Labor group says government won’t meet job creation target until 2010

The government may not meet its four-year job creation target by a wide margin in 2006 and 2010 based on the growth forecast of the Asian Development Bank (ADB), a labor research group said.

Clarence Pascual, a senior researcher at the Labor Education and Research Network (LEARN), said the jobs shortfall can be attributed to slower gross domestic product growth and lower growth in terms of creating employment.

The ADB expects the country’s GDP to grow by five percent in 2006 and 2007, and to average by five to six percent a year until 2010.

Pascual said based on the ADB’s forecast, the estimated net job creation is placed at 715,000 annually in 2006 and 2007.

"Facing a huge jobs deficit, the Arroyo administration placed job creation at the top of its 10-point agenda," he said.

"It vowed to generate six to 10 million jobs in six years or one to 1.5 million jobs annually. In 2005, however, the economy created only 700,000 jobs, which is 278,000 lower than the 978,000 mark during the previous year."

Net job creation is expected to average 715,000-850,000 annually until 2010, he added.

Pascual said the decline in the pace of job creation followed a slowdown in economic growth.

"Underlying slower GDP growth in the next two years is weak investments and exports, according to the ADB," he said.

"Investments dropped four percent in 2005 while exports growth slowed to three percent from 13 percent the year before. The ADB expects investments and exports to lag behind in 2006, picking up slightly in 2007."

Pascual said weak investment and poor export performance will have a major impact on the government’s job creation program.

"New investment ensures job creation, while exports have been a major source of new jobs since the mid-1990s. Indeed, weak investor confidence in the last seven years coupled with declining export growth accounts for a large part of the slower pace of job creation during this period."

Pascual said that fewer jobs are being created per GDP growth.

"Slower GDP growth in the near and medium term is compounded by fewer jobs per percentage point of GDP growth," he said.

Pascual said the ability of the country’s economy to create jobs has weakened since the 1998 crisis.

"If the previous ratio were maintained, a five- percent growth in GDP this year would translate to some 700,000 new jobs," he said. "The lower jobs-to-GDP growth ratio since 1998 means a loss of some 800,000 potential jobs."

Based on the ADB forecast, if the GDP growth is unchanged in the next two years, it would severely limit prospects for job creation, Pascual said.

In the seven years prior to 1998, job growth averaged 3.1 percent per annum while GDP growth was at 3.4 percent.

During this period, each percentage-point increase in GDP raised employment by 0.91 percent.

GDP growth hit a 20-year high six percent in 2004, but slipped to five percent in 2005.

Data from LEARN showed that between 1998 and 2005, GDP grew over five percent annually.

In the same period, employment expanded by only 2.3 percent per annum.

Thus, a one percentage-point growth in GDP resulted in 0.44 percent growth in employment or a net job creation of 143,000. — James Mananghaya