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PHILIPPINES

‘Filipinos are working hard

but remain poor’ – World
Bank
(UPDATED) The jobs available are not meeting the aspirations of Filipino youth entering the
labor market, says World Bank lead economist Jan Rutkowski

Mara Cepeda
@maracepeda
Published 3:52 PM, June 17, 2016
Updated 6:11 PM, June 18, 2016

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BETTER SKILLS, BETTER JOBS. A Philippine Airlines plane flies over a Filipino laborer at a construction site in
Parañaque city on June 17. Photo by Francis R. Malasig/EPA

MANILA, Philippines (UPDATED) – A recent study by the World Bank showed that Filipinos
continue to suffer from poverty despite being employed.

The World Bank revealed the highlights of its report entitled, “Labor Market Review:
Employment and Poverty in the Philippines” on Friday, June 17.

“This new report shows that contrary to some perceptions, economic growth in the last 10 years
has created enough jobs to absorb the growing labor force. Still, many workers remain
underemployed,” said World Bank country director Mara Warwick.

Those considered underemployed are people with jobs who express the desire to have additional
hours of work in their present job, to have an additional job, or to have a new job with longer
working hours.

The Philippine economy has been steadily growing at around 5% to 6%, but Warwick said the
issue is that “many of the newly created jobs are precarious and low-paying,” mostly found
under the informal sector. (READ: Beyond the numbers: How Aquino fueled the economy)

According to World Bank lead economist Jan Ruthowski, reducing in-work poverty is thus the
main challenge facing the country’s labor sector.

He attributed the cause of in-work poverty among Filipinos to the low learning capacity of the
poor, saying that 30% of workers who finished secondary education hold unskilled jobs and
work as laborers.

Rutkowski added that there is a scarcity of productive, well-paying jobs, especially in the rural
areas.

The World Bank’s findings echo the data recently released by the Philippine Statistics Authority.
The unemployment rate in April 2016 declined to 6.1% from 6.4% a year ago, but the
underemployment rate climbed to 18.4% from 17.8%.

‘Good’ vs ‘bad’ jobs

WB REPORT. World Bank lead economist Jan Rutkowski, country director Mara Warwick, and lead economist
Aleksandra Posarac reveal the highlights of their latest Labor Market review report on June 17. Photo by Mara
Cepeda/Rappler

Rutkowski acknowledged that the growing Philippine economy produced jobs for Filipinos, but
this did not necessarily improve the quality of jobs.

He discussed labor market segmentation, wherein the World Bank classified work into two: good
jobs, which are “formal, permanent, well-paid, and offering social protection; “and bad jobs,
which are “temporary, casual, informal, precarious and low-paid, often with very little or no
social protection.”

While this is not an issue unique to the Philippines, it is more pronounced here.

PSA data showed that underemployed persons who work for less than 40 hours a week
accounted for 54.2% of the total underemployed in April 2016.

About 45.7% of the underemployed worked in the services sector, while 35.5% were in the
agriculture sector.

“The problem has been that the jobs that are available are not meeting the aspirations of the
young people entering the labor market… It’s the quality of jobs that matters,” said Rutkowski.

“There are still a lot of informal jobs, still a lot of informal jobs, precarious jobs, and low-paying
jobs,” he added.

Job market mismatch has been a perennial problem in the Philippines, with labor advocates
pushing for a long-term jobs road map to address it.

Labor Secretary Rosalinda Baldoz previously said that only 10 out of 1,000 Filipino applicants
are getting hired because many lack the necessary skills needed for the jobs available in the
market.

Tripartite approach needed

SOLUTIONS. Ruthowski discusses the 3-pronged approach the World Bank recommends to address in-work
poverty. Photo by Mara Cepeda/Rappler

Rutkowski added that informal sector workers have low bargaining power.

“Given the structure of the economy, minimum wage is ineffective in raising wage level,” he
said.

Rutkowski said the World Bank recommends a tripartite response among the government, the
employers, and the Filipino laborers to determine the best ways to solve this issue.

“But also workers from the informal sector need to be represented. They need to have a voice,”
he said.

3-pronged solution

GIVE THEM A VOICE. The World Bank says that labor regulations must be simplified so that more Filipinos
would be hired formally. File photo by Jose Mari Pineda/Rappler

Rutkowski said the World Bank report suggest a 3-pronged approach to reduce in-work poverty
and to help address labor market segmentation. (READ: World Bank: PH can end poverty in a
generation)

The World Bank recommended that government continue investing in education and skills of
disadvantaged youth to raise their earning capacity, especially in the rural areas.

Labor regulations should also be simplified to encourage more employers to formally hire more
workers.

Rutkowski said the investment climate in the Philippines should likewise be improved.
“Lower the cost of doing business in the formal sector to create more and better jobs, and sustain
high economic growth,” he said.

