In a recent article in Time Magazine, Fareed Zakaria offers five strategies to bring unemployment down in the United States. The context is the observation that the US economy is now producing the same amount of goods and services as it did in 2007, prior to the global crisis, but with seven million fewer workers. The positive spin on this would be to say that American productivity has risen. But this offers no comfort to the millions of jobless Americans, whose numbers have roughly doubled since the crisis started. Like much of the rest of the world, the US has been experiencing jobless growth, or more aptly, job-killing growth. We in the Philippines are no strangers to this phenomenon, which has afflicted us for most of the past 10 years.
In the 1990s, productivity gains in the US translated into higher economic output, higher incomes, and in turn increasing jobs (because the higher incomes raised demand for goods and services they produced). But Zakaria observes that lately, productivity gains have been achieved almost entirely by cutting jobs; that is, finding ways of producing the same products with fewer people. As any casual observer would surmise, a prime factor is technology, where rapid advances have been displacing human workers just as rapidly. And nowadays, it’s not just unskilled labor that machines are replacing; computer programs have become so sophisticated that computers can now do tasks that previously took highly educated or highly skilled workers to perform.
The situation is made even more difficult for workers in the Philippines by a host of other man-made problems. Rampant smuggling of various products ranging from onions to motor vehicles is stealing the business from domestic producers, and consequently jobs from Filipino workers. Peace and order problems in parts of Mindanao continue to make it very difficult to attract job-creating investments in that part of the country which suffers from the worst poverty. Declining education over the past decade has impaired the employability of our youth, even as statistics have consistently shown that our unemployment problem has primarily been a youth unemployment problem. And certain government policies that favor a few but inhibit the creation of millions of potential jobs continue to be in place.
With the recent drop in President Aquino’s ratings being blamed on, among other things, his supposed failure to improve the job situation in the country, he needs a job-creation strategy fast. And he could well start with addressing the above.
Zakaria’s five-point job creation strategy for the US focuses on manufacturing, growth industries, retraining of workers, small businesses and opportunities in immediate needs. The same could very well form the basis for our own strategy to bring down unemployment, perhaps with slightly differing contexts and focus.
Manufacturing. Growth potentials for food manufactures, the most dominant manufacturing subsector, will keep rising amid rising demands in domestic and foreign markets. Creative ways must be found to facilitate investments in more small and medium-scale food processing closer to primary production areas, especially in Mindanao. Manufactures built on Filipinos’ design ingenuity, such as high-end furniture and apparel, are poised to keep doing well in world markets, especially with China’s declining labor cost advantage. But government needs to re-emphasize economic diplomacy, including strategic economic intelligence, and breaking into non-traditional markets in the work agenda of our diplomatic missions abroad.
Growth industries. Other industries with much recognized growth potential include low to medium-income housing, for which requirements far outstrip availability; tourism, where employment impacts go far and wide; and shipbuilding and repair, a natural for an archipelagic country like ours. Government needs to invest much more in public housing finance, where we fall far behind our Asian neighbors, including much poorer ones. Open skies would serve the greater good of the greater number, even as government must support our own air carriers in securing fair terms abroad.
Worker retraining. Here, our focus would be on returning displaced overseas workers, especially less-skilled ones, to be able to gear them for entrepreneurship, and thus have them create even more jobs rather than seek jobs themselves. For those who must rely on the latter, retraining programs to gear them up for the potential growth industries mentioned above is not a job for government alone, but must be yet another public-private partnership.
Small and medium enterprises. It is far cheaper to create a job in an SME than in a large enterprise, and benefits are more widespread. Government must make an orchestrated effort to provide the environment that makes access to financing, technology, raw materials and markets easier for SMEs that venture into agri-processing, light manufactures, tourism enterprises and other growth industries.
Immediate needs. Catching up on infrastructure, in terms of which we have lagged badly behind our neighbors, is a short-term imperative for the government; there are no ifs and buts about it. An institutional environment that facilitates infrastructure investments, whether funded from public coffers or by private partners, needs to be assured. Government must have a focused list of top priority projects that will bring the most strategic benefits nationwide and will be pursued relentlessly.
Much more can be done, to be sure. What is clear is that jobs, or the lack of them, will ultimately spell the success or failure of this administration.
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E-mail: cielito.habito@gmail.com