Industrial productivity ‘missing link’ in gov’t’s inclusive growth goal

MANILA, Philippines - No matter how prosperous the Philippine economy becomes, the country will still experience the “jobless growth” phenomenon of high unemployment and poverty levels, unless the full potential of the manufacturing sector is developed.

Norio Usui, a senior economist at the Asian Development Bank (ADB), said the inclusive growth that the Philippines seeks will remain elusive because economic growth is not matched by productivity growth in both industry and labor.

Citing figures from his ADB report “Taking the Right Road to Inclusive Growth” published in 2012, he noted how the unemployment and underemployment picture as well as poverty levels of the country have not improved since the early 2000s despite the Philippines’ remarkable GDP expansion in the last few years.

Many Filipinos can’t enjoy the benefits of a strong economy because the country’s industrial and labor productivity have lagged behind those of its Asian neighbors such as India, Indonesia, Malaysia, and Thailand, said Usui in a presentation he made at the National Competitive Council Dialogues on June 26 in Makati City.

“Productivity is everything in the long run,” he said, pointing to it as the “missing link” between growth and development in the Philippines.

He traced the country’s poor marks in productivity largely to the stagnation of industry. A well-developed, efficient, and restructured manufacturing sector, he added, can generate a sufficient variety and number of job opportunities to benefit workers of different skills and educational levels.

Stressing that a strong services sector is “great” for any economy, Usui points out that services alone may not be able to cut down the unemployment and poverty rates significantly. Business process outsourcing companies, for instance, often require of job applicants to be college graduates, or at least college undergraduates.

He advocated ensuring a more balanced growth between services and manufacturing— which should include agribusiness—to boost employment and labor productivity.

“The Philippines can be a key productive base” in the Association of Southeast Asian Nations region, but it needs to take its game to the next level, said Usui.

To bolster industry, he noted “the critical importance of focusing on product-specific constraints” that hold back the development of the manufacturing sector.?One aspect of this is to identify the products that manufacturers can develop “with relative ease,” he said.

With the problem of high power costs, for instance, he suggested the possibility of shifting to goods that are less dependent on electricity.

He also pushed for a move up to the higher-value segment, especially for key export goods such as electronics, a sector which he said could still expand its productivity and product scope and thus expand its workforce requirements. “With more variety of products come more jobs,” he stated.

At the same time, he reiterated the need for strong communication between the private sector and the government. Constant dialogs with the business community can help the authorities “adopt” a businessman’s point of view in drafting policy, said Usui.

There should likewise be seamless coordination among different government agencies, with the common goal of delivering the “public goods” needed for inclusive economic growth, including better infrastructure.