‘Filipinos are working hard but remain poor’ – World Bank

Mara Cepeda

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‘Filipinos are working hard but remain poor’ – World Bank
(UPDATED) The jobs available are not meeting the aspirations of Filipino youth entering the labor market, says World Bank lead economist Jan Rutkowski

MANILA, Philippines (UPDATED) – A recent study by the World Bank showed that Filipinos continue to suffer from poverty despite being employed.

The World Bank revealed the highlights of its report entitled, “Labor Market Review: Employment and Poverty in the Philippines” on Friday, June 17. 

“This new report shows that contrary to some perceptions, economic growth in the last 10  years has created enough jobs to absorb the growing labor force. Still, many workers remain underemployed,” said World Bank country director Mara Warwick.  

Those considered underemployed are people with jobs who express the desire to have additional hours of work in their present job, to have an additional job, or to have a new job with longer working hours.

The Philippine economy has been steadily growing at around 5% to 6%, but Warwick said the issue is that “many of the newly created jobs are precarious and low-paying,” mostly found under the informal sector. (READ: Beyond the numbers: How Aquino fueled the economy)

According to World Bank lead economist Jan Ruthowski, reducing in-work poverty is thus the main challenge facing the country’s labor sector.  

He attributed the cause of in-work poverty among Filipinos to the low learning capacity of the poor, saying that 30% of workers who finished secondary education hold unskilled jobs and work as laborers.  

Rutkowski added that there is a scarcity of productive, well-paying jobs, especially in the rural areas. 

The World Bank’s findings echo the data recently released by the Philippine Statistics Authority. 

The unemployment rate in April 2016 declined to 6.1% from 6.4% a year ago, but the underemployment rate climbed to 18.4% from 17.8%.

‘Good’ vs ‘bad’ jobs

WB REPORT. World Bank lead economist Jan Rutkowski, country director Mara Warwick, and lead economist Aleksandra Posarac reveal the highlights of their latest Labor Market review report on June 17. Photo by Mara Cepeda/Rappler

Rutkowski acknowledged that the growing Philippine economy produced jobs for Filipinos, but this did not necessarily improve the quality of jobs. 

He discussed labor market segmentation, wherein the World Bank classified work into two: good jobs, which are “formal, permanent, well-paid, and offering social protection; “and bad jobs, which are “temporary, casual, informal, precarious and low-paid, often with very little or no social protection.”

While this is not an issue unique to the Philippines, it is more pronounced here.  

PSA data showed that underemployed persons who work for less than 40 hours a week accounted for 54.2% of the total underemployed in April 2016. 

About 45.7% of the underemployed worked in the services sector, while 35.5% were in the agriculture sector.

“The problem has been that the jobs that are available are not meeting the aspirations of the young people entering the labor market… It’s the quality of jobs that matters,” said Rutkowski.

“There are still a lot of informal jobs, still a lot of informal jobs, precarious jobs, and low-paying jobs,” he added.

Job market mismatch has been a perennial problem in the Philippines, with labor advocates pushing for a long-term jobs road map to address it. 

Labor Secretary Rosalinda Baldoz previously said that only 10 out of 1,000 Filipino applicants are getting hired because many lack the necessary skills needed for the jobs available in the market. 

Tripartite approach needed

SOLUTIONS. Ruthowski discusses the 3-pronged approach the World Bank recommends to address in-work poverty. Photo by Mara Cepeda/Rappler

Rutkowski added that informal sector workers have low bargaining power. 

“Given the structure of the economy, minimum wage is ineffective in raising wage level,” he said.

Rutkowski said the World Bank recommends a tripartite response among the government, the employers, and the Filipino laborers to determine the best ways to solve this issue. 

“But also workers from the informal sector need to be represented. They need to have a voice,” he said.

3-pronged solution 

GIVE THEM A VOICE. The World Bank says that labor regulations must be simplified so that more Filipinos would be hired formally. File photo by Jose Mari Pineda/Rappler

Rutkowski said the World Bank report suggest a 3-pronged approach to reduce in-work poverty and to help address labor market segmentation. (READ: World Bank: PH can end poverty in a generation

The World Bank recommended that government continue investing in education and skills of disadvantaged youth to raise their earning capacity, especially in the rural areas. 

Labor regulations should also be simplified to encourage more employers to formally hire more workers.

Rutkowski said the investment climate in the Philippines should likewise be improved. 

“Lower the cost of doing business in the formal sector to create more and better jobs, and sustain high economic growth,” he said.

In an interview with dzRB on Saturday, Palace Communications Secretary Herminio Coloma Jr pointed out the World Bank report also discussed an accomplishment of the Philippine government.

Hindi ba napakahalagang accomplishment ito na ‘yung economic growth ay nakalikha na ng sapat na trabaho upang ma-absorb o matugunan ‘yung pangangailangan ng lumalaking labor force at hindi na nadagdagan ‘yung kawalan ng trabaho?” he said. 

(Isn’t an accomplishment that our economic growth was able to create enough jobs to respond to the needs of the growing labor force and that unemployment no longer increased?)

Tinuturing nga tayo na one of the fastest growing economies at tinuturing na rin tayong Asia’s Rising Star or Asia’s New Darling. At dahil nga natugunan natin at hindi na nag-iincrease ‘yung unemployment,” Coloma added.

(We are called one of the fastest growing economies and we are Asia’s Rising Star or Asia’s New Darling. And that’s because we were able to stop an increase in unemployment.)

He then acknowledged that while the World Bank cited some lapses in the country’s labor policies, it also gave suggestions on how to solve them. – Rappler.com

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Mara Cepeda

Mara Cepeda specializes in stories about politics and local governance. She covers the Office of the Vice President, the Senate, and the Philippine opposition. She is a 2021 fellow of the Asia Journalism Fellowship and the Reham al-Farra Memorial Journalism Fellowship of the UN. Got tips? Email her at mara.cepeda@rappler.com or tweet @maracepeda.