ECONOMIC POLICY MONITOR 2013: ADDRESSING THE JOBS CHALLENGE TOWARD INCLUSIVE GROWTH
This fourth issue of the PIDS Economic Policy Monitor (EPM) focuses on the need to pursue inclusive growth through the expansion of quality job opportunities. It revisits the jobs issue and provides recommendations on how to address it, taking into consideration the socioeconomic and political landscape and historical experience of the Philippines. The theme chapter looks into the causes of the economy`s failure to generate substantial and quality job opportunities by examining the effectiveness of minimum wage and other labor regulations to determine if they are growth and welfare enhancing. The study finds that raising the minimum wage reduces employment in smaller firms, lowers household income, and increases the probability of falling into poverty. Along with recommendations for a minimum wage reform, expansion of gainful job opportunities from the labor-intensive manufacturing sector, and greater investments in education and other human development aspects, the study proposes a 12-point agenda called "Job Expansion and Development Initiatives" or JEDI.
CLARIFYING THE JOBS CHALLENGE (PIDS PN 2014-17)
The jobs challenge is not simply the lack of job opportunities. A more nuanced view is the inability of the common person to earn a decent living through productive employment or self-employment. Viewing the issue as such reveals the other dimensions of the lack of job opportunities issue. This Policy Note clarifies the jobs challenge and its implications for policy based on Paqueo et al. (2014). Defining clearly the jobs challenge illuminates the issue much more clearly and highlights the weakness of viewing it as simply a problem of lack of job opportunities. The Note argues that the jobs challenge extends beyond those who are currently unemployed. It should include those who are currently employed but are earning below subsistence. These workers require much more than just having and keeping their jobs. Finally, there are those who are earning beyond subsistence but for whatever reason still want to work more hours.
IS GROWTH REALLY JOBLESS? (PIDS PN 2014-16)
Many people have commented that the stellar economic growth in the country since 2012 has not been subsequently accompanied by a significant reduction in poverty or by increased employment. At the 2013 Philippine Development Forum, the development community suggested that the government should focus its efforts on further accelerating structural reforms to facilitate sustained and inclusive growth and development, which will create jobs and reduce poverty. Subsequently, the World Bank (2013) re-echoed the suggestion for a more inclusive growth agenda. This Policy Note examines whether or not it is fair to characterize the country’s economy as having jobless growth, and discusses related issues.
The Labor Code contains several provisions intended primarily to protect workers. Among its objectives are (1) prohibit the termination of private employees except for just or authorized causes as prescribed by Articles 282 to 284 of the code; (2) recognize the right to form a trade union expressly, and the right of a union to insist on a closed shop; and (3)allow strikes as long as they comply with the strict requirements under the code, otherwise the workers who organize or participate in illegal strikes may be subject to dismissal. Philippine jurisprudence holds that any doubts in the interpretation of law, especially the Labor Code, will be resolved in favor of labor and against management. Due to this bias, some of these labor policies can have deleterious effects on the industry, such as increasing unemployment and eventually retarding skill formation.
Regional economic integration in East Asia is characterized initially as a market-driven process of increased trade and foreign direct investment inflows, and eventually by formal arrangements to liberalize trade and integrate economic activities through free trade agreements among East and Southeast Asian countries. This has led to more intensified regional production networks in which East and Southeast Asian countries, including the Philippines, participated. Set against the backdrop of continuing economic integration in the region, economic growth in the Philippines has not been as inclusive as in the other countries as manifested in the increase in the magnitude of poverty incidence.
FORMULATING THE PHILIPPINE SERVICES STRATEGY FOR INCLUSIVE GROWTH (PIDS PN 2014-07)
Competitive services are necessary for inclusive growth. Services not only directly contribute to jobs creation and value added in the economy but affect the performance of other sectors through critical intersectoral linkages. Improving the competitiveness of all services is thus essential to transform the economy and achieve broad-based growth. However, there are still vast opportunities left untapped to fully exploit its role in the economy. This Policy Note explains why a Philippine services strategy is essential to maximize the sector`s potential in contributing to the attainment of inclusive growth.
WHERE ARE THE POOR EMPLOYED? PROFILING THE WORKING POOR (PIDS PN 2013-04)
The poor, in general, have lower levels of education because they tend to prioritize their daily basic needs and put lower investment in education. Local studies on poverty correlates note that members of poor households more likely have lower levels of education. This Notes intends to raise understanding on the impacts of low education on the employment outcomes of the poor. It analyzes the profile of the working poor based on data from the Labor Force Survey and Annual Poverty Indicators Survey of the National Statistics Office and looks at possible interventions that can promote inclusive growth.
