Research Paper of DR Fernando Aldaba (As of 21 May)

First Draft Not for Quotation
A Framework for Promoting Decent Work by Integrating Employment in Industrial Policies in the Philippines
Fernando T. Aldaba
Institute for Labour Studies
May 2012
Integrating Employment in Industrial Policies
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A Framework for Promoting Decent Work by Integrating Employment in Industrial Policies in the Philippines
Section List of Abbreviations I II
Contents
Page 4 5 5 5 5 8 9 9 11 12 15 22 26 35 36
1. 2. III 1. 2. 3. IV V VI VIII
Introduction Philippine Industrial Structure and Employment Growth Overview of the Macroeconomic Landscape of the Philippine Labour Market The Macroeconomy Sectoral Contribution to Employment Key Employment and Labour Market Constraints High Unemployment and Underemployment Rates despite Growth Demand for Labour Constraints Supply of Labour and Human Capital Constraints Brief Review of Industrial Policy and Sectoral Strategies and their Employment Effects in the Philippines Reforms to Address the Perennial Employment Problem A Framework and Diagnostic Tools for the Analysis of the Employment Effects of Industrial Policies Summary and Conclusions References
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LIST OF ABBREVIATIONS
ASEAN ADB BLES BOI BWSC CHED CSO DBM DBP DepEd DILG DOLE DTI ECOP FDI FIES GDCF GDP GNP GSIS HEI HDI ILO ILS LFS LGC LGU NCR NEDA NPC NSCB NSO OFW OTOP PDP PEDP PESO PEZA PIDS PLEP POEA PhilHealth PRC SMEDC SSS TESDA Association of Southeast Asian Nations Asian Development Bank Bureau of Labour and Employment Statistics Board of Investments Bureau of Workers with Special Concerns Commission on Higher Education civil society organization Department of Budget and Management Development Bank of the Philippines Department of Education Department of Interior and Local Government Department of Labour and Employment Department of Trade and Industry Employers Confederation of the Philippines Foreign Direct Investments Family Income and Expenditure Survey Gross Domestic Capital Formation gross domestic product gross national product Government Service Insurance System Higher Education Institutions Human Development Index International Labour Organization Institute of Labour Studies Labour Force Survey local government code local government unit National Capital Region (i.e., Metro Manila) National Economic and Development Authority National Power Corporation National Statistical Coordination Board National Statistics Office Overseas Filipino Worker One Town One Product Philippine Development Plan Philippine Export Development Plan Public Employment Service Office Philippine Economic Zone Authority Philippine Institute for Development Studies Philippine Labour and Employment Plan Philippine Overseas Employment Administration Philippine Health Insurance Corporation Professional Regulatory Commission Small and Medium Enterprises Development Council Social Security System Technical Educational and Skills Development Authority
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I. Introduction1 Industrial policy has recently become one of the recommended policy responses for the Philippines after its economy reliant mostly on remittances and a small range of product exports has become vulnerable to the ongoing global crisis (Usui, 2012; Aldaba, 2009). Structural transformation in terms of industrial upgrading and the expansion and diversification of the manufacturing sector are again being emphasized as key ingredients toward a more inclusive and sustained growth of the economy. Manufacturing and industry have been the traditional sources of good quality jobs for the labour force as experienced by most of the developed countries today. Recognizing the need for employment-rich growth in the Asia and the Pacific Region, the International Labour Organization (ILO), with support from the Republic of Korea, has launched the project Promoting decent work through integrating employment in industrial policies and sectoral strategies in Southeast Asia. The main objective is to contribute to poverty reduction and creation of income earning opportunities in Indonesia and the Philippines through national policies that lead to job-rich economic growth by supporting efforts for the better integration of employment in industrial and sectoral policies. Productive employment is by far the most important link between growth and poverty reduction (Nubler, 2011). This thrust towards employment creation through industrial policy is very much aligned with the newly adopted Philippine Development Plan (PDP) 2011-2016. The Plan is anchored on the principle of inclusive growth, which means growth that delivers benefits for all, or growth that massively creates employment, draws many into the economic and social mainstream and substantially reduces poverty. Given high potential for growth or substantial employment generating capacity, 10 sectors or industries are identified in the PDP as priorities for government support and enabling measures. Under the PDP, the Department of Trade and Industry (DTI) has also committed to formulate a comprehensive national industrial strategy that spells out opportunities, coordinates and promotes the growth of forward and backward linkages in priority areas and high-potential growth sectors as well as prepares other industries to attract investments and generate jobs. The main results of this research project aim to help DTI and other stakeholders toward the development or enhancement of strategies and programs that will produce and sustain employment outcomes for the priority sectors. This framework paper hopes to: - provide a brief review of literature on industrial policies and sectoral strategies and their employment effects in the Philippines - define a framework that highlights key features of industrial policy or sectoral strategies that will help grow employment or improve employment quality in the Philippines - assist in the development of knowledge tools and applying such tools in mainstreaming employment creation and decent work objectives in industrial strategies/policy
