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Monday / 15 SEPTEMBER 2014

IN FOCUS: Job Creation and Inclusive Growth

The Philippines enjoys rapid economic growth. From 2008 to 2013, it registered an average GDP growth rate of 5.1 percent. In 2013, the economy grew at a remarkable rate of 7.2 percent despite the combined effects of typhoons and other disasters, the tamed growth of some sectors, and the global economic slowdown in the Euro zone and other trading partners. This can be attributed to improved macroeconomic fundamentals, better financial management, and the reform efforts of the present administration. Nevertheless, income inequality and poverty incidence remain high and stable in the last two decades. It is widely believed that this failure to attain greater inclusiveness is due to widespread joblessness and underemployment because of the country’s inability to rapidly expand quality job opportunities. Philippine growth has often been criticized as “jobless growth”. Senior Research Fellow Dr. Jose Ramon Albert debunks this in a policy brief titled “Is Growth Really Jobless?”, noting that “small net changes in unemployment rates are full-time jobs being created in industry and services sectors and part-time jobs lost in agriculture.”

At any rate, the jobs problem has to be confronted head on, by looking at the underlying causes. PIDS research has found that decades-old labor regulations have been ineffective, indicating that new approaches are needed. A study titled “Labor Policy Analysis for Jobs Expansion and Development,” by Drs. Aniceto Orbeta, Vicente Paqueo, and Leonardo Lanzona, found that the overall impact of the minimum wage is negative. It is disadvantageous particularly to smaller firms that dominate the economy. Moreover, it reduces the employability of young, female, and inexperienced workers, and lowers the proportion of working-age family members who will be hired. The study proposes a 12-point agenda, referred to as the Jobs Expansion and Development Initiative (JEDI). It would be better to use direct and temporary income subsidy, carefully targeted toward extremely poor households, to meet suitable norms that society considers as public good. Other measures are better educa tion, increased labor-intensive manufacturing, and greater opportunities for training on the job.

Transforming and upgrading the manufacturing industry is crucial to achieve inclusive growth, create quality jobs, increase incomes, and reduce poverty, according to the study titled “The Philippine Manufacturing Industry Roadmap: Agenda for New Industrial Policy, High Productivity Jobs, and Inclusive Growth,” by Dr. Rafaelita Aldaba, PIDS senior research fellow on secondment to the Trade department as assistant secretary. The study underscores the importance of implementing a new industrial policy that would take advantage of market opportunities and face the challenges of the AEC. Moreover, a paper titled “Regional Integration, Inclusive Growth, and Poverty: Enhancing Employment Opportunities for the Poor,” written by Senior Research Fellow Dr. Celia Reyes as lead author, explains that the manufacturing sector can provide employment opportunities for the poor and can offer relatively higher wages. To promote inclusive growth and reduce poverty, the manufacturing sector has to be made more competitive. At the same time, productivity in the agriculture sector, which is the major employer of the poor, should increase.

To know more about PIDS research on jobs and inclusive growth, visit the SocioEconomic Research Portal for the Philippines. Simply type “job”, “inclusive growth”, “education”, “poverty”, and related terms in the Search box.

Statement of PIDS President Gilberto Llanto regarding media reports on the Commission on Audit findings

This is to clarify certain issues raised against the Philippine Institute for Development Studies (PIDS) in connection with the 2013 Annual Audit Report of the Commission on Audit (COA), and published in the newspapers and online news web sites.

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CALENDAR OF EVENTS

23 SEPTEMBER 2014
Forum on Addressing the Jobs Challenge toward Inclusive Growth
C.P. Romulo Hall, NEDA sa Makati Bldg., Amorsolo Street, Makati City

18 SEPTEMBER 2014
Senate-PIDS Economic Forum on the Jobs Challenge
Senate of the Philippines, Pasay City, Metro Manila

09 SEPTEMBER 2014
Press Conference on the Development Policy Research Month (Baguio City)
City Lights Hotel
Gen. Luna Rd., Baguio City

08 SEPTEMBER 2014
Tapatan sa Aristocrat (Media Roundtable Discussion)
"Topic: Jobless Growth"
Aristocrat Restaurant
Malate, Manila

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SPECIAL FEATURE:

SEPTEMBER IS DEVELOPMENT POLICY RESEARCH MONTH (DPRM)

Inclusivity remains a critical challenge for the Philippines. Despite an outstanding growth performance in 2013, widespread poverty and joblessness persist – signs that growth continues to benefit only a few. Three million Filipinos were without jobs in 2013 and 7.51 million were underemployed. By 2012, the proportion of the population living below poverty line was 25.2 percent.

VISIT THE DPRM WEBSITE

NEW PUBLICATIONS

ANNUAL REPORT

PIDS 2013 Annual Report: Making Health More Inclusive in a Growing Economy

2013 was a year of significant achievements for PIDS in policy research, and a year when the international research community gave it greater recognition as a policy think tank. The PIDS conducted assessments of several major government programs to determine their effectiveness. This was in line with the thrust of the government to implement programs based on their effectiveness in delivering development outcomes.

