• Perspectives on unemployment

    Ben D. Kritz

    Ben D. Kritz

    That unemployment is a bit of a problem for the Philippines is a generally accepted assertion, if “generally” is used in the normal way here, meaning “most everyone except officials of the current administration.”

    With an official unemployment rate of around 7 percent, an official underemployment rate of around 20 percent and with about one-fifth of the country’s available workforce finding jobs outside the Philippines—all of which means that something like 20 million employable people are not, for whatever reason, fully contributing to the economy—it is not much of a mystery why the Philippines continues to lag behind its neighbors in development and real economic growth.

    There are two basic explanations for why more people do not have adequate employment. The first, and in some ways more believable because it matches the visible state of the nation, is that enough substantial jobs are not being created. The second, which is the preferred explanation of the Aquino administration because it absolves them of their failures in capital development, is that the workforce is simply not adequate for the jobs that are available—the so-called “skills mismatch” explanation.

    Because the credibility of the current government has declined to the point that an executive assertion that the sky is blue would cause most people to actually go outside to check for themselves, there is a strong temptation to dismiss “skills mismatch” as a legitimate explanation for the persistent employment problem. But according to people who actually know what they’re talking about it, “skills mismatch” is not something that should be overlooked.

    Winston Pepito, the chief executive officer of Phil-Am Outsourcing Solutions in Cebu, makes a compelling argument that more people would be employed, if only they had the qualifications for the jobs that are available. Explaining his perspective in a post on his own blog, he writes, “I believe there’s more than enough work for everybody. I’m saying this because our business is to get people employed so we do a lot of hiring regularly. The biggest problem we’re facing is we hardly find qualified employees. We have positions here in our company that have been open for years. We actually had a client who left us a few months ago because the project was poised for growth and needed to hire more people, but we just couldn’t find the resources. We’ve done all kinds of things to try and attract people—free night outs where we offered free food and drinks, disco and t-shirts, but still we couldn’t find qualified applicants.”

    Pepito puts most of the blame for the problem on the potential workforce, listing a number of reasons for the lack of success of job-seekers from his own observation, which fall into four general categories: Lack of ambition to either look for a job in the first place, or to be aggressive (such as applying to several employers at once instead of one at a time) in looking for work; reluctance to undertake additional education or training to learn different skills; a distaste for laborer-type or low-end work; and mendicancy encouraged by external support such as family members working abroad or programs such as the government’s “4P’s” conditional cash transfer (CCT) program.

    Pepito agrees, however, that “skills mismatch” is not the sole reason for the employment puzzle, and to some extent the demand side of the equation is falling short of creating jobs to make better use of the labor supply. “My problem with the government is that they blame other entities for their failure to attract more investors,” he explained in a follow-up conversation, “And of course, they don’t want to blame the unemployed for the skills mismatch,” he added. Attracting more investors would naturally expand the scale and variety of the job market, and being frank about the underlying causes of “skills mismatch” would help in developing more effective ways to address it.

    The one thing that becomes immediately clear when looking at the different perspectives on the employment problem is that the government clearly has not demonstrated an understanding of the complexity of the issue; and they deserve the negative criticism for not doing so, because they are the only entity who can legitimately be expected to have that understanding. Developing a workforce that has skills which are in demand by the country’s employers (as opposed to putting the weight of the efforts in this regard to meeting the demands of other countries’ employers) is the government’s responsibility—perhaps not to undertake that task entirely on its own, but at the very least to set a firm direction and lead the effort. That is not simply a matter of applying simplistic modifications to the country’s educational system, but also requires finding ways to improve some unproductive social traits—discouraging dependence and passivity by taking steps like, for example, ending the bloated, ineffective and corruption-ridden CCT program.

    At the same time, the government has the responsibility to encourage diversity in the labor market, which has the dual benefits of expanding the economy generally as well as providing more would-be workers with suitable opportunities. And that means actually listening to business groups and economic analysts for a change, and following through on some of the dozens of ignored recommendations for increasing investment that have been offered in the past three years. Applying superficial ad hoc measures, or simply declaring everything is okay with some palengkero-grade aphorisms is not an action plan; the fact that unemployment does not appear to be—and in some respects actually is not—as bad as it could be is, if anything, a matter of luck. The Aquino administration needs to address job creation and human resource development before that luck changes.