Mostly derived from the terms of reference of the project
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This paper is organized as follows section II provides an overview of the countrys macroeconomy, industrial structure and employment growth. Section III discusses the key labour market constraints that have resulted into high unemployment and underemployment rates. Section IV explains the various industrial policies adopted by the government in the last sixty years and the employment outcomes. Section V discusses the key reforms needed to address the employment problem of the country. Section VI elucidates a framework incorporating employment effects of industrial and policies and some possible tools in analyzing such effects. Finally, Section VII gives the summary and conclusions. II. Philippine Industrial Structure and Employment Growth Overview of the Macroeconomic Landscape of the Philippine Labour Market 1. The Macroeconomy The Philippine economys growth has been characterized by boom and bust situation from the 1950s to the 2000s (see Figure 1 below). Recent bust episodes (1983-86, 1990-91, 1998-99, 2000-01, 2008-2009) were typically identified with political uncertainties or economic recession resulting from global or regional crises. In 2011, the Philippine economy grew by about 3.7% down from a high of 7.3% the previous year. This year, the government sees a 5-6% expansion of the economy. Figure 1: Gross Domestic Product, 1947-2010
Source: National Accounts of the Philippines, National Statistical Coordination Board as cited in R. Aldaba (2012)
In terms of sectoral growth, there have been significant shifts in performance. While the industry sector was the best performer from the 1950s to the 1970s, the services sector has become the leading sector in the following decades. From the 1980s to the present, the services sector has increasingly served as the source of domestic economic growth. It grew continuously from 3.6% in the 1990s to 5.7% in the 2000s with most of its sub-sectors expanding consistently. Agriculture, industry and manufacturing in particular, suffered lethargic growth from the 1980s to the 1990 with moderate expansion seen in more recent years. From 1980-1990, industrial growth was virtually nil. In the following decade, the sector registered a moderate annual average growth rate of 3 percent Integrating Employment in Industrial Policies Page 5
and from 2001-2009, 4.2%. Manufacturing had an average annual growth rate of 0.9 percent in the 1980s, 2.5 percent in the 1990s, and 3.5 percent in the more recent period. Table 1: Average Growth Rates by Sector (in %, at constant 1985 prices) Year Gross Domestic Product 1. Agriculture, Fishery, Forestry Agriculture industry Forestry 2. Industry Sector Mining & Quarrying Manufacturing Construction Electricity, Gas and Water 3. Service Sector Transport, Communication & Storage Trade Finance* Dwellings & Real Estate Private Services Government Services 7.2 6.4* 7.1 8.7 9.4 -0.6 4.3 6.7 7.6 1951-60 1961-70 1971-80 1981-90 1991-00 2001-10 6.2 4.8 4.8 4.8 4.2 1.0 2.6 5.5 7.1 5.7 4.2 5.4 4.7 5.6 4.9 -16.5 1.4 -1.8 7.6 5.7 3.9 5.7 -3.6 7.6 6.1 5.9 14.1 11.6 5.2 7.2 5.7 8.7 1.6 5.0 4.3 1.7 1.1 2.0 -9.1 0.3 1.9 0.9 -3.1 4.1 3.3 3.4 3.0 2.2 2.4 5.0 3.6 3.0 1.8 2.2 -16.7 3.0 -0.2 2.5 4.3 5.6 3.6 5.1 3.5 4.4 1.9 3.6 2.9 4.7 3.0 3.0 -1.0 4.2 13.5 4.1 2.8 4.1 5.8 6.6 5.7 7.3 4.0 7.2 2.7
Source of basic data: National Accounts of the Philippines, National Statistical Coordination Board * figure refers to combined finance and trade sectors
Within the services sector, the transportation, communication, and storage as well as finance and private services sub-sectors have seen sustained growth rates since the 1980s. In the present period, finance recorded the highest average growth rate of 7.5 percent. Transportation, communication, and storage followed with an average growth of 7.3 percent (see Table 1 above)
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Table 2 below shows a declining trend in the value added share of the agriculture sector as its share dropped from 33 percent in the 1950s to 26 percent in the 1970s. In the last two decades, its average share fell slightly from 20.8 percent to 19 percent in the 2000s. While the average share of manufacturing value added was rising from 22% in the 1950s to 28% in the 1970s, this declined to 26% in the 1980s, to around 24 percent in the 1990s and 2000s. Table 2: Value Added Structure by Major Economic Sector Year 1951-60 1961-70 1971-80 1981-90 1991-00 2001-10
