under 100,000 jobs), again apparently dominated by informal transport sector jobs like tricycle, pedicab or jeepney drivers.

Sluggish economy

Based on these numbers, it would seem that there were five new informal sector (a.k.a. underground economy) jobs for every additional job created in the formal sector last year. While welcome at a time of economic slowdown, the situation leaves much to be desired nonetheless. In fact, total net job creation last year, at just under a million (972,000), fell short of the 1.1 million new additions to the labor force as reported by the quarterly Labor Force Survey of the National Statistics Office. Thus, we have been unable to keep pace with our fast-growing work force—and note that this already nets out those who opted to seek their fortunes abroad last year, numbering over a million according to government reports.

What has kept us from generating enough quality jobs to gainfully employ our people over the past years? Why is unemployment so unusually high in our country, compared to our neighbors? I recently shared my thoughts on this question in the University of the Philippines Academic Congress, where I was invited to speak on the topic. There are answers on both the supply and demand sides of the labor market to help explain what appears to be our toughest economic challenge over the years.

Supply side issues

On the supply side, our problem boils down to (1) too many people aspiring to find a job, and not enough aspiring to create jobs, and (2) too many of our workers being ill-equipped for the job opportunities emerging in the economy.

I have long lamented how our education system in general has tended to produce graduates whose primary ambition is to find a job (that is, work for someone else, including foreigners), rather than to create jobs. Put another way, our young people in school aspire to earn a salary after graduation, rather than to create wealth. Corroborating this, a Tesda official informed me some time ago that graduates of their training courses predominantly favor employment over livelihood. I have also seen a study showing that Filipino workers tend to prefer the cash flow regularity that comes with employment, even if entrepreneurship promises potentially higher but more sporadic income flows.

Worker qualifications present the other major supply side problem. Of our close to 3 million unemployed workers, 60 percent made it only to a high school education or less, with less than half of them actually finishing high school. Thus, promising as the BPO industry might be, our challenge is in coming up with enough workers qualified to take up the jobs this fast-growing industry is expected to generate in the years ahead. Even the OFW market is beginning to show signs of decline in qualified workers for overseas jobs. Last year, rehires reportedly outstripped new hires for the first time, suggesting that qualified new recruits may be dwindling in the overseas labor market. These trends are hardly surprising in the face of hard data showing that basic education enrollment rates have dropped in 75 percent of our provinces since 2002. We simply need to do something drastic about education—and fast!

Not enough enterprises

If a major problem on the supply side is too many aspiring employees and not enough entrepreneurs, the problem on the demand side is similarly not enough enterprises to hire those aspiring employees. The most telling statistic pertaining to this is the glaring lack of investment growth—whether foreign or domestic—in our economy. While data show that we have averaged virtually zero annual growth in total investment since 2000, our neighbors, in stark contrast, have posted anywhere from 3 to 20 percent. Even more glaring is the continuously falling level of private domestic investment since the first quarter of last year, even as foreign direct investments had already staged a turnaround as of the third quarter—but not enough to avoid an overall decline.

There is clearly something terribly wrong about our domestic business climate that is keeping our own investors, large or small, from placing enough bets in our economy. I find that the list of reasons one can draw up all ultimately trace to the big bad G word of (bad) governance, and I find this affirmed by 9 out of every 10 people I ask.

It is clear that for Filipinos to finally have enough quality jobs, we need to start with electing quality leaders in May. –Cielito Habito

(Comments welcome at chabito@ateneo.edu)