For inclusive growth: Jobs with higher wages

That the Philippine economy grew by 6.6% in 2012 is good, although disputable, news. The better news is that the report has spurred a common call — from institutions and economists of varied persuasions — to focus on creating jobs with higher wages in order to sustain a growth rate that shall benefit all Filipinos (inclusive growth).

Still, how to create good jobs with higher wages on a long-term basis remains a subject of debate.

One call, to which President Aquino harkened immediately, came from the World Bank, through its country director here, Motoo Konishi. 

Speaking at a WB-sponsored Philippine Development Forum last Tuesday, Konishi urged the government to address the need to create 14.6 million jobs between now and 2016 (end of P-Noy’s term). That total figure reflects the current 10 million-plus unemployed or underemployed Filipinos, as correctly tracked by IBON Foundation, plus 1.1 million added yearly to the labor force.

The jobs to be created should be “good,” Konishi emphasized, meaning “jobs that raise real wages or bring people out of poverty.”  How enormous the challenge is can be gauged by the existing condition he describes:

“The domestic job market in the formal, services and manufacturing industries and the jobs abroad are not enough to absorb so many people getting into the labor force. This means that all other sectors in the economy, particularly agribusiness and agriculture, must contribute more to address joblessness and poverty.”

In short, an economy-wide upgraded production capability must be attained.

After the forum, P-Noy told reporters that the government had posted in its Phil.JobNet website 230,000 jobs available but only 117,000 applied. This indicated mismatches between jobs and skills required for them, he added, which the government sought to remedy by adjusting college courses to fit the requirements, say, of the business processing-outsourcing industry.

He acknowledged errors in government labor surveys done under his watch, which showed reduced unemployment whereas only 860,000 jobs, on average, were created each year, insufficient to accommodate the 1.1-million additional jobseekers. (The National Economic and Development Authority claimed the average annual job generation was 997,000.) 

“The statistics being trumpeted didn’t make that much sense to me,” P-Noy grunted. He ordered a review of the surveys.

 Victor Abola, senior economist of the University of Asia and the Pacific, disputed the NEDA figure. He suggested that the National Statistics Office be given a budget to make monthly, rather than quarterly, labor-force surveys, presumably to ensure more reliable tracking of employment-unemployment trends.

IBON, an alternative research group, has scored the government’s changed methodology for computing labor statistics, saying that it “under-reports unemployment.” Thus, instead of showing the unemployment rate in 2012 at 10.5% (4.4 million, up by 48,000 from 2011), the official unemployment figure is only 7% (same as in 2011).

Yet, even at that downgraded rate, the Philippines ranks well below other East Asian nations, with these comparative unemployment rates: Thailand, 0.6%; Singapore, 1.7%; Malaysia, 3%; South Korea, 3%; China, 4.1%; Taiwan, 4.3%; Vietnam, 4.4%; and Indonesia, 6.5%.

What explains this? 

IBON points out: “The job situation has worsened because the Aquino administration has not changed the failed economic policies of past administrations, which have already resulted in over a decade of jobless growth in the country. The last decade has seen the fastest growth in the post-Marcos era, yet (it) has also seen record joblessness and increasing numbers of poor Filipinos (and) severe inequality.”

Peter Wallace, an investment adviser who writes a column in another paper, concurs with Ibon’s observation on decade-long rising joblessness, poverty and inequality (but doesn’t necessarily agree with the above-cited cause).  He cites these figures: 79% of Filipinos belong to the low-income group; 5%, to the high-income group; and 15%, the middle class.

Leveling the inequalities “can only be done through job creation; there is no other way,” he asserts but adds wryly, “yet the necessary high-level attention to achieving it isn’t there.”   

Besides closely monitoring the GDP and employment statistics, Wallace urges focusing on the GINI factor (a measurement, between 0 and 1, of the income difference between the rich and the poor, wherein 0 is most equal).

He cites these comparative GINI figures, showing the Philippines as having the worst inequality:

Philippines, 0.448; Thailand, 0.425; Cambodia, 0.407;  Indonesia, 0.394; Malaysia, 0.379; Vietnam, 0.378; and Laos, 0.326.

Wallace’s prescription: “The first thing necessary to fix a problem is to recognize it (then act).”

IBON is more explicit about job creation: “Jobs and higher wages are the best mechanisms for inclusive growth, which can only be achieved with well-developed Filipino industry and equitable agricultural development.”

 The third-quarter GDP growth, it notes, was largely attributed to public construction, transport, storage and communications, trade and repair, renting, and financial intermediation. These are not “domestically-grounded production using domestic sources”; their gains went to foreign companies that, instead of adding jobs, retrenched workers.

IBON further contends: “Sustainable job generation and poverty reduction requires active and responsible state intervention to build Filipino industry and develop local agriculture.”

The emphasis on “Filipino industry” denotes its difference from the failed,  pro-foreign-investment  programs that every administration since the 1960s has pursued.

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