Domestic growth fails to provide more jobs – WB


Sustained high-rate growth in the Philippine economy for over a decade has not translated into the creation of more and better jobs, and neither has it led to massive poverty reduction, the World Bank said.

In its latest Philippine Economic Update, the lender said that in the last 10 years, the country’s gross domestic product (GDP) per capita grew by an average 3.4 percent, much higher than the historical average growth rate of 1.4 percent from 1950 to 2003.

“This allowed the Philippines to double per capita income in just seven years from $1,660 to $3,270,” it stated.

Despite this development, the World Bank said there are still structural weaknesses that hamper employment-generation and poverty reduction.

It noted that poverty between 2000 and 2012 was slow to decline, only falling substantially in 2013, when poverty incidence declined by 3 percentage points from 27.9 percent in 2012 to 24.9 percent in 2013, lifting 2.5 million Filipinos out of poverty.

In terms of employment, about 75 percent of Filipino workers have at least one attribute of informality, such as the lack of a written contract, social or health insurance, and protection from dismissal, it said.

World Bank also cited its Philippine Development Report “Creating More and Better Jobs” which estimates that, relative to 2012, about 14.6 million Filipinos need to be provided good jobs by 2016.

“Having achieved macroeconomic stability, efforts are now needed to boost shared prosperity. It is now time to take advantage of this period of stability and higher growth to ensure that all Filipinos benefit from these achievements. This can be done best by providing good jobs to all Filipinos,” it stated.

The lender also estimates that the country needs to spend an additional 5 percent of GDP on health and education to raise labor productivity and competitiveness of Filipino workers.

Pursuing structural reforms and investing heavily in human and physical capital can create more and better jobs, it said.

“One of the major reasons why the country has not created more and better jobs is its low levels of investment in human and physical capital, alongside the lack of technological improvement,” it stated.

The World Bank noted that in the past four decades, the overall human and physical capital investment trend was largely stagnant or declining. From close to 30 percent of GDP in the 1970s, investments fell to less than 20 percent of GDP in 2013.

The lender said that another area of underinvestment is education, adding that because of perennially low revenues, the level of education spending has been lower than in some neighboring countries.

“For instance, Malaysia and Thailand spend between 1.2 percentage points and 2.5 percentage points of GDP more than the Philippines, respectively. This low level of spending has led to lower quality of education,” WB said.

The lender said realization of these reforms could help the country become more competitive globally.

“With further economic reforms, especially in areas which will have more impact on the lives of the poor, the government can help put the country on an irreversible path of inclusive growth,” it said.


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