- Category: Banking & Finance
06 Jun 2013
- Written by Santiago F. Dumlao Jr.
THERE are some people in the business community who have been asking, in all honest concern, what the investment-grade sovereign credit rating really means in practical terms. It’s a legitimate question.
What has been a principal indicator of the investment-grade rating is the growth in gross domestic product (GDP): 6.6 percent in 2012; 7.8 percent in the first quarter of 2013. Dampening the good news, however, is the report that economic growth has not translated to more employment. The Philippines in January had a high unemployment rate of 7.1 percent compared to, say, Indonesia’s 6.5 percent, Malaysia’s 3.0 percent and Thailand’s 0.7 percent, according to Prof. Ben E. Diokno’s presentation to a Management Association of the Philippines forum. Our underemployment rate was 20.9 percent. These percentages translate to 2,894,000 unemployed and 7,934,000 underemployed.
It’s not that the government is oblivious to the situation. They’re addressing the matter with a review and updating the Philippine Development Plan: 2011-2016. As the National Economic and Development Authority’s (Neda) March 25 memorandum said about the review—called the PDP Midterm Update—the assessment “shall also contain policies and strategies on where the priorities and focus of the government should be in order to sustain the country’s improving economic performance and expedite the achievement of an inclusive growth.” We can read that also as expediting the reduction of unemployment.
Let me share these data from our government-planning desks to underscore that we do have a direction in our quest to addressing the employment problem. This should give us greater awareness, understanding and assurance that, well, we’re not lost or helpless.
Where, then, are the potential jobs? A Neda briefing paper lists these 10 sectors:
1. Agribusiness/forest-based industries
2. Business-process outsourcing/information technology
10. Other high-growth potential industries (wearables, garments, homestyle products, motor-vehicle parts/components)
The job projections, based on available industry/sectoral plans, are:
· Tourism 3,000,000
· Infrastructure projects 2,310,813
· Micro/small and medium enterprises (SMEs) 2,000,000
· ICT/Digital Industry/BPO 1,300,000
· Philippine Economic Zone Authority locators 641,096
· Health 96,880
At the high policy levels, the objectives have been quite clear: to increase labor demand, for example, reduce the regulatory burden related to opening, expanding, running and closing a business; improve access to capital; increase the rate of return by reducing cost of utilities, improve production efficiency and access to raw materials, expand market access, etc.
There are well-articulated policies to improve employability of potential labor supply, as well as improve productivity of current labor supply, including reducing search costs. Various government agencies have been identified as responsibility centers.
This article just wants to get across the point that the government has a grand viable plan, is updating the plan, is serious about inclusive growth to benefit a greater number of citizens and appears determined to tame unemployment, an issue that seems to have become a sensitive sore point for the President. That’s good for a goal.
An updated Philippine Development Plan for the next three years of the President’s term is scheduled to be released in December. But we’ll probably have a dose of what his own plans are for the next half of his term when he delivers his next State of the Nation Address.
Having said all this, are we to remain just spectators? Or shouldn’t we, as businessmen, take the challenge and do whatever we can for inclusive growth? The Financial Executives Institute of the Philippines’s Foundation for Entrepreneurs, for one, has developed an SME Plus portal to facilitate matching SME bank lenders and SME borrowers, on the conviction that the robust growth of SMEs translates to greater business activities and expanded employment nationwide, i.e., inclusive growth. We should have more initiatives like this and continue to be encouraged.
The opinions expressed here are the views of the writer and do not necessarily reflect those of the Financial Executives Institute of the Philippines (Finex). Free Enterprise is a rotating column of members of Finex and appears every Wednesday and Friday.