JOBLESS GROWTH, INEQUALITY PERSISTENT IN PHL Translating economic gains to poverty reduction remains a challenge

MANILA-The Philippines’s steady economic growth has not been coupled by improvements in the labor market, creating a “jobless growth” where many sectors of the population are unable to benefit from prosperity, and where inequality remains persistent.

The country’s growth averaged nearly 7% in the last two years, higher than all the other countries in the region except China. However, economists both local and international noted that the economic surge has failed to create jobs that will result to gainful employment for majority of Filipinos, especially those in rural areas.

The expansion of the services sector, mainly the outsourcing industry, has been remarkable but experts were careful to note that this sector demands only highly skilled positions and accounts for just 1% of employment, leaving the rest of the labor force untapped.

Within this economic scenario, the Angara Centre for Law and Economics today presented the second roundtable discussion of the Andrew Tan Lecture Series on the topic “Towards Inclusive Regional Development in the Philippines: Lessons, Challenges and Policy Suggestions” at the Malcolm Hall, College of Law, University of the Philippines in Diliman, Quezon City.

This lecture is part of a joint study undertaken by the Angara Centre with the World Bank to identify the areas of persistent underperformance and inequality in the Philippines.

Studies showed that economic growth has been largely supported by private consumption and consumer spending, owing to employment in services, construction and remittances from overseas Filipinos. The services sector, contributing 57% of the economy, grew even further as retail, finance, real estate, and business process outsourcing (BPO) posted strong growth.

Growth has failed to permeate the other sectors of the economy, most especially to the countryside that makes up 70% of the population. Agriculture growth was at a measly 1%.

The Philippines’ overall ratio of rural-urban wage gap at 67 percent has remained constant over the last decade.

Teams of economists and leading researchers from the Philippines and abroad presented their studies and recommended actionable policy initiatives. Leading this lecture are Dr. James Robinson of Harvard University, Dr. Pablo Querubin of New York University and Dr. John C. Nye, Frederic Bastiat Chair in Political Economy at the Mercatus Center, George Mason University and Research Director at the Higher School of Economics in Moscow.

They called for public investments to support agriculture, tourism and manufacturing so that infrastructure growth can crawl out of metropolitan centers and into rural areas. Raising millions out of poverty also requires investments in transportation and communication, and improving resilience against disasters that debilitate poverty reduction efforts and threaten to reduce the middle class.

Further, creating quality jobs and enhancing competitiveness through strategic partnerships with the private sector must also be prioritized in order to move more people from the fringes of income distribution.