PBBM’S SONA on July 25 failed to address a number of critical issues facing the nation. As we pointed out in the last column, the most urgent is the challenge of creating quality and sustainable jobs for the majority of the labor force—the “inadequately employed.”
The inadequately employed include those without jobs (openly unemployed but looking for work), those with jobs but with limited hours of work (underemployed), the unpaid family workers, the self-employed and micro entrepreneurs with very uncertain and limited incomes/earnings/opportunities, and the non-regular hires in the formal sector (who have no job security such as the contractuals, project hires and those without any formal employment contracts). Collectively, they constitute the overwhelming majority of the labor force. They are the nation’s working poor. They belong to the C-D-E classes who gave President Bongbong a landslide victory last May.
Can the President return the electoral favor given by the working poor by focusing all the government’s attention and energy of his administration on the creation of good, secure and sustainable jobs for them? Can his administration go beyond the populist tendency of politicians to espouse instant remedies for the maladies affecting the working poor by simply announcing and allocating paltry “ayudas” or “pantawid-buhay” that can sustain the food and income needs of an individual or family good for only one to two weeks?
The SONA failed to outline the administration’s program on job creation for the working poor. However, his Economic Planning Secretary, Arsenio Balisacan, was quoted as saying that there are three major development thrusts under the PBBM administration: re-opening of the economy; investment on human capital; and making “productive sectors” more productive. Further, he gave a very rosy growth and job forecast for the country in the next six years, with the national poverty rate (reported by PSA to be at 18.1 percent in 2021) eventually going down to a single digit of 9 percent in 2028. Balisacan even remarked that the Philippines can officially join the ranks of the world’s “upper” middle-income countries by 2024, a target that the Duterte administration also declared and yet failed to achieve.
We wish we can share the optimism of Secretary Balisacan. Records show that most of the rosy growth and job projections made by Neda at the beginning of each administration (from Marcos Sr. to Duterte) were never fulfilled. The same happened with the CGE growth-growth-growth projections articulated by the economists who pushed for the early ratification of Philippine membership in the WTO in 1994 and for the Philippine participation in various Asean and Asean-linked free-trade agreements.
Former DA Secretary Manny Piñol, citing the country’s experience in 2016-2018, pointed out that the growth-growth-growth economics under a liberalized environment does not automatically translate into more jobs, better welfare and sustainable development, as demonstrated in the case of the failing agricultural sector. This is one reason why the farmers’ organizations in the country are united in their call for a deferment of the Philippine ratification of the Regional Comprehensive Economic Partnership Agreement and the overhaul or repeal of the ultra-liberal Rice Tariffication Law. Jobs and incomes are falling in agriculture.
To a certain extent, a similar phenomenon is happening in the country’s industrial sector, which has remained lilliputian compared to our industry-oriented Asian neighbors. Our economy has evolved into a services-led one without undergoing an industrial revolution and agricultural modernization.
However, the Philippines managed to post high growth rates in the pre-Covid years of 2010-2018. This is not due to the failing agricultural sector and stagnant industrial sector. Credit goes to the 10 million plus OFWs, who send over $35 billion a year to their families, and to the rise of an unexpected economic savior: the call center-BPO sector.
And yet, the two legs of the economy (labor migration and CC/BPO) are not enough to create good and sustainable jobs for all in an economy that has become services-oriented. Thus, the army of the inadequately employed—unemployed, underemployed, unpaid family workers, self-employed, micro entrepreneurs and the precariat in the formal labor market (casuals, contractuals, etc.) – keeps growing, a clear indicator that the economy cannot stand based on the above-cited two legs.
How many are the inadequately employed? A recent study by Professor Emily Cabegin of the University of the Philippines (“The Informal Labor Carries the Brunt of a Covid-19-induced Economic Recession,” UP CIDS, 2022) asserts that “informal employment,” where most of the inadequately employed can be classified too, constitutes around 83 percent of the labor force. She gave the following ILO definition of informal employment: “Those working in informal or formal enterprises or private households whose activities are not covered or insufficiently covered by labor regulations and social protection.” As such, the informally employed “suffer from poor and unsafe working conditions, low wages, and the lack of social protection, collective representation, and access to skills development training, technology, and financial services.”
According to the statistical analysis made by Professor Cabegin, those belonging to the informal employment represent over 80 percent of the labor force. Further, she noted that the level of labor informality was fairly “stable,” at 82-83 percent in the high-growth decade of 2010-2020. This shows the correctness of Piñol’s observation: high economic growth does not automatically lead to more and better jobs and welfare for all.
So the big challenge: how will the PBBM administration reverse the ratio, or reduce the informal and unprotected segments of the labor force to 20 percent (not 80 percent) or even less?
Meanwhile, how will the Balisacan’s three-point development program work out in the next six years? First, on more investment on human capital and social protection, this is unarguably fine. But where will the debt-saddled government go to strengthen the Covid-weakened educational system, and provide social amelioration and social protection to 4/5 of the labor force and their families?
As to making the “productive sectors” more productive, this is also good. But does the good Secretary refer to the industrial and agricultural sectors, both of which have not been faring well under our liberalized and deregulated economy? In the first place, how will the PBBM administration help rebuild and transform these two weak, if not fracturing, sectors?
On the expectation that growth is bound to surge with the opening of the economy, this sounds very much like the mantra uttered by former Neda DG Karl Chua: “Bring the economy back to the old normal.” But is the old pre-Covid normal desirable? The high level of informal employment or inadequate employment tells us bolder measures, including possible restructuring of the economy, are needed.
For inquiries, please e-mail [email protected]