Government’s role in job creation and labour productivity

According to the ILO, the Philippine government must play a major role in creating jobs and more importantly increasing the quality of labour available in the country. And with almost double (7.0% vs 4.7%) the unemployment rate when compared with the rest of the Asian region, the urgency is even greater.

From BusinessWorld Philippines

January 24, 2012

To reduce unemployment, gov’t must invest in human capital, infrastructure — ILO

EMPLOYMENT GROWTH in the Philippines has remained positive but “volatile” in 2011 amid weather disturbances that caused fluctuations in economic growth, the International Labor Organization (ILO) said in a report, as it challenged government to push for growth that will create jobs and increase productivity.

In its Global Employment Trends 2012 report released this week, the ILO said labor market recovery will be sluggish in Southeast Asia, which includes the Philippines, this year as domestic growth will be weighed down by global economic slowdown.

This, despite citing government data suggesting a decline in the country’s unemployment rate last year. Earlier this month, the Bureau of Labor and Employment Statistics reported that unemployment eased to 7% in 2011 from 7.4% in 2010.

This is higher than the unemployment rate of 4.7% in Southeast Asia and 6% in the global labor market, which ILO said will remain at that level in 2013.

As it projected that the global labor force will grow by 40 million annually over the next decade, the report suggested that 400 million jobs should be made available in the same period to keep unemployment rate at its current level.

“Hence, to generate sustainable growth while maintaining social cohesion, the world must rise to the urgent challenge of creating 600 million productive jobs over the next decade, which would still leave 900 million workers living with their families below the US$2-a-day poverty line, largely in developing countries,” the ILO said.

The ILO said that aside from unemployment, governments must also address the number of workers with families living below the $2-a-day poverty line, estimated at 27.3% of the employed population in 2011.

The “working poverty rate” is higher in Southeast Asia despite a decline to 32.3% in 2011 from 60.5% in 2000.

The ILO also noted that the pace of decline in the number of workers below the poverty line has slowed down in recent years, dropping only by 10.1% between 2008 and 2011 after having decreased by 27.6% between 2004 and 2007.

Aside from unemployed and poor workers, the ILO also noted that the number of workers in poor quality and low-paid jobs, with intermittent and insecure work arrangements and poor working conditions was estimated at 1.52 billion in 2011, up by 136 million from 2000 and 23 million from 2009.

In the Philippines, 40.2% of workers are under “vulnerable employment” conditions, the ILO said.

“[The rate of vulnerable employment] has been moving slowly which means that a lot of the jobs in the country lack social protection, social dialogue and are most likely low-productivity, poorly remunerated jobs,” David Jeff Johnson, director of the ILO Country Office for the Philippines, said in a phone interview.

Saying that the Philippines’ unemployment rate would still hover at around 6%-7% this year, Mr. Johnson added that instead of hoping to reduce the employment rate by increasing growth, government should move to employ more of its labor force in productive work to impact the GDP.

“It’s not about the rate of growth, the most important thing is how we achieve that,” Mr. Johnson said, as he urged government to invest in human capital.

Investing in infrastructure and increasing labor productivity would actually have a multiplier effect because it will draw in foreign and private investment,” Mr. Johnson told BusinessWorld. — Kim Arveen M. Patria

Article location : reduce unemployment, gov’t must invest in human capital, infrastructure ILO&id=45588

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