President Aquino wondered aloud on why the country is facing the very high unemployment rate reported by the Social Weather Station earlier this week. In their estimation, around 12.1 million Filipinos are unemployed right now which is 27.5 percent of Filipinos of working age. This is six percent higher than the previous quarter’s 21.7 percent despite the recently reported 7.2 percent growth of the economy.
The unemployment rate should not have surprised the president. The phenomenon of unemployment amidst supposed growth has been the hallmark of recent governments even before Aquino. This jobless growth is a result of the government mainly focusing on the growth of the services sector while manufacturing and agriculture remain slow.
According to the think tank IBON, services would have a relatively weak job creation potential, productivity and earnings when compared to manufacturing and a modernized agriculture sector. Government instead allows foreign investors and their agents to dictate and control domestic patterns of production and consumption resulting in a heavy push for services such as business process outsourcing and the like.
Basic services such as electricity, water and transportation are being sold left and right to private firms. These basic utilities which are vital and strategic to industrialization is being held hostage by profit. One example is how power generation firms threaten blackouts in the recent Meralco case in the Supreme Court if they are not allowed to get the more than 4.15 peso rate increase.
Agriculture’s contribution to the country’s GDP has shrunk to only around 12 percent compared to 41 percent right after World War II. Manufacturing as a subset of industry has been relatively flat since the 1950s at around 30 percent. Services on the other hand has increased from slightly below 40 percent in the 1940s to around 56 percent last year. The 27.5 percent joblessness is a direct effect of this long-term de-industrialization and shrinking manufacturing in the country.
Building national industries is the solution. We need to have an industrial policy geared towards building local industries in order to modernize agriculture and reverse agrarian backwardness. Without increasing manufacturing capacity, we will always face perennial joblessness.
We need to expand production of raw materials for the needs of downstream industries and local processing in the country. In order to do this, we need foundation industries such as basic metals, chemicals, pharmaceuticals, petrochemicals, machinery, precision instruments and capital goods. Aside from these heavy industries, we should also build light industries in order to address daily and consumer needs such as processing of grains, cereals, beverages and dairy products, aquaculture and fisheries, textile, garments and mass housing.
We should limit the export of primary commodities such as raw minerals and agricultural products in order to have materials for the industries we need. Manufacturing should be made as much as possible reliant on locally produced capital equipment, intermediate parts and raw materials. This can be done by re-tooling the present manufacturing enterprises away from exports as well as building local capacity to make our own capital goods.
Whatever surplus in agriculture, mineral extraction and industrial goods above the current needs of the people and the targets of the economy can be traded in exchange for capital goods and important products which the country cannot yet make. The objective is to be able to build local capacity in industrial production of capital and consumer goods. As the PDAF, DAP and presidential pork issues have shown, money in government is being used for personal and political gain rather than being used as industrial investments.
Building national industries is the key to the establishment of a modern and diversified industrial economy that will satisfy our basic industrial and consumer needs, secure jobs and livelihood for our people as well as ensure rapid and sustained economic growth for the country. We will not only achieve economic independence by mobilizing primarily our own domestic capital geared towards satisfying our own domestic market needs.
As President Aquino’s spokespersons have noted, the idea of national industrialization is not new. But it is definitely not passe. What went wrong is President Aquino’s continued implementation of privatization and liberalization. His government’s refusal to build and strengthen Filipino industries and instead depend on foreign capital is the answer to his question of why the country seems to never generate enough jobs.