Multi-pronged approach needed to expand middle class, says PIDS

MANILA, Philippines — A multi-pronged approach is needed to address the key challenges and opportunities in achieving the vision of a predominantly middle-class society in the country, according to the Philippine Institute For Development Studies (PIDS).

“Expanding the middle class requires a multipronged approach that encompasses promoting social justice in natural resource management and climate change transition, harnessing new opportunities in trade and investments, ensuring a future-ready workforce, strengthening social protection systems, and improving digital governance and public service delivery,” the PIDS said in its Economic Policy Monitor 2023-2024: Wealth Creation for Expanding the Middle Class in the Philippines.

“By establishing a comprehensive and integrated set of policies and programs across these key areas, the Philippines can build a stronger, more resilient, and more inclusive middle class,” the think tank said.

The report proposed specific recommendations under the four mentioned areas to foster a stronger and more inclusive middle class in the Philippines.

Under promoting social justice in natural resource management and climate change transitions, the PIDS is recommending strengthening community-based natural resource management frameworks, ensuring equitable access to and benefit sharing from natural resources for local communities.

It also recommended investment in sustainable livelihoods and value chain development for resource-dependent communities, particularly in sectors such as agroforestry, ecotourism, and sustainable fisheries.

To harness new opportunities in trade and investments for MSMEs, export promotion programs and trade facilitation measures need to be strengthened to assist MSMEs in accessing regional and global markets, particularly in high-potential sectors such as electronics, food and services.

The PIDS cited targeted support to MSMEs in the form of export coaching, trade financing, and market intelligence to help them overcome barriers to internationalization as another recommendation.

Meanwhile, ensuring a future-ready workforce and social protection requires investing in quality education and skills development programs that are responsive to the changing demands of the labor market, particularly in STEM and digital skills.

The report cited the need to strengthen industry-academe linkages and promote work-based learning programs, such as apprenticeships and internships, to improve the employability of graduates.

Additionally, there is also a need to expand social protection coverage to informal and gig workers through initiatives such as the SSS Reform Act and the Unemployment Insurance Scheme.

To improve digital governance and public service delivery, the PIDS is recommending the acceleration of investment in digital infrastructure, particularly in rural and underserved areas, to ensure equitable access to digital services and opportunities.

It also moved for the implementation of the PhilSys to improve the targeting and delivery of social protection programs and promote financial inclusion.

The agency also recommended strengthening digital literacy and skills development programs for government workers and citizens, particularly in underserved and marginalized communities.

“By implementing these specific recommendations, the Philippines can create a more enabling environment for middle-class expansion while addressing the key challenges and opportunities in each of the four multipronged approaches.

The PIDS noted, however, that the recommendations are not exhaustive and should be adapted to the specific context and priorities of the country.

It emphasized that the effective implementation of these recommendations will require strong political will, sustained investments, and close collaboration among government agencies, the private sector, civil society organizations, and development partners.

Additionally, it will also require a commitment to evidence-based policymaking, regular monitoring and evaluation, and continuous learning and adaptation.

“Realizing this vision depends on strong leadership, a long-term perspective, and a willingness to invest in the country’s human capital, institutions, and infrastructure, even in the face of short-term challenges and competing priorities,” the PIDS said.

“Ultimately, by establishing a comprehensive and integrated set of policies and programs across these four key areas, the Philippines can foster a stronger, more resilient, and more inclusive middle class that can serve as a key driver of sustainable and equitable development in the years to come,” it said.