PHL needs to create 14.6 million jobs by 2016–WB report

Informal workers, or Filipinos who are employed without contracts or have fixed incomes, comprise the majority of the country’s current work force, according to the World Bank.

In the recent Philippine Economic Update, the World Bank said there are around 28 million informal workers and they comprise 75 percent of those who are employed.

Informal workers include, but are not limited to, street vendors and those who provide various services in the outsourcing, transportation and tourism industries, among others. They usually get paid low wages and generate low or minimal incomes.

“The informal sector is not necessarily equivalent to bad jobs. Nor can all jobs in the formal sector be considered good jobs. Moving to a formal sector job is not always the better choice.

People can choose to work in the informal sector and can still be better off. Jobs created in the informal sector are as important as jobs generated by big firms. What can be bad about the informal sector is when workers want to move up the job ladder, but cannot do so because of structural barriers,” the World Bank said.

The number of informal sector workers compounds the job generation challenge of the Philippines. The World Bank earlier noted that the country needs to create 14.6 million jobs by 2016.

However, even with this, the World Bank estimates that by 2016, around 12.4 million Filipinos would still be unemployed, underemployed, or would have to work in the informal sector.

Data showed that around 10 million Filipinos are either unemployed or underemployed. There are around 3 million unemployed and 7 million underemployed Filipinos.

“Under  the current high-growth scenario and the removal of key binding constraints in fast-growing sectors [e.g., skills constraint so that the business-process outsourcing  industry can accelerate its annual growth from  20  percent to  30  percent,  and  power  and  other  constraints  so  that  the manufacturing sector  can  see  a  doubling  of  employment],  the formal  sector  will  be  able  to  provide good  jobs  to  around 2.2  million  people  in  the  next  four  years  [or  550,000  every year between 2013 and 2016], or around double the current figure,” the bank said.

Due to this, the World Bank said the government must expand the formal sector employment faster while rapidly increasing the incomes of the informally employed.

The bank believes there is a window of opportunity for the Philippines to undertake these efforts. The country’s strong macroeconomic fundamentals, political stability and a popular government can implement much-needed reforms.

Further, the bank said the country can also benefit from the global and regional economic rebalancing and the strong growth prospects of a dynamic East Asia region.

The World Bank also said aging populations abroad offer new opportunities to the country’s young and dynamic labor force, while sectors that had previously been dominated  by  monopolies, such  as  telecommunication  and  air transport,  are  now demonstrably benefiting from past reform efforts that opened them up to competition.

“The Aquino government has demonstrated that it is not afraid to tackle vested interests in  areas  that  had  previously  been  too  sensitive  to reform,” the World Bank said.

“The government now needs to maximize the chances that the country will follow a more inclusive growth path and meet the jobs challenge  by accelerating  reforms  to  protect  property  rights, promote more competition and simplify regulations to trigger more private investments by firms of all sizes, while sustainably ramping up public investments in infrastructure, education and health,” it added.

Apart from the jobs challenge, World Bank estimated the country’s gross domestic product (GDP) to reach 6.6 percent in 2014 and 6.9 percent in 2015, depending on the pace of Supertyphoon Yolanda reconstruction and rehabilitation efforts.

The bank’s pre-Yolanda forecast puts the Philippines’s GDP growth at 6.7 percent in 2014 and 6.8 percent in 2015.

The bank also said a key challenge of the reconstruction process is to develop and enforce explicit standards for “building back better”—for safe and resilient buildings and infrastructure.

source:  Business Mirror