Despite the acceleration in GDP growth last year to 6.6%, employment
growth slowed to 1.2%, with nearly all the new jobs generated by services
(Figure 3.28.12). The Business Processing Association o...
f the Philippines
estimates that the rapidly expanding BPO industry will employ 926,000
full-time employees by the end of 2013, or 2% of the total labor force.
BPO hires mostly skilled workers, however, which does not offer much
hope to the large pool of unskilled labor. Tourism and related services
employ 4 million people, or 10% of the labor force. Other services
including finance and retailing also show consistent growth. Still, the
service sector cannot absorb all new entrants to the workforce, which is
growing by about 2% a year.
A stronger industrial base, particularly in manufacturing, could
generate a wide range of jobs. But the development of manufacturing in
the Philippines has lagged most other larger countries in Southeast Asia.
The share of manufacturing in GDP declined to 22% in 2012 from 26%
in 1990. Manufacturing in the Philippines provides only 8.3% of total
employment, a much smaller contribution than in comparable countries
Spurring industrial development requires broad-based reform to
address the long-standing challenges of under-provision of infrastructure,
an unfriendly investment and business environment, and poor
governance. In the past 2 decades, steps have been taken on these fronts,
as trade restrictions have been liberalized, the licensing system simplified,
and a sound financial system established. More recently, governance
reforms and gradual improvements in infrastructure have enhanced the
While such reforms are crucial, by themselves they may not be
enough to attract substantial new manufacturing investment in the near
term. Targeted interventions aimed at manufacturers may be required.
The challenge is to identify constraints on the development of particular
industries and formulate policies to deploy against them. That requires
considerable consultation with the industries concerned.
A window may be opening for the Philippines to pursue such a
targeted policy, in light of renewed interest by some manufacturers
to invest in Southeast Asia at a time that the improvements in the
Philippines’ investment environment are being recognized. Moreover,
labor markets are tightening and wages rising more rapidly in several
Asian countries that compete with the Philippines for manufacturing
NO = Indonesia, MAL = Malaysia, PHI = Philippines, THA = Thailand, VIE = Viet Nam.
Data for Viet Nam is for 2011.
Source: CEIC Data Company (accessed 16 March 2013), Bureau of Labor and Employment Statistics. Current Labor Statistics.
Various years. http://www.bles.dole.gov.ph/
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