Click here to download

POLICY NOTES

PN 2014-16: Is Growth Really Jobless?
by Jose Ramon G. Albert

The stellar economic growth in the country since 2012 has not been subsequently accompanied by a significant reduction in poverty or by increased employment. Is the country’s economic growth really jobless? The description about the Philippine economy being jobless stems from the seeming divergence in growth between economic growth and employment. This Policy Note examines whether or not it is fair to characterize the country’s economy as having jobless growth, and discusses related issues. The development community suggests that the government focus its efforts on further accelerating structural reforms to facilitate sustained and inclusive growth and development, which will create jobs and reduce poverty.

Click here for the full article
PN 2014-15: Effects of Minimum Wage on the Philippine Economy
by Leonardo A. Lanzona, Jr.

This Policy Note presents the results of a study that explores the effects of labor policies on the industrial sector. In particular, it examines the minimum wage policy by disentangling and controlling various factors that may confound the effects of minimum wages on employment. Using various econometric methods, the study finds that the minimum wage policy reduces employment in small firms. It causes small firms to reduce their production workers. The negative impact of minimum wages emanates from scale effects. Because of greater marginal costs, it is difficult for small firms to mature into larger-scale firms. In the process, production and the demand for production workers decline. With the decline of small-scale firms, larger firms are able to acquire more production workers, presumably at starting wages lower than what experienced workers would have received in smaller firms. These firms are not able to rehire all the laid-off workers, and the poorer workers who may need cash in the short term may find these arrangements inferior to their previous jobs. Furthermore, because of minimum wages, firms are reluctant to hire younger, less educated, and female production workers. To minimize costs, increasing training for these younger and less educated production workers may no longer be an option as minimum wages rise. These findings may have serious consequences on the way the Labor Code affects production efficiency, as well as social protection. There is thus a need to coordinate these policy areas in a way that reinforces one another.

Click here for the full article
PN 2014-14: Process, Nature, and Impacts of Irrigation System Rehabilitation
by Mona Liza F. Delos Reyes

Irrigation systems undergo rehabilitation to maintain developed irrigation service areas and close the gap between service areas and actual areas irrigated. A rapid appraisal of the government’s irrigation program was commissioned to the Philippine Institute for Development Studies to assess how well these goals have been achieved. Historical data on areas reported to have been rehabilitated, restored, and generated nationwide were analyzed vis-a-vis trends on irrigation service areas and actual areas irrigated. The rehabilitation process was studied to gain insights on the planning and implementation of rehabilitation projects and how the adopted processes or practices could have influenced the results of rehabilitation.

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PN 2014-13: Appraisal of Methodology in Estimating Irrigable Areas and Processes of Evaluating the Feasibility of NIA Irrigation Projects
by Guillermo Q. Tabios III and Cristina C. David

Irrigation has perennially accounted for the major expenditure outlay of the Philippine government in the agriculture sector. The performance of the national irrigation program, however, has always been below expectation. This Policy Note highlights the key findings of a component study of the rapid appraisal of the irrigation program, commissioned by the National Economic and Development Authority and the Department of Budget and Management to the Philippine Institute for Development Studies, to provide input to the budget process. The study indicates that the NIA irrigation systems in general have various technical problems and issues that need to be resolved. One of these issues is that the actual irrigated areas in all four irrigation systems studied had been consistently below the target or design irrigation area. This was due to overestimation of irrigable areas by not fully accounting for built-up areas or urbanization, flooded areas during the wet season, and elevated areas that cannot be reached by gravity.

Click here for the full article

PN 2014-12: Government Investment in Deep-well Pumps: Some Preliminary Notes for Policy
by Alma M. dela Cruz and Roehlano M. Briones

Irrigation is a key component of the government’s strategy to improve agricultural productivity and attain food self-sufficiency. In recent years, the government has been investing in deep-well pumps as an option to develop more water sources amid the expansion of service areas. This study undertakes a rapid appraisal of deep-well pump projects in several national irrigation systems in Central Luzon, operated by the National Irrigation Administration. It also provides a preliminary assessment of the suitability of such investments. It then lists down some lessons that should be considered to improve the planning and implementation of irrigation projects.

Click here for the full article

PN 2014-11: Analysis of Technical Assumptions and Processes of Evaluating the Feasibility of Irrigation Projects
by Tolentino B. Moya

This Policy Note presents the highlights of a component study of the rapid appraisal of the government’s irrigation program commissioned by the National Economic and Development Authority and the Department of Budget and Management to the Philippine Institute for Development Studies, as input to the budget process. In most Philippine irrigation systems, a large gap exists between design assumptions and operational realities, which causes these systems to underperform chronically. Site visits and collection of secondary data were conducted for 14 irrigation systems in Luzon and the Visayas to evaluate the kind of design problems determining underperformance. The study concludes that good governance of irrigation systems must start with a design that ensures compatibility with operational realities and an acceptable level of financial viability to ensure sustainable performance.

