Philippine Unemployment Rising Undermines Aquino’s Growth

Jeany Rose Callora left her home on
the Philippine island of Negros last year to work at a soft-drinks factory in Manila, hoping to earn money for college. When
her contract ended six months later, she said she couldn’t get
another job in Southeast Asia’s fastest growing economy.

“I’ll do anything: saleslady, factory worker, waitress,”
the 20-year-old high-school graduate said as she waited 11 hours
for an interview in an employment agency in Manila, surrounded
by dozens of other applicants.

Callora is one of 2.89 million unemployed Filipinos,
swelling a jobless rate that climbed to 7.1 percent in January
from 6.8 percent the previous month. About 660,000 positions
have been lost since October 2011, even as the economy expanded
6.6 percent last year.

The nation is struggling to reconcile a lack of jobs for
people like Callora, who have little training, with a shortage
of skilled workers in industries such as information technology
and shipbuilding. While the economy is being boosted by call
centers
and remittances from workers who moved abroad, the
country’s poverty level hasn’t decreased since 2006.

“What we’re seeing is a two-tier economy with booming
sectors favoring skilled workers,” said Frederic Neumann, co-head of Asian economics research at HSBC Holdings Plc in Hong
Kong
. “The government must boost labor-intensive sectors such
as manufacturing, agriculture, or else rising inequality will
create pressure for increased social spending.”

Aquino’s Plan

President Benigno Aquino has promised to cut unemployment
to 6 percent at most by the end of his term in 2016. Proposals
include easing curbs on foreign investment, boosting tourism and
infrastructure to provide more work outside the capital, and
expanding farming and fishing, said Economic Planning Secretary
Arsenio Balisacan, who’s in charge of the plan.

“Jobs are now the biggest priority of the government,”
Balisacan said in an April 29 interview. “We are using all
resources to create jobs as fast as we can.”

The Philippines attracts the least foreign direct
investment in Southeast Asia, according to the World Bank.
That’s in part because contract disputes and regulatory
reversals in the past led companies, including Frankfurt,
Germany-based Fraport AG, to leave the country. Fraport stopped
work on an almost-completed airport terminal building in 2002
and later sought compensation after having its contract
nullified by the Supreme Court.

“The low investment share is because past economic growth
has depended more on services that are less capital intensive
than industry,” said Norio Usui, senior country economist for
the Philippines at the Asian Development Bank in Manila. “The
Philippines’ biggest need is to generate productive job
opportunities for the growing working-age population.”

Teenage Ranks

Presiding over a country with one of the youngest
populations in the world, Aquino needs to finds jobs not just
for the current unemployed, but also for the growing ranks of
teenagers entering the workforce. The Philippine labor pool will
expand by almost 18 million, or 31 percent, to 75 million by
2020 compared with 2010, Bank of America Corp. projected in
April last year.

“We have to provide something like a million new jobs,”
Aquino said in an interview today in Manila. “We do have a
significant increase in population.”

Almost half of all jobless Filipinos are between the ages
of 15 and 24, according to the government statistics office. The
biggest area of employment remains agriculture and fishing,
which provides work for 30.4 million people, or almost a third
of the population. About 8 percent work in manufacturing.

Night Work

Call center agents are the most in demand, followed by
salespeople and service crew, according to Phil-JobNet, the
government’s official job portal. The site has 14,165 vacancies
in so-called business process outsourcing, which includes call
centers, from companies such as Dublin-based Accenture Plc (ACN) and
Sitel LLC, headquartered in Nashville, Tennessee.

Leny Aceveda Roxas, who in March lost her job providing
after-sales support for an outsourcing company, said she’s
trying to avoid BPO jobs, which typically involve working at
night. “But with tough times and the lack of opportunities
elsewhere, I’ll have to consider it.”

The Business Processing Association of the Philippines
forecast the industry will employ 1.3 million people by 2016,
from 638,000 in 2011. Most of the jobs require fluent English
speakers.

“We are trying to match the skills with the job
opportunities,” said Aquino. “To that end, the BPO sector is
one of our growing sectors.”

Banking, services, construction and administration are
among other industries struggling to find competent staff.

Shallow Pool

“The demand for workers is there but the pool of qualified
applicants is shallow,” said Joann Hizon, vice president of
human resources at SM Investments Corp. (SM), the holding company of
Philippine billionaire Henry Sy. SM plans to hire 8,800 workers
this year to boost its payroll from 71,500 as it expands its
property, shopping mall, and banking businesses, Hizon said in
an interview.

The Philippines spent the least on public education in 2009
in proportion to its economy among major Southeast Asian nations
including Thailand, Indonesia and Malaysia, according to the
latest comparable figures available from the World Bank. The
budget was 2.7 percent of gross domestic product, compared with
6 percent for Malaysia and 3.5 percent for Indonesia.

Aquino promised to boost spending more than 20 percent this
year to address a shortage of teachers, textbooks and classrooms.
The government also aims to fund more scholarships for
vocational courses like bartending, welding and health care.

