ECONOMISTS flagged the declining employment share of the Philippine manufacturing sector, which they said is key to achieving a high-income status and meeting other development goals including bringing down poverty incidence to single digits at a faster rate.
A De La Salle University (DLSU) School of Economics report on Monday showed that most targets under the Philippines’ development plan for 2023 to 2028 will be met later than expected, and noted that the country would struggle to achieve high growth in the long-run in the absence of an industrial policy that has helped its Southeast Asian neighbors’ manufacturing industries climb the value chain.
Most Filipino workers are employed in sectors of “very low productivity,” the report said, adding the manufacturing sector’s employment share is only 8% and is expected to further decrease to 7% by 2030.
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“Historically, countries that have achieved high-income status obtained employment shares in manufacturing from about 20-25%, sometimes even higher,” Mariel Monica Sauler, an economics professor at DLSU, said at the report’s launch in Makati City. “Our current manufacturing employment share is just 8%.”
For the Philippines to become an economic powerhouse, it needs to restructure its economy by taking workers out of the agriculture sector through mechanization and by significantly increasing the employment share of its manufacturing base, said Jesus Felipe, director of the Angelo King Institute for Economic and Business Studies at DLSU.
“We desperately need firms with high organizational capabilities and highly productive, that manufacture and export complex products, and that compete in the world economy,” he said during the event.
Mr. Felipe said the declining number of Filipinos leaving the country for job opportunities abroad — a phenomenon linked to an increase in wage rates locally — provides an opportunity for the country to expand its manufacturing base.
According to the report, the number of overseas Filipino workers (OFWs) will further decline to 1.91 million in 2025 from 1.97 million in 2023.
“We think that our wage rates are going to increase.
Therefore, the incentive to leave the country declines,” Mr. Felipe said.
Even as the agriculture sector’s employment share has been on a decline, Ms. Sauler said the share of construction and transport and storage sectors, which have “low productivity” and “low wages,” have increased.
Source: Business world
