The Philippines needs to explore other alternatives that would lead to an expansion in secure jobs with decent wages among the Filipinos.
This was the key message in the seminar-forum on the PIDS Economic Monitor conducted Thursday (April 3) by the Philippine Institute for Development Studies (PIDS) at the PIDS headquarters in Makati City.
With the theme “The Jobs Challenge: Choosing between the Beaten Path and Its Alternative”, the forum discussed the macroeconomic trends in the country and in developing Asian countries, important policy updates in key economic sectors, and the proposed 12-point agenda—referred to as the Jobs Expansion and Development Initiative (JEDI) for poverty reduction.
With more emphasis on the JEDI which seeks to expand gainful jobs through the acceleration of labor intensive production, to improve investment in education and other human capital development, and to sustain total productivity gains; the forum underscored the necessity of taking a different development path, and explore other approaches to get a “better chance at reducing poverty.”
Seminar speakers Dr. Vicente Paqueo and Dr. Aniceto Orbeta, PIDS Visiting Research Fellow and PIDS Senior Research Fellow, respectively, discussed the deleterious impact of minimum wage being implemented in the country on income and poverty status of households, particularly those coming from the marginalized sectors.
The talk also tackled the current labor regulations and practices as “costly, inconvenient, with long conflict resolution processes; (this is aside from) the tripartism, inadequate representation of the poor, disadvantaged, and unorganized labor, as well as confusing regulations in labor practices”.
The seminar-forum addresses that aspiration for secure jobs with decent wages is well-recognized; however, it also challenges the concept of minimum wages and other labor regulations which are of existence in the country today. The recommendation: To leave the beaten track and try new approaches.
This is where the JEDI, with its 12-point program was discussed by Dr. Orbeta, which as he explained “would re-balance current labor laws and practice to expand gainful jobs and minimize unintended consequences that are detrimental to the poor, the young, the women, the less educated and the unorganized workers.”
Among the labor reforms included in the JEDI are:
1. Simplifying labor dispute resolution processes to cut the time, cost, inconvenience, and uncertainty involved usually spent in labor dialogues;
2. Making the rules on hiring and firing more flexible, and leaving the firms and workers to negotiate and work out agreements that are mutually beneficial;
3. Instituting measures that would minimize the imposition of labor regulations and practices detrimental to and discriminatory against the poor and the other disadvantaged population;
4. Allowing firms to hire low skilled and poor workers who want to voluntarily opt out of the mandatory minimum wage norm, though, it should be ensured that the workers’ acceptance of the offers is voluntary and well informed;
5. Adapting and experimenting with a Singaporean style scheme providing income supplement to targeted ultra poor workers to close the gap between market wage and decent wage norm;
6. Transforming the consultation process from a tripartite into a quadripartite system that would give the poor, unemployed, underemployed, and self-employed direct representation in the determination of labor regulations and policies;
7. Encouraging labor unions to focus on raising the competencies and productivity of workers as a means to achieving decent wages;
8. Lengthening from six months to two years the compulsory regularization of young workers to expand their learning experience and build their skills on the job;
9. Ensuring quality implementation of the K-12 reform; undertaking institutional reform of TESDA; and pursuing ongoing CHED initiatives aimed at improving access to quality higher education and the production of good research;
10. Implementing the extension of demand-side education assistance of Pantawid Pamilya to high school students and complimenting it with policies and programs that facilitate on-the-job training and employment in private enterprises;
11. Promoting research and development activities; and
12. Facilitating the emergence of well-organized coalition for stakeholders devoted to finding and promoting approaches that effectively advance the interest of the poor workers now being excluded from gainful job opportunities.
The JEDI, in a nutshell, puts premium on alternative solutions such as better education, increased labor intensive manufacturing, and greater opportunities for training on the job to reduce poverty from a labor standpoint.
Government response such as the strengthening of social protection programs which would provide a direct and temporary income subsidy was also recommended as such an approach would “be both efficient and equitable as it conforms to the general principle of public economics that a public good should be financed by general tax revenues,” according to the PIDS report.
Meanwhile, Asian Development Bank (ADB) Senior Economist Dr. Akiko Terada-Hagiwara presented the growth forecast for Developing Asia for 2014 and 2015, which is seen to have a positive trend in the said years. Projected growth rate is 6.2 per cent in 2014, and 6.4 per cent in 2015, respectively.
This increase is complemented by the increase in the growth rate of advanced economies such as the United States, Japan, and Europe, whose growth rate is projected at 1.9 per cent for 2014 and 2.2 per cent for 2015.
Dr. Hagiwara also said that inflation rate will remain under check at 3.7 per cent in 2014.
She recommends that Asia, though the individual country’s government, has yet to spend more on equity-promoting programs such as in education, healthcare, and social protection so as to lessen the inequality gap.
PIDS Senior Research Fellow Dr. Adoracion Navarro said that the Philippines will experience a lower GDP rate in 2014, though despite the risk of higher interest rates, “there is still sufficient slack in investments and wide room for productivity improvements,” she said.
GDP rate in 2014 is projected at 6.6 per cent, from 7.2 per cent in 2013.
Dr. Adoracion reported that policies and institutional reforms such as good governance and anti-corruption initiatives have “resulted in a strong macroeconomic framework that has provided stability and investor confidence, and has primed the economy for sustained growth.”
She ended by saying that “bolder efforts must be exerted in increasing infrastructure investments, expanding the industrial base, introducing a competition policy framework, reforming regulatory institutions, and addressing labor market issue”—all of which to lead the country to achieve the goal of inclusive growth.