Elite Graduates

For the few who can afford to go to an elite college, the
situation is very different. Joy Billones, a legal management
graduate from Ateneo de Manila University, where Aquino studied,
said responses to her job applications have been good.

“We’re just working on the salary range,” said Billones,
who has offers from five companies, including Security Bank Corp.
and SM Supermalls, part of SM Investments. “I’m lucky because
companies prioritize applicants from top schools.”

Still, investment in schools and colleges will take years
to improve skill levels and the government in the meantime needs
to attract investment in factories, farms and mines to reverse
the unemployment trend.

“The government is investing in education so that, over
the long term, workers have higher skills,” said Prakriti Sofat,
a Singapore-based regional economist for Barclays Plc. “At the
same time, we need opportunities for the currently unemployed.”
The nation has the second-highest jobless level in Asia-Pacific.

Going Abroad

With limited opportunities at home, many jobseekers go
abroad to find work. The number of overseas Filipino workers
climbed 15 percent in 2011 to almost 1.7 million, the Philippine
Overseas Employment Administration said. The funds they sent
home totaled $21.4 billion last year, about 10 percent of gross
domestic product.

The remitted funds have helped fuel economic growth that
the World Bank estimates will stay above 6 percent through 2014.
Standard Poor’s upgraded the Philippines to investment grade
for the first time last week, as Aquino battles corruption and
increases spending on roads and schools.

Still, the proportion of families living below the poverty
line in the first half of 2012 was 22.3 percent, almost the same
as the 23.4 percent in 2006, the government statistics agency
said in an April 23 report.

That’s putting pressure on Aquino to divert funds to social
services, with the government increasing its conditional cash
transfer program to 44.26 billion pesos this year to benefit a
record 3.8 million families. The program funds poor households
to keep their children in school and get regular health checks.

Callora, the youngest of seven siblings and daughter of a
farmer, is not giving up hope and refuses to go back home to
Negros, the country’s largest producer of sugar cane.

“I’m going to try my hardest to find work and to study
again,” she said. “I’m still young.” Then she added shyly:
“I really want to be a stewardess.”

To contact the reporter on this story:
Karl Lester M. Yap in Manila at
kyap5@bloomberg.net

To contact the editor responsible for this story:
Stephanie Phang at
sphang@bloomberg.net


Enlarge image
Aquino’s Philippine Growth Boom Masks Rising Unemployment

Aquino’s Philippine Growth Boom Masks Rising Unemployment

Aquino’s Philippine Growth Boom Masks Rising Unemployment

Julian Abram Wainwright/Bloomberg

A vendor waits for customers at her stall selling stuffed toys at the Divisoria market in Manila. “The demand for workers is there but the pool of qualified applicants is shallow,” said Joann Hizon, vice president of human resources at SM Investments Corp.

A vendor waits for customers at her stall selling stuffed toys at the Divisoria market in Manila. “The demand for workers is there but the pool of qualified applicants is shallow,” said Joann Hizon, vice president of human resources at SM Investments Corp. Photographer: Julian Abram Wainwright/Bloomberg


Philippines' Purisima on SP Rating, Economy

May 3 (Bloomberg) — Philippine Finance Secretary Cesar Purisima talks about the nation’s investment grade rating by Standard Poor’s, and the outlook for the domestic economy.
The Philippines beat Indonesia to win an investment grade from SP’s, as President Benigno Aquino outshines Susilo Bambang Yudhoyono in improving government finances and spurring growth. Purisima speaks with Susan Li on Bloomberg Television’s “First Up.” (Source: Bloomberg)


Enlarge image
Aquino’s Philippine Growth Boom Masks Rising Unemployment

Aquino’s Philippine Growth Boom Masks Rising Unemployment

Aquino’s Philippine Growth Boom Masks Rising Unemployment

Julian Abram Wainwright/Bloomberg

With one of the youngest populations in the world, President Benigno Aquino needs to find jobs not just for the current unemployed, but also for the growing ranks of teenagers entering the workforce in the Philippines.

With one of the youngest populations in the world, President Benigno Aquino needs to find jobs not just for the current unemployed, but also for the growing ranks of teenagers entering the workforce in the Philippines. Photographer: Julian Abram Wainwright/Bloomberg


Enlarge image
Aquino’s Philippine Growth Boom Masks Rising Unemployment

Aquino’s Philippine Growth Boom Masks Rising Unemployment

Aquino’s Philippine Growth Boom Masks Rising Unemployment

Julian Abram Wainwright/Bloomberg

Employees take phone calls as they work in an SPi Global call center in Manila. Call center agents are the most in demand, followed by salesmen and service crew, according to Phil-JobNet, the official job portal of the government.

Employees take phone calls as they work in an SPi Global call center in Manila. Call center agents are the most in demand, followed by salesmen and service crew, according to Phil-JobNet, the official job portal of the government. Photographer: Julian Abram Wainwright/Bloomberg

Article source: http://www.bloomberg.com/news/2013-05-07/philippine-unemployment-rising-undermines-aquino-s-growth.html

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