In an interview with dzRB on Saturday, Palace Communications Secretary Herminio Coloma Jr

pointed out the World Bank report also discussed an accomplishment of the Philippine
government.

"Hindi ba napakahalagang accomplishment ito na ‘yung economic growth ay nakalikha na ng

sapat na trabaho upang ma-absorb o matugunan ‘yung pangangailangan ng lumalaking labor
force at hindi na nadagdagan ‘yung kawalan ng trabaho?" he said.

(Isn't an accomplishment that our economic growth was able to create enough jobs to respond to
the needs of the growing labor force and that unemployment no longer increased?)

"Tinuturing nga tayo na one of the fastest growing economies at tinuturing na rin tayong Asia’s
Rising Star or Asia’s New Darling. At dahil nga natugunan natin at hindi na nag-iincrease ‘yung
unemployment," Coloma added.

(We are called one of the fastest growing economies and we are Asia's Rising Star or Asia's New
Darling. And that's because we were able to stop an increase in unemployment.)

He then acknowledged that while the World Bank cited some lapses in the country's labor
policies, it also gave suggestions on how to solve them. – Rappler.com

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Filed under:Jan RutkowskiMara WarwickPhilippine economyWorld Bank reportemploymentin-work
povertyinformal jobsjobslaborlabor forcelabor issuespovertyunderemploymentunemploymentWorld Bank

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JUN 1, 2017 @ 05:00 PM 16,957 2 Free Issues of Forbes

Why Filipinos Remain Poor







Panos Mourdoukoutas , CONTRIBUTOR Opinions expressed by Forbes Contributors are their own.
(Photo credit should read NOEL CELIS/AFP/Getty Images)

Hard working Filipinos remain poor, watching the people of other nations in the region get rich.
Revolutions come and go in Philippines, but the old villains -- corruption and political
oppression -- remain intact, preventing Filipinos from making the great leap forwards from
poverty to riches.

This happens for a familiar reason: every new regime uses the old mechanisms, which they
had challenged before assuming office, to advance its own interests rather than the interests of
the people at large.

The Philippines is a country rich both in natural resources (e.g., nickel, copper, gold, silver, and
chromium), and human resources (close to 104 million people). But it remains poor. The Gross
Domestic Product per capita in Philippines was last recorded at 2639.90 US dollars in 2015,
according to Tradingeconomics.com. That’s just 21 percent of the world's average, and well
below the per capita GDP of such neighboring countries as Indonesia and especially Singapore,
which has become a rich country.

That hasn’t surprised those following emerging markets closely, even though the Philippines'
equity market has outperformed Indonesia's and Singapore’s in the last ten years. Nor has it been
a surprise seeing the Philippines leave behind the old glory days of the 1960s, remaining poor six
decades later.
Philippines’ Per Capita GDP Lags Behind Indonesia’s And Singapore’s

Metric Indonesia Singapore Philippines

Population 259 Million 5.8 million 102 Million
Per Capita GDP $3,834 $51,855 $2,640
Per Capita GDP in PPP $10,385 $80,192 $6,938

Source: Tradingiconomics.com 4/11/2017

Philippines Beats Indonesia And Singapore In Corruption

Year Singapore Indonesia Philippines

2009 3 101 139
2017 7 90 101

Source: Tradingiconomics.com 1/28/2017

Philippines' Equities Outperform Indonesia's And Singapore's

ETF 10-year Average Annual Returns

iShares MSCI Singapore (EWS) 3.08%
iShares MSCI Indonesia (EIDO) 3.74%
iShares MSCI Philippines (EPHE) 5.85%

Source: E*Trade 5/31/17

What’s preventing Filipinos from getting rich? Extractive institutions—institutions that allow a
small group to extract incomes and wealth from the rest of society, and to block economic
growth when its interests are threatened.

“Powerful groups often stand against the engines of prosperity,” write Daron Acemoglu
and James A. Robinson in Why Nations Fail: The Origins Of Power, Prosperity And Poverty.
Economic growth is not just a process of more and better machines and more and better-educated
people, but also a transformative and destabilizing process associated with widespread creative
destruction. Growth thus moves forward only if not blocked by the economic losers who
anticipate that their economic privileges will be lost and by the political losers who fear their
political power will be eroded.”

Worse, extractive institutions breed corruption and political oppression.

The Philippines is the 101 least corrupt country out of 175 countries, according to the 2016
Corruption Perceptions Index reported by Transparency International. Corruption Rank in
Philippines averaged 92.09 from 1995 until 2016, reaching an all time high of 141 in 2008 and a
record low of 36 in 1995. Meanwhile, the country is on and off martial law.

That’s bad news for the future of Philippines. “Nations fail when they have extractive
institutions, supported by extractive political institutions that impede and even block economic
growth,” add Acemoglu and Robinson.

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