Click here for the full article

PRESS RELEASES

FILIPINO EXPERTS TACKLE IMPACT EVALUATION TECHNIQUES IN #IEMATTERS WORKSHOPS

Economists from the Philippine Institute for Development Studies (PIDS) and the University of the Philippines (UP) took turns discussing techniques in impact evaluation at the #IEmatters pre-conference workshops, providing development practitioners with the means to generate evidence that will influence policy.

PIDS Senior Research Fellow Aniceto Orbeta on Tuesday (Sept. 2, 2014) gave an overview of regression discontinuity and interrupted time series designs, which exploit the fact that development programs often use arbitrary rules (such as age of the beneficiary) for program placement or eligibility. Such interventions, he said, provide good quasi-experiments by comparing people affected by the rule and those who are not.

GOV'T, INTERNATIONAL AGENCIES COMMIT TO MORE FUNDING FOR IMPACT EVALUATION

Impact evaluation in the Philippines is getting a boost with the government, the International Initiative for Impact Evaluation or 3ie, and the Asian Development Bank (ADB) ready to pour in more resources to evaluating development programs.

In a press briefing on Day 1 of the "Making Impact Evaluation Matter" international conference being held in Manila, Socioeconomic Planning Secretary Arsenio Balisacan said the Philippines is now among many developing countries utilizing impact evaluation to assess what development programs have been effective in addressing poverty reduction.

CABINET OFFICIALS BACK IMPACT EVALUATION OF GOV'T PROGRAMS

Two top officials of the Aquino administration on Wednesday (Sept. 3, 2014) backed efforts to integrate evaluation practices into development programs, saying these measures ensure the efficient and prudent use of public and donor funds.

Socioeconomic Planning Secretary Arsenio Balisacan said evaluation practices have "provided effective feedback of lessons learned for the improvement of program and project designs of future development projects."

SECRETARY BALISACAN TO OPEN #IEMATTERS CONFERENCE

Socioeconomic Planning Secretary Arsenio Balisacan will open Making Impact Evaluation Matter, a large international conference on the increasingly influential field of impact evaluation to be held for the first time in Asia.

Balisacan, who is director-general of the National Economic and Development Authority (NEDA), is expected to update more than 400 policymakers, program managers, and researchers on the Philippines` development initiatives and governance reforms in the context of the Philippine Development Plan.

#IEMATTERS: IMPACT EVALUATION WEEK OPENS

Development practitioners and advocates are gathering in Manila this week for the first-ever international meet on impact evaluation in Asia. The Philippine Institute for Development Studies (PIDS) is co-organizing the five-day workshop and conference with the Asian Development Bank (ADB) and the International Initiative for Impact Evaluation (3ie).

"Making Impact Evaluation Matter: Better Evidence for Effective Policies and Programs" is being held at the ADB headquarters in Manila as the Philippines marks the 12th Development Policy Research Month, a nationwide observance promoting evidence-based policymaking.

AUTO INDUSTRY EXPECTED TO YIELD 300,000 JOBS

The automotive industry is expected to yield 300,000 jobs under a new industrial policy that seeks to revive the manufacturing sector, an official bared.

Reviving the manufacturing sector will help achieve inclusive growth and at the same time generate better-paying jobs, said Rafaelita Aldaba, senior research fellow at the Philippine Institute for Development Studies (PIDS) now on secondment to the Department of Trade and Industry (DTI), in a press conference launching the 12th Development Policy Research Month (DPRM) last August 28.

DATABASE UPDATES

Overseas Filipinos' Cash Remittances

Total overseas Filipinos' cash remittances stood at USD 2.05 billion in June 2014. This was higher compared with the USD 1.93 billion recorded in the same period last year. It was the highest amount of cash remittances registered in the first semester of 2014.

Source: Bangko Sentral ng Pilipinas

VIEW TABLE for time-series data on Total Overseas Filipinos' Cash Remittances

National Government Cash Operation

National government revenue collections reached PHP 139 billion in the month of June. This was higher by PHP 7.6 billion compared with the figure for the same period last year – PHP 131 billion. For January to June 2014, total revenue collections reached PHP 934 billion; the deficit stood at PHP 54 billion.

Source: Department of Finance

VIEW TABLE for monthly data on National Government Cash Operation.

Gross International Reserves

Gross international reserves (GIR) rose to USD 81 billion as of the end of July 2014, up by USD 0.3 billion from the end of June. The GIR remains ample as it can cover 11 months worth of imports of goods and payments of services and income.

Source: Bangko Sentral ng Pilipinas

VIEW TABLE for the latest monthly data on GIR.

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