PANTAWID PAMILYANG PILIPINO PROGRAM: WHY "DEEPENING" MATTERS IN ACHIEVING ITS HUMAN CAPITAL OBJECTIVES (PIDS PN 2013-02)
The Pantawid Pamilyang Pilipino (4Ps) is by far the largest poverty reduction and social development program the Philippine government has ever conceived. It is also one of the most controversial because its budget is huge and it is mainly financed by loans. This Policy Notes raises several issues in the program`s design and implementation which are critical to be addressed in terms of achieving its social development objective. Primarily, the authors argue for the deepening of the program to achieve better human development outcomes rather than expanding it to cover as many poor people as possible. Instead of increasing the number of beneficiary families, they recommend the expansion of the program by providing a longer period of assistance to current beneficiaries to ensure that their children finish high school. Differentiating the assistance by gender is also strongly suggested, on account of the fact that more boys than girls in the Philippines are not attending school.
The Philippines is at a crossroad. It can choose to continue to follow current unrealistic policies that despite good intentions have been shown to be actually detrimental to the poor. Or, it can elect to try another development path to get a better chance at reducing poverty. This study proposes a 12-point agenda, conveniently referred to as the Jobs Expansion and Development Initiative (JEDI) for poverty reduction. JEDI has two objectives. One is to expand gainful jobs through the acceleration of labor intensive production, particularly, the manufacturing of tradable commodities. The other is to improve investments in education and other human capital development and sustain total factor productivity gains. These objectives require inter alia minimum wage reform, which should be undertaken immediately, while investors are looking for new places to locate labor-intensive production and the Philippine economy is getting another look as a potential destination.
In the light of the weak performance of the Philippine manufacturing industry and the absence of structural transformation of the economy from agriculture to manufacturing in the last two decades, the paper calls for the implementation of a new industrial policy. This is crucial not only to upgrade Philippine industries, generate more and better jobs, and reduce poverty but also to take advantage of the market opportunities and face the challenges arising from the ASEAN Economic Community.
REVIEW AND ASSESSMENT OF PROGRAMS OFFERED BY STATE UNIVERSITIES AND COLLEGES (PIDS DP 2014-29)
The importance of tertiary education in promoting human development and improving the economy`s competitiveness has already been realized. However, state universities and colleges (SUCs) have always faced issues such as the quality of education, management and financial systems, and access, despite considerable funding support provided by the government. This study, which is an extension of a previous work to include all SUCs in the Philippines, aims to (i) review and assess the programs being offered by SUCs vis-a-vis their mandates, the courses being offered by other SUCs in the region, and the quality of graduates produced; and (ii) recommend courses of action to improve the relevance and quality of course offerings of the SUCs.
STUDY OF GOVERNMENT INTERVENTIONS FOR EMPLOYMENT GENERATION IN THE PRIVATE SECTOR (PIDS DP 2014-28)
Economic growth in the Philippines has not been accompanied by significant improvements in employment. Government thus implemented Active Labor Market Programs or ALMPs as one of the strategies to improve the chances of getting jobs of those in disadvantaged sectors. The programs specifically targeted skilled, semi-skilled, and low-skilled workers in the community through the infrastructure and non-infrastructure projects of national government agencies, local government units, government-owned and -controlled corporations, government financial institutions, and public-private partnerships in the national, regional, provincial, city, and municipal levels. Overall, ALMPs have been primarily adopted as stop-gap measures to address adverse effects of economic crises on employment.
AFTER FIVE YEARS OF PANTAWID, WHAT NEXT? (PIDS DP 2013-41)
When the Pantawid Pamilyang Pilipino Program was designed, the government publicly promised to limit to five years the giving of the education and health grants. This five-year limit is almost over for the first set of beneficiaries by 2013. The natural policy question then is: Would it be wise to keep the promise or would an extension be better? This paper presents five arguments and evidence why the extension of the program is better than keeping the promise to limit it to five years. The five arguments include: (a) the problems that the Pantawid had been designed to address continue to be high priority issues; (b) Pantawid remains credible as an effective and valuable instrument for poverty alleviation in the short run and for reducing the transmission of intergenerational poverty in the long run; (c) the extension could provide great opportunities to produce a much greater positive impact on the welfare of the poor; (d) the extension could buy much-needed time for developing and implementing an adequate and workable transition promotion strategy to help beneficiaries outgrow their need for CCT assistance and, therefore, facilitate its termination; and (e) secondary education enrollment and completion produces high returns in terms of increased earning and is achievable with a moderate amount of subsidy. The paper ends with cautionary notes including articulating that Pantawid remains a bridging program; the need for a careful study to ensure affordability and maximize its cost effectiveness; the need to continue to generate better estimates of key parameters such as income elasticities; and possible phasing for affordability and recognition of possible supply-side constraints.
AGRICULTURE, RURAL EMPLOYMENT, AND INCLUSIVE GROWTH (PIDS DP 2013-39)
This paper argues that the development of the rural economy is a key factor for achieving inclusive growth, one that creates jobs, draws the majority into the economic and social mainstream, and continuously reduces mass poverty. Employment conditions in Philippine rural labor markets and agriculture can be characterized as casual or informal, with low skill requirements, with low productivity and returns, and a greater concentration of poverty. This is consistent with a prominent strand of development literature that posits a traditional sector, mostly located in rural areas, and highly dependent on agricultural livelihood. Development involves the change in economic structure, anchored on productivity growth in agriculture, involving a movement of labor from the traditional sector, as well as accelerated capital formation in industry and services.