Can we avoid jobless growth?
Over the past year, our gross domestic product (GDP) grew by an impressive 7.5 percent (as of end-June). In the process, the economy saw a net increase of 620,000 additional jobs on top of the 37,555,000 jobs that existed in the economy last year. This means that the number of jobs grew by only 1.6 percent, or just about one-fifth of the rate at which the economy grew.
There’s both good news and bad news there. The positive spin one might give to these comparative trends is that labor productivity appears to have gone up. That is, it didn’t take as much increase in workers to generate five times more growth in aggregate output and income. But this is no consolation to those who see these numbers as bad news, for at least two reasons. First, jobs failed to keep pace with the labor force, which grew at a faster 2 percent. The result was a rise in the unemployment rate, from 7.0 to 7.3 percent. Second, the economy’s relatively rapid growth—the fastest in Asia, in fact, and among the fastest in the whole world—must have failed to translate into poverty reduction, given the rise in the jobless rate. In other words, the rising economy was not a tide that lifted all boats. Many continued to be left behind (or more aptly, down below). In short, the economy’s growth has yet to become the “inclusive growth” that government is aiming for in its Philippine Development Plan.
Understanding our “jobless growth” experience entails a closer look at the recent job statistics. According to the quarterly Labor Force Survey taken last July (the latest available), 620,000 new jobs were created in the economy over the past year. The services sector accounted for the bulk (383,000) of these, agriculture contributed 173,000, and industry came up with the remaining 62,000 jobs. Jobs in agriculture grew by 1.5 percent, against output growth of 1.4 percent. Jobs in industry grew by only 1.1 percent even as output grew by a hefty 10.6 percent, while services sector jobs grew by 1.9 percent against output growth of 7.1 percent.
Again, one might interpret these numbers kindly and take them to mean that there was improved labor productivity, particularly in industry and services. The problem, though, is that any such increase in productivity has not translated into an increase in labor incomes, as should be the case. Indeed, the trend, not only in the Philippines but also in the global economy as a whole, is that the share of labor income in total GDP has shrunk over the years while the share of profit income has risen substantially. This is a formula for widening income gaps, and while the phenomenon appears to be worldwide, the gap has been glaringly wider in the Philippines relative to its neighbors and most of the rest of the developing world.
There’s even more cause for concern. It’s bad enough that the quantity of new jobs created did not measure up to requirements and set targets. But the quality of the new jobs generated was also questionable, to say the least. An examination of the employment data by class of workers bears this out. A disturbing decline is seen in the number of wage and salary workers and those who are employers in their own family-operated farm or business. Both dropped substantially, by 366,000 and 164,000 workers respectively. This represented a 1.6 percent decline in wage and salary workers, and a hefty 11.3 percent drop in employer-entrepreneurs, both of which represent good quality jobs. On the other hand, those who were self-employed without any paid employee increased by nearly a million or 920,000 (a 9.3 percent rise), and those classified as unpaid family labor went up by 232,000 (6.4 percent). These are mostly in low-quality informal sector or underground economy occupations such as ambulant vendors or drivers of jeepneys, tricycles or pedicabs—not exactly the jobs we’d like to grow.
If the record brisk growth of the Philippine economy since last year has not been widely felt, the explanation can be easily seen in what drove that growth. Fastest growers have been real estate, finance (banks and insurance) and construction, which grew at 17.2, 13.5 and 22.6 percent respectively. But there are only 449,000 workers in finance, 163,000 in real estate, and about 2.4 million in construction. On the other hand, agriculture, accounting for nearly 12 million workers, only grew at a meager 1.4 percent—not even fast enough to keep up with the growth in population.
We need, in sum, to broaden the base of our economy’s growth. We need to put our “eggs,” i.e. our economic stakes, in more baskets. It’s not wise to focus unduly on the Clark/Subic-Metro Manila-Calabarzon growth triangle on the reasoning that it accounts for nearly two-thirds of our GDP, when it accounts for a far lower proportion of our workers and population. Neither is it good enough to look to the business process outsourcing sector to drive services sector growth, when 70 percent of our poor are in the rural areas. Agriculture deserves much more attention than it is getting, and much less stealing of public funds that recent events suggest the sector has traditionally been a victim of. If the 12 million farmers and farm workers and their families had more money in their pockets to spend, the rest of the economy would get a tremendous boost.
The implication of all this is that we should not be content with achieving a high rate of economic growth alone, in terms of simply raising the aggregate GDP growth rate. It must also be quality growth. In particular, it must be growth that produces jobs and livelihoods for as many Filipinos as possible.
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