Jobless, laggard and outdated

Some people including President Aquino are perplexed by the recent Social Weather Stations survey results — asking Cabinet officials why Asia’s “new economic dragon” has even more jobless people than ever. Economists point to several reasons why the unemployment rate has grown and poverty reduction continues to be an uphill battle despite the praises heaped on the country for its resiliency and strong performance amid a global slowdown. 

Several businessmen including myself are convinced that one major reason is because every year there is a huge number of new graduates joining the job market. Every year, half a million students leave colleges and universities armed with a diploma and hope in their hearts. Unfortunately, only 30-40 percent will most likely get any kind of employment, with only five to 10 percent getting jobs that match their training. The rest — about 300,000 — become statistical entries for unemployment either because they are not qualified or worse, no jobs are available. According to an education specialist at the US Agency for International Development (USAID), the biggest number of unemployed or underemployed Filipinos is composed of college graduates. 

While the president has expanded the Conditional Cash Transfer program to include 18-year-olds, it’s obvious that this has not done enough to significantly alleviate poverty especially in the poorest provinces in the country, felt poignantly among families who have put all hope in improving their lot in life on that promising son or daughter — only to discover that their investment on four (or more) years of college education will not yield the return they have hoped for because there is no job waiting for their son or daughter.

As pointed out by one of our American businessman-friends, the expansion of the economy is simply not fast enough to outgrow the increasing number of jobless Filipinos. But one clear observation is that the Philippines is a country that continues to practice the padrino system that pervades our culture, where jobs and favors are given to those who know the right people. Unlike in Western countries where meritocracy is the norm, in the Philippines the system can be summed up by the popular maxim that goes, “It’s not what you know; it’s whom you know.” 

No wonder many more Filipinos thrive better abroad, because they get promoted or compensated based on their skill and talent — which probably explains why the number of overseas Filipino workers has been consistently increasing in the last 30 years according to the Country Migration Report of the International Organization for Migration. The fact is, it’s beginning to look like we are a country that wants to have our cake and eat it, too.  We trumpet the dollar inflows sent in by our OFWs but at the same time, we complain about the social impact it has on families. But how can we expect OFWs to come home when there are no jobs to be had at home. If there is any at all, the compensation is too low. Not surprising therefore that doctors – whose families spend hundreds of thousands for their education — prefer to work in other countries, resulting in an alarming shortage of 930,000 physicians according to the Philippine Medical Association. For many Filipinos, working abroad and leaving their families has become a matter of necessity and not of choice.

One other reason why the unemployment rate and poverty incidence remain disheartening despite glowing economic growth projections is the fact that the Philippines continues to lag behind — the laggard as some analysts put it — as far as foreign direct investments go. Compared to our neighbors in Asia such as Malaysia, Singapore and Indonesia whose FDIs are now in double digits, we only mustered $2.8 billion in 20102 while Vietnam drew $8.4 billion and Thailand attracted $8.6 billion.

While there has been a marked increase in FDI inflow by as much as 37 percent to $3.64 billion in the first 11 months of 2013 compared to the same period in 2012, this is still far below the president’s avowed objective of attracting foreign direct investments to over $10 billion a year.  As one observer correctly said, we need more foreign investors to create more jobs if we want to see a significant drop in the unemployment rate and achieve the target of decreasing poverty incidence to 16.6 percent of the population by 2015.  As things stand, more than 25 percent of the population remains extremely poor.

It’s common knowledge that a major reason why a big number of foreign investors continue to shy away from the Philippines is the overly protectionist and outdated provisions in the 1987 Constitution that limit foreign ownership in certain sectors to just 40 percent. Unfortunately the president has been unrelenting in his position as far as Charter Change is concerned, saying he won’t support any moves by Congress to amend certain economic provisions in the Constitution.

Nevertheless, Speaker Belmonte has expressed confidence that his proposal to amend the economic provisions in the Charter will be approved this year. Even Vice President Jejomar Binay said during our lunch with him last Wednesday that he agrees with the proposed amendments since it will open up the economy even more — something that businessmen like to hear from him.

Our current situation has been described in three words — jobless, laggard and outdated. To expand the economy faster and catch up with the growing population, economic analysts have repeatedly said we need more foreign investments to create more jobs. To do that, we need to open up our economy by updating the already outdated economic provisions of the 1987 Philippine Constitution.

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