THE Philippines needs to come up with measures that will unlock the potential of its quality labor pool, with reductions in the country’s unemployment and underemployment numbers translating to better trend growth up to 2020, an international banking giant said.
In a research note, Standard Chartered said a percentage-point reduction in unemployment and a percentage-point reduction in underemployment will yield a 0.1-percentage-point improvement in the country’s gross domestic product (GDP) growth rate.
“The Philippines has abundant labor supply. Further, a significant portion of its working-age population is not employed. Measures to boost employment should boost trend growth. We estimate that between now and 2020, the Philippines’s trend GDP growth rate will improve by 0.1 percentage point if 1 percentage of the percentage of people currently not in the labor force obtain full-time employment,” Standard Chartered said.
In particular, every 1-percent reduction in unemployment will improve the country’s growth rate by about 0.07 percentage point, while a percentage-point reduction in the country’s underemployment will yield about 0.03 percentage-point increase in the country’s GDP growth trend.
The country’s unemployment rate as of October 2014, data from the Philippine Statistics Authority (PSA) showed, hit 6 percent, while underemployment is at 18.7 percent during the same month.
The country’s current trend growth in the past five years, as earlier stated by government officials, is at about 5 percent to 6 percent.
“The Labor market has improved but has yet to reach full employment. The Philippines’s labor market has improved since 2010. There is, however, scope to improve the labor market further,” Standard Chartered said.