Phl needs to pump prime job creation

CEBU, Philippines - To fill the gap between the country's economic growth and poverty reduction, the Philippine government is called to pump prime job creation further.

"Now is the time for the Philippines to translate economic growth benefits down to the ordinary people if the country wants to take the right road to inclusive growth," said Norio Usui, senior country economist of the Asian Development Bank-Philipppines.

Usui encouraged the Philippine government to establish a clear linkage between economic growth and poverty reduction by creating more job opportunities for many Filipinos, leveraging on the country's dynamic growth.

The strong growth performance of the Philippines continues to lack an inclusive growth dimension, and for Usui, that means creating more jobs.

Usui recommends for the Philippines to "walk on two legs," which means that apart from developing the service sector, the government must also take focus on traditional growth engines, like manufacturing, to pave the way for a higher, sustained and more inclusive growth.

Industry records show that the Philippine unemployment rate stands at 7.3 percent and underemployment rate at 21 percent.

According to Usui, the problem here is that growth has depended more on services, mainly on the business process outsourcing (BPO).

"Create job opportunities not just specific to the educated people but for a wider range where manufacturing industries could come in,” he stressed.

Since the early 2000, Usui said the BPO industry has mushroomed and the country has become the second largest global BPO destination.

However, the BPO industry still employs less than one percent of the total labor force, and its labor demand is biased toward relatively-skilled workers.

"Therefore, given the large amount of underutilized unskilled labor and the prospect of a further increasing labor force in the country, it is difficult to expect the BPO industry to be a savior for the Philippine economy," Usui added.

A strong growth in the manufacturing sector is still key to address the country's long-term development challenges of job creation and poverty reduction.

The manufacturing has the capacity to absorb those that are migrating from the agricultural sector, he said.

"What the Philippines needs to do is to facilitate diversification in the manufacturing sector. It is diversification not specialization,” he said, which means that the country does not have to veer away from the kind of products it is already manufacturing and exporting.

"The Philippine government, together with the private sector, needs to step up now and boost more development in the manufacturing sector so that, together with the already growing services sector, the country can walk on two legs," he said.

Also, Usui said that the Philippines has the potential to even go beyond the seven-percent gross domestic product growth, however, this is hindered by persistent problems on chronic productivity growth deficit due to stagnant industrialization, in particular, slow product diversification.

This, on top of prevailing concerns on high power cost, poor business and investment climate, red tape, corruption, among others.

Usui said these challenges need to find immediate solutions given that the Philippines is well-poised to capitalize on the coming ASEAN integration in 2015.

"The Philippines must have a clear strategy on how to seize the opportunities under a free-trade ASEAN economy, otherwise it will fail," he said. /JMD (FREEMAN)