Philippines stands to gain 3.1 million jobs as part of AEC common market

Decisive policy action now is a must in order for the Philippines to benefit from the ASEAN Economic Community (AEC).

MANILA (ILO News) – The Philippines could add another 3.1 million jobs to its labour market as a member of the ASEAN Economic Community (AEC), expected to come into force in 2015. However, a new report says the country needs to boost skills training and social protection now in order to make the most of the single common market — or else risk worsening poverty.

The study, “ASEAN Community 2015: Managing integration for better jobs and shared prosperity” was prepared by the International Labour Organization (ILO) and the Asian Development Bank (ADB), and discussed at a high-level national policy dialogue in the Philippines on Wednesday, 8 October.

By the end of 2015, the AEC, a single common market and production base, will take shape in 10 ASEAN member States, including the Philippines. Freer flow of goods, services, investment and skilled labour will impact the structure of the economy as well as jobs, skills, wages and labour mobility.

However, if the benefits of AEC are unevenly distributed and poorly managed, integration could add to existing challenges in the areas of poverty, inequality, vulnerability and poor job quality.

“If decisive policy action is taken, AEC has the potential to ensure sustained economic growth centred on decent and productive work — thus, help the Philippines achieve its goal of inclusive growth that creates jobs and reduces poverty,” said Lawrence Jeff Johnson, Director of the ILO Country Office for the Philippines.

Risk of vulnerable jobs

Deepened trade integration under the AEC could lead to both economic and employment growth in the Philippines that could contribute to 3.1 million more jobs. However, around 38 per cent of these could be in vulnerable employment, and women account for just 1.1 million of expected job gains.

Demand for high-skilled employment such as managers, professionals, technicians and associate professionals could increase by nearly 60 per cent. Medium-skilled employment could grow by around 25 per cent mainly clerks, craft and related trade workers, plant and machine operators and assemblers, and service and sales workers. Low-skilled work could rise significantly, by more than 60 per cent.

This highlights the need to improve the quality and relevance of education and technical and vocational education and training in the Philippines to provide a smoother transition from the classroom to the workplace for Filipino youth.

“At the heart of promoting decent work is the goal of ensuring that the outcome yields workers that are mobile, job-ready, skilled and competent, which in turn should help produce sustainable and competitive enterprises,” said Secretary Rosalinda Baldoz of the Department of Labor and Employment.

With the Philippines’ integration into AEC, it is also expected that labour migration will continue to climb. Labour migration, particularly for low and medium-skilled workers, requires collective regional action to safeguard the rights of migrant workers, extend the coverage and portability of social security, and expand mutual skills recognition.

“The prospect of large gains in such jobs calls for coordinated labour market policies to improve working conditions and reduce vulnerability,” said Johnson.

Priority areas for action in the Philippines as identified by the joint ILO-ADB study include:

• create better jobs, including through industrial policies that target agro-industry for high-value farming products and more investment in irrigation, infrastructure and transport in rural areas;
• enhance social protection programmes, improve implementation of existing schemes and enforce better disaster preparedness and response measures;
• upgrade skills to meet shifting demand including effective implementation of the K-12, increase enrolment, minimize dropout and expand schools in remote areas as well improve technical and vocational education and training and reform the curricula to be demand-driven;
• improve protection for migrant workers to provide legal and social protection and social security coverage to Overseas Filipino Workers, while further enforcement is also needed to stop recruitment malpractice;
• strengthen collective bargaining to improve the productivity-wage link since better mechanisms can help translate the benefits of closer economic integration into shared prosperity.