The global problem of creating jobs

Growth with Equity is one concept I hope the Philippine government as well as every other government embraces as they meet the very challenging economic environments currently prevailing the world economy as a whole. For the Philippines, with the great unequal distribution of wealth and other economic resources, the simple measure of the country’s economic growth should no longer be enough. There should be a greater focus on the number of jobs created and its demographic profile. At the end of the day, the person without a job will have the last say on what is the level of economic growth.


From BusinessWorld Philippines

October 02, 2012

Jobless, non-inclusive growth

THE ECONOMY grew 5.9% in the second quarter of 2012, after a surprisingly strong growth of 6.3% in the first quarter, or a first semester GDP growth of 6.1%. Yet, unemployment remained stubbornly high at 7%, while underemployment soared to a six-year high of 22.7%. Relatedly, a recent (August) Social Weather Stations survey results showed that 21% of respondents (an estimated 4.3 million households) went hungry in the last three months, an almost three-point rise from the 18.4% recorded in May. What happened?

How can such a strong growth result in so much joblessness and hunger? It’s in the nature of growth. Some economic expansions are broad-based, inclusive (few are left behind in the growth process) and employment generating. Others are limited, non-inclusive, and do not create a lot of jobs.

For some, this suggests that policymakers should go beyond the headline growth numbers. They have to be analyzed, scrutinized and responded to with other indicators of economic performance: employment, inflation, hunger rates, poverty rates, income inequality, state of education and health care, and so on.

When the economy, measured in terms of gross domestic product (GDP), grows at 6%, it does not mean that the economic well-being of every citizen improved by 6%. The stark reality, depending on how income is distributed, is that for some it may mean 100% or higher, for others it may mean less than 6%, and for the jobless and those who lost their jobs, it means zero or negative growth.

The recent jobs numbers should remind policymakers of the tough road ahead. The world economy continues to worsen. Europe is facing another round of recession and its leaders are still clueless on how to get out of current economic mess. The United States is on a long-term slow growth path. China has started to slow, and a lackluster world economy, its changes of restoring strong growth are getting quite limited.

The Philippines has to look for means to strengthen the domestic economy. But it’s not going to be easy. The President and his economic managers have to stimulate growth of agriculture and industry.

Agriculture, which employs about one-third of the country’s labor force, has to find new life. A big part of the sector’s growth is retarded by the uncertainty brought about by agrarian reform. The process of asset redistribution has to be completed soon. Yet, the present government’s accomplishments in agrarian reform are dismal.

Injecting new life in the industrial sector, the source of many productive, decent jobs, require better infrastructure, specifically better roads so that goods can be transported from one point to another at less costs.

It also requires better, more reliable, and cheaper power. Yet, no new capacity from cheaper sources of energy (geothermal and hydro) have been put up, and no new capacity is expected to be provided during President Aquino’s term. The lead time for setting up new capacity is much longer than what remains of Mr. Aquino’s stay in Malacanang.

Benjamin Diokno is professor of Economics at the School of Economics, University of the Philippines (Diliman)

Article location :, non inclusive growth&id=59406

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