Curbing unemployment through investments in job-creating industries

The recent release of data from the Philippine Statistics Authority (PSA) underscores the urgent need to address the country’s unemployment rate. According to PSA reports, in June 2023, the number of unemployed Filipinos increased by 159,000 on a month-on-month basis, bringing the total to 2.3 million. Unemployment rate inched up to 4.5 percent, slightly higher than 4.3 percent registered in May.

Based on its latest employment data, the National Economic and Development Authority (NEDA) said that the government continues to push labor upskilling, putting emphasis on equipping the youth with the necessary skills needed for the workforce.

NEDA’s approach is enhanced through the adoption of a multi-dimensional and holistic strategy, aimed at fostering an enduring and impactful transformation.

Increased infusion of private corporate investments is a key approach that can generate high-quality and remunerative employment. Government and businesses should prioritize investing in job-creating industries. PSA reports that the services sector led in terms of number of employed persons with a share of 58.2 percent, agriculture sector with 23.8 percent, and industry with 18 percent.

Additional areas ripe for private sector involvement include infrastructure development, which includes advancements in digital connectivity, and the expansion of renewable energy initiatives.

According to the World Bank, directing investments towards infrastructure serve as vital inputs in the production of goods and services. As a result, we can anticipate a decrease in the cost of delivered goods due to enhanced mobility, alleviating productivity constraints, and fostering increased competitiveness. Simultaneously, this can serve as an attractive prospect for domestic and foreign investments, initiating a positive feedback loop of job creation.

NEDA has recently entered into agreements for 194 new infrastructure projects that are poised to generate a significant number of “high-quality and resilient jobs”, according to Economic Planning Secretary Arsenio Balisacan. The new projects have gained priority status in the government’s annual budget allocation process. Notably, 45 of the new ventures are set to be financed through public-private partnerships (PPPs), underscoring the government’s commitment to fostering collaboration with the private sector.

To further complement this, businesses investing in high-employment areas can be provided with financial incentives to encourage development or expansion in a local area and boost growth. These can be in the form of tax breaks, grants, and regulatory assistance. The Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law, which slashes the country’s Corporate Income Tax (CIT) from 30 percent to 25 percent is a welcome development. This provides enterprises with more resources to reinvest and expand operations and thus create more jobs.

Enhancing the ease of conducting business is of paramount importance for both domestic and international investors. The positive outcome of the Ease of Doing Business Act (RA 11032) is evident through streamlined administrative procedures and reduced regulatory complexities, fostering an environment conducive to business, nurturing economic expansion and employment opportunities. Additionally, sustaining a culture of entrepreneurship, innovation, and creativity can pave the way for emerging industries with new job prospects.

Renewable energy offers yet another promising pathway for job generation. During a recent briefing, Labor Secretary Bienvenido Laguesma revealed that the Marcos administration’s drive to attract foreign investments in the country’s green sector has already secured commitments for projects that are projected to create approximately 75,000 fresh employment opportunities.

Both governmental and private entities are actively embracing the country’s digital transformation, a move that is poised to spark substantial job growth. The Department of Information and Communications Technology (DICT) has unveiled its strategy to enhance connectivity in rural regions, catering to the escalating demand for ICT positions beyond Metro Manila. According to DICT Undersecretary Jocelle Batapa-Sigue, the proportion of digital jobs in provinces is projected to surpass half a million by 2028.

Private corporations are also driving digital skills and capabilities through initiatives like the GoDigital Pilipinas (GDP) Movement, led by the Private Sector Advisory Council (PSAC). GDP complements public sector efforts for a comprehensive digital transformation.

Manuel V. Pangilinan, chairman of the MVP Group, expressed commitment to the advocacy through digitalization of his group of companies.

Pangilinan-led Meralco has already embarked on a digital transformation journey with its Customer Centricity Transformation Program and digital projects to improve the company’s customer touchpoints and operations. Meralco Data Platform, which enables the creation of management and operation dashboards and insights crucial for business decision-making, was also recently launched.

The PLDT Group has also been boosting government initiatives to make government services more accessible through apps such as the eGovPH Super App – a platform for local and national services, LGU services, healthcare assistance and e-payments. PLDT is also supporting the creation of a Connectivity Index Rating, streamlining permitting process for telco facilities and ensuring customers’ compliance with the SIM Registration Law. PLDT, thru its subsidiary e-PLDT, is constructing the largest hyperscale data center to-date and is expected to facilitate the creation of more local jobs.

Amidst these dynamic initiatives, the indispensable role of micro, small, and medium-sized enterprises (MSMEs) emerges as a cornerstone for growth and development. Constituting 99.51 percent of business establishments in the Philippines and providing employment for about 63 percent of the country’s workforce, MSMEs hold unparalleled potential. By nurturing their expansion through targeted tax incentives and streamlined regulations, we can inspire entrepreneurial spirit and foster meaningful job opportunities, particularly within local communities. At a summit last year, President Marcos expressed support for the MSME Development Council’s formulation and implementation of strategic goals to improve five key business areas – business climate; access to finance; management and labor; access to technology and innovation; and market access.

In conclusion, the collaborative efforts of government and the private sector, coupled with strategic investments and a focus on emerging industries, are critical to alleviating unemployment in the country.