Share prosperity for growth – AIM study

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THE Philippines needs to move toward shared prosperity to ensure that more people will benefit from the strong economic growth the country is making now, says Prof. Jamil Paolo Francisco, the executive director of Asian Institute of Management’s Rizalino S. Navarro Policy Center for Competitiveness.

Competitiveness and shared prosperity, he pointed out on Wednesday, are intertwined and that focusing on shared prosperity will allow the country to grow in a more sustainable manner.

“To sustain the developments that have boosted macroeconomic indicators and generated optimistic expectations about the economy, growth must be shared across all sectors. At present, the benefits of recent economic successes are yet to be broadly felt, especially among the poor and disenfranchised in society,” he pointed out.

The AIM conducted recently a review of existing literature and analysis of publicly available data, looking particularly into three areas: poverty reduction, income growth and equality, and decent and productive employment.


The review entitled The State of Shared Prosperity in the Philippines, noted that around 25 percent of Filipinos remain poor, and the country’s poverty incidence is second only to Myanmar in Southeast Asia.

As of the first semester of 2015, regions in Luzon, except for Regions 3-B (Mimaropa) and 5 (Bicol), had smaller proportions of poor families that the national average of 21.1 percent.

On the other hand, all regions in Visayas and Mindanao, excluding Region 11 (Davao) had poverty incidence among families above the national average.

“Given the nature of transitional poverty, individuals and families may at times find themselves disqualified from government assistance targeted toward the officially poor,” Francisco noted.

The study also found that the top 10 percent of families control about 30 percent of total income, while the bottom 10 percent of families make do with only 3 percent of total income.

The average real basic pay for all occupations measured in constant 2006 prices declined from P275.11 in 2001 to P263.33 in 2014. In 2008, it was even lower, only P250.39. The study also noted that most major occupation groups experienced stagnant or declining wages. Only those in management, clerical support, and agriculture experienced growth in real daily wages.

Real basic pay declined at an average rate of 1 percent a year for service and sales workers from 2001 to 2014, despite the fact that a significant share of growth in the services sector had come from the trade and repair of motor vehicles, motorcycles, personal and household goods.

“From the latest available data, we’ve seen that Filipino families spend about a third on food, and over a decade-long period, they’ve spent only 3.4 percent on education and 3 percent on health,” Francisco said.

Compared with Indonesia, Malaysia, and Thailand, “the proportion of household expenditures on food for all deciles is the highest in the Philippines,” he added.

The study revealed that labor force participation among the working-age population was constant at about 64 percent from 2005 to 2014, with the levels of participation varying depending on gender and age. Around 80 percent of working-age men were in the labor force, compared with only 50 percent of working-age women, and labor force participation among the youth averaged 45.8 percent from 2008 to 2014.

The unemployment rate in 2015 was at a historical low of 6.3 percent. Meanwhile, nearly all of our Southeast Asian neighbors posted unemployment rates of less than 4 percent.

The study also highlighted that there continues to be a gender gap when it comes to employment. From 2010 to 2015, there were only about two-thirds as many employed female workers as male, and the gap persists despite changes in the overall employment rate. This underutilization of half of the country’s human resource pool leads to significant losses in potential productivity.

“We need more Filipinos to be more productive to sustain our economic growth. The slowdown in job creation and relatively high unemployment suggest that growth and expansion may not have been taking place in sectors that provide employment opportunities for the available labor force,” said Francisco.

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