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BY MANNY VILLAR
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Wednesday, October 4, 2017
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FOR MANY years, the Philippines has been a laggard in Asia in terms of economic growth. Today, however, the country is considered one of the best performers in the region, beating most major economies except China.
Unfortunately, the benefits of economic growth have failed to trickle down to the majority of the population, as poverty continues to persist because of lack of unemployment. Thus, despite impressive economic performance, the previous administration did not fare well in terms of creating jobs.
In March 2014, the middle of the Aquino administration’s term, the United Nations Department of Economic and Social Affairs published a report titled The Philippines: a case of jobless growth.
The report noted that unlike many other countries in the region, the Philippines avoided a recession in 2009, and since 2010, its year-on-year GDP growth has exceeded 6 percent in 12 out of 16 quarters.
Growth was driven by a robust expansion of domestic demand, particularly fixed investment, supported by both the private and the public sectors.
The UN report pointed out, however, that the fast economic growth was not accompanied by a similar increase in job generation, as unemployment and underemployment “remained stubbornly high, well above the rates seen in most other East Asian economies.”
According to the UN, average unemployment was 7.1 percent in 2013, while underemployment was 19.3 percent — about the same levels as in the last few years and only slightly below the combined rate of about 30 percent registered in the early 2000s.
This led many economists to refer to the country’s economic performance as “jobless growth.”
The previous administration may have succeeded in driving economic growth, but it lacked focus on generating employment.
What makes the Duterte administration’s economic strategy different is its focus on employment. Selection and evaluation of infrastructure and other projects now consider their impact on employment – how many jobs will the projects generate – rather than on economic growth alone.
On the part of the private sector, the housing industry plays an important role not only in generating employment but also in fulfilling social needs. Housing fulfills the basic human need for shelter and upholds the dignity of a family. It has a multiplier effect on the economy – stimulating other industries and generating a lot of jobs. Housing, as part of the construction sector, is among the major sources of growth for the country’s Gross Domestic Product (GDP).
In its website, the government places the current housing backlog at 3.9 million units. Assuming that production of housing units would average 200,000 units every year from 2012 to 2030, the backlog would still persist and hit 6.5 million households by 2030. The highest demand would come from the economic housing segment, followed by socialized housing, and lastly by low-cost housing.
Thus, the government must continue to support the private sector-led industry to encourage more investments. It must maintain or even improve the incentives given to developers, including VAT (value added tax) exemptions, and the ceiling on socialized housing.
As a very labor-intensive industry, housing is the key not only to providing jobs and livelihood to many families but in reducing poverty, which has afflicted generations of Filipinos.
This piece first came out in Business Mirror on Sept. 25, 2017 under the column “The Entrepreneur.” For comments/feedback e-mail to: mbv.secretariat@gmail.com or visitwww.mannyvillar.com.ph./PN)
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