Business World, 7 July 2015

President Aquino III and his economic managers boast that the Philippines is the fastest growing country in Asia. (Not true, because in reality, China, India, Cambodia, Laos and Myanmar continue to outgrow us.) Yet the Philippines remains the poorest in terms of per capita income and the worst in terms of providing decent jobs to its work force.

This seeming contradiction can be explained by the Philippines’ rapidly multiplying population, the nature of its growth (exclusive and unbalanced), and the inequality in the distribution of income.

Some two million Filipinos are born every year. This number, which is added to about 100 million Filipinos, is much higher than the population of many small republics — countries like Montenegro with a population of 621,800, Bhutan (765,600) and Equatorial Guinea (778,100), to mention a few.

Imagine the Philippines creating one or two new states every year, with the corresponding additional budgetary costs to the government.

Some 1.1 million Filipino workers join the labor force every year. Total labor force is defined as labor force participation rate — that is, the proportion of workers actively looking for a job — times the population 15 years and above. This has increased from 38.9 million in 2010 to 41.9 million in April 2015.

In 2010, there were some 7.3 million unemployed (completely idle) and 18.8 million underemployed (working but unpaid, working part-time, and working but actively looking for a better job). That’s 26.1% of the total work force or 10,158,000 warm bodies.

In April 2015, despite the slightly lower unemployment (6.4%) and underemployment (17.8%) rates, 24.2% of a much bigger work force, or 10,131,000 warm bodies, remain unemployed or underemployed. The number could be higher if workers who went abroad and workers in Leyte were counted.

After five years in office, the Aquino administration continues to fail in its war against unemployment, and consequently its war against poverty. There is virtually no change in the number of workers who are either totally idle or underemployed — and this despite the relatively strong economic growth.

This poor state of unemployment in the Philippines looks grimmer when compared with ASEAN-5 economies. According to the World Bank’s World Economic Report, the Philippines has the highest unemployment rate at 7.3% compared to Indonesia’s 6.2%, Singapore’s 3.1%, Malaysia’s 3% and Thailand’s near full employment of 0.6%.

In addition, youth (15-24) unemployment in the Philippines at 16.3% is the second most serious among its ASEAN-5 neighbors, with Indonesia having the worst unemployment rate at 22.2%. Thailand has 2.8%, Singapore has 6.7% and Malaysia has 10.3% youth unemployment.

This ugly unemployment picture would have been uglier were it not for the country’s “safety valve”: the opportunity for Filipinos to seek overseas employment. Though overseas employment has some positive contribution to the economy (for example, it has steadily kept the international reserves healthy), the country’s labor export policy, at the same time, has huge social costs. Families get separated, young children grow with little parental supervision, and many overseas Filipino workers (OFWs) are subjected to physical harm and indignities.

In its definition of the labor force, the Labor Force Survey (LFS) excludes overseas Filipino workers in the estimation of the size of the working population — that is, population aged 15 years and older. This means that the joblessness picture would have looked more serious if overseas employment were included in the work force.

Youth unemployment, especially for college-trained workers, and when allowed to persist, will leave a permanent scar on the future of the young unemployed men and women.

The world is changing in ways that do not necessarily favor Filipinos working abroad. Filipino leaders should seriously think of the consequences of the worsening political crises in the Middle East and Africa. Civil wars, racial violence, and persistent unemployment in many parts of the world are constant threats to Filipino overseas employment. What happens to OFWs when they are forced to return to the Philippines as a result of these threats?

The next President should have a doable exit plan for overseas Filipino workers. Having a well-crafted, consistent and enforceable local employment policy is a necessary condition for the success of such an exit plan.

Clearly, the present passive, reactive and fluky approach to job creation should stop. It should be replaced with one that is active, purposeful and assiduous.