Unemployment, a drag to inclusive growth

MANILA, Philippines –The twin issues of lack of jobs — including decent and quality ones — and high poverty incidence remain a challenge in sustaining and keeping the country’s economic performance, Socioeconomic Planning Secretary Arsenio M. Balisacan said.

In his speech to the National Conference of Employers on Friday, May 24, Balisacan identified that good numbers of employment – 93% employment rate in 2012 and 57% of workers are part of wage and salary class in 2012 went up to 60% by the 1^st quarter of 2013 – are not translating into improvements on poverty.

“Despite these seemingly good numbers in employment, poverty remains high,” National Economic and Development Authority (NEDA) Secretary Balisacan said.

The NEDA secretary expressed concern that the lack of jobs may cause the country’s poverty incidence to fall short of the 2016 Philippine Development Plan (PDP) goal of 17%. The 2012 poverty incidence stands at 22.3%.

The PDP is a framework for inclusive growth spearheaded by NEDA aimed to sustain high growth, create jobs and reduce poverty in 2011-2016.

Read: Aquino gov’t fails short of jobs, spending targets

View: INFOGRAPHIC: The Filipino worker

Change in plans

The government is updating the country’s economic development plan to acknowledge and address the issues that cause and lead to lack of jobs.

“Creating jobs to reduce unemployment requires a multi-pronged multi-stakeholder approach. More importantly, the strategy should be anchored on a distinct appreciation of the unemployment problem,” Balisacan said.

“We intend to revise the employment targets, particularly paying attention to the creation of decent and remunerative jobs to make it more consistent with the goal of inclusive growth,” he added.

The government will address these 3 major employment issues:

• The slow rate of increase of employment opportunities
• low employability of new job entrants
• the slow recovery of firms and businesses affected by calamities

The government will also allocate a budget for specific job-generating areas to generate and spur interest from the private sector, Balisacan said.

“Our strategic framework envisions the public sector as provider of enabling conditions for the private sector to invest in productive sectors, thereby creating decent and remunerative employment opportunities for the rapidly growing labor force.”

Additional investment in technical education and the encouragement of higher education to partner with businesses and employers is another area to improve the country’s “human capital,” he said.

On the issue of jobs lost due to slow recovery of businesses affected by calamities, Balisacan said this will be addressed by social protection programs, climate change adaptation and pursuit of lasting peace, especially in the Muslim Mindanao region.

How to reduce poverty

Although the main strategy to reduce poverty is still employment generation, more indicative of poverty incidence are the underemployed, or those who are not earning enough, or working less than 40 hours a week and looking for additional work.

Half of the visibly underemployed are agricultural workers that had a 40% poverty incidence in 2009 due to seasonality of work, according to Balisacan.

The solution is providing “enabling conditions for part-time employment,” Balisacan said.

2016 targets

With these hiccups in the employment and poverty incidence, Balisacan said the targets for 2016, or when the current Aquino administration ends its term, will remain.

The PDP targets by 2016 are:

• GDP growth rate of 7% to 8%
• Investment to GDP ratio of 22%
• Inflation within 3% to 5%
• Unemployment rate of 7%
• Poverty incidence of 17%

Balisacan expressed confidence that the macroeconomic numbers of 2012 — Gross Domestic Product (GDP) growth rate at 6.6%, investment to GDP ratio was 20.4%, average inflation at 3.2% and unemployment rate at 7% — will remain on track in achieving the 2016 PDP targets.

“Macroeconomic stability will still be the major strategy to fuel positive expectations.  Government will continue to exercise fiscal prudence.  We will strive to maintain, if not improve, our credit ratings so that business and employers could enjoy a lower cost of capital,” he said.

He noted how the government’s anti-corruption agenda will remain the foundation for implementing these economic goals.

“Good governance will continue to be the platform upon which we will implement the (above) strategies. I think that in the past couple of years, we have demonstrated that the President’s mantra that ‘good governance is good economics’ works.”

He noted that the cost savings realized from reducing wrongdoings in the government transactions provided for a higher budget for education, health and infrastructure.

“We are also aware of the big challenge of achieving inclusive growth. Going forward, we are seeing various opportunities and we hope to take advantage of these in order to meet the challenge,” Balisacan said. – Rappler.com