Agriculture, Fishery,Forestry 32.5 29.7 25.6 23.9 20.8 18.9 Agriculture industry 32.5 26.5 20.7 22.1 20.5 18.8 Forestry 8.2 4.9 1.8 0.3 0.1 Industry Sector 30.6 32.6 38.3 38.0 34.1 33.1 Mining & Quarrying 1.2 1.1 1.4 1.7 1.3 1.7 Manufacturing 22.3 25.6 28.2 26.3 24.3 23.7 Construction 6.1 5.0 7.1 7.3 5.5 4.5 Electricity, Gas and Water 1.1 1.0 1.7 2.7 3.0 3.2 Service Sector 38.3 38.4 36.6 40.4 42.4 48.0 Transportation, Communication 3.7 4.0 4.7 5.5 6.0 8.4 Trade 13.0 12.8 14.4 15.0 16.8 & Storage Finance* 24.6* 15.8 3.4 3.6 4.4 5.4 Private Services 9.9 8.3 5.1 6.6 6.8 8.3 Government Services 4.6 4.5 4.8 5.0 4.4 Source of basic data: National Accounts of the Philippines, National Statistical Coordination Board *: figure refers to combined finance and trade sectors It is clear from Table 2 that the Philippine economys output structure is characterized by a burgeoning services sector. The services sectors contribution continued to increase from an average of 37 percent during the 1970s to 40.4 percent in the 1980s, 42.4 percent in the 1990s and to almost 48 percent in the current period. Trade comprised the bulk of the services sector followed by transportation, communication, and storage and private services sub-sectors. Since the 1980s, all services sub-sectors except for government services expanded their shares. 2. Sectoral Contribution to Employment In terms of employment contribution, the services sector has also become the largest provider of employment in the most recent period (Table 3). The share of the labor force employed in the sector consistently increased, from around 32 percent in the mid-1970s to about 48 percent in 2001-2010. The share of industry to total employment has been almost stagnant at 15% from the mid 1970s to the most recent period. Specifically, the manufacturing sector has failed in creating enough employment to absorb new entrants to the labor force as well as those who move out of the agricultural sector. Its share dropped from 11 percent in the mid-1970s to 8.42 percent in 2010. While the contribution of agriculture has been decreasing, the sector has continued to be an important source of jobs. From 52.8 percent in the mid-1970s, the agriculture sectors share in total employment continuously declined in the succeeding decades and is currently around 33 percent. In
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recent years, there have been inadequate income opportunities in the rural areas where most of the poor are located. Table 3: Structure of Employment (in percent) Major Sector 1975-78 1980-89 1990-99 2000-09 Agriculture, Fishery and Forestry
Industry Mining and Quarrying Manufacturing Electricity, Gas and Water Construction Services Wholesale and Retail Trade Transportation, Storage & Communication Financing, Insurance, Real Estate & Business Services Community, Social & Personal Services Industry not Elsewhere Classified
2010 33.18
14.98 0.55 8.42 0.42 5.60 51.84 19.52 7.56
52.83
15.23 0.46 11.29 0.35 3.13 31.87 10.32 4.08
49.60
14.49 0.66 9.93 0.36 3.54 35.90 12.55 4.45
43.16
15.98 0.59 10.01 0.44 4.94 40.94 14.54 5.80
36.58
15.20 0.39 9.24 0.39 5.19 48.21 18.40 7.47
4.55 14.05 0.49
1.79 17.11 0.02
2.18 18.42 0.05
3.34 19.00 0.00
4.29 20.47 0.01
Sources: Yearbook of Labor Statistics (1980-2000) and Current Labor Statistics (2001-2002), Bureau of Labor and Employment Statistics, Department of Labor and Employment and Employed Persons by Major Industry Group, National Statistics Office Labor Force Survey (1970, 1975-1976, 1977-1978, 2003-2009).
In contrast, the services sector mostly urban based and employing most of the informal workers absorbed much of the labour force during the last twenty years. The services sector already employs about 52% of the labour force. The structural adjustments in the economy have led to unemployment pressures, particularly from those coming from the agricultural sector. The actual number of jobs created per year is about 650,000 or a growth of only 2.7%, relatively slower than that of economic growth. The share of industrial and manufacturing employment, where relatively stable and higher quality jobs are usually found has markedly declined over the years and such has been the main factor affecting the high unemployment and underemployment rates. III. Key Employment and Labour Market Constraints 1. High Unemployment and Underemployment Rates despite Growth Despite the recent economic growth of the Philippines in the last ten years, it still is confronted with relatively high unemployment and underemployment rates. In 2011, the
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unemployment rate was estimated to be around 7.0%. The rates were typically double-digit figures from 2000-2005 but went down to single digits when the definition was revised.2 Prior to 2005, the unemployment rate was about 11.3% in the early 2000. The rate was lowest during 1971-80 at 4.86% (see Table 4) Table 4: Labour Market Indicators
Year 1956-60 1961-70 1971-80 1981-90 1991-00 2001-04 2005-10 2011 2012 Unemployment Rate 8.01 7.26 4.86 7.43 9.75 11.43 7.57 7.20 7.40 Underemployment Rate --21.00 25.74 21.39 17.20 20.14 18.80 19.40
Sources: Yearbook of Labor Statistics. BLES-DOLE as cited in R. Aldaba (2012). The rates for 2011 & 2012 are from Labor Force Survey of NSO. Notes: Starting April 2005, unemployed persons include all persons 15 years old & over & are reported as (1) without work & currently available for work & seeking work & (2) without work & currently available for work but not seeking for work due to the following reasons: tired/believed no work available; awaiting results of previous job application; bad weather; & waiting for rehire/job recall.
Definition of unemployment was revised to adopt the International Standards as found in the Explanatory Notes of the LFS. www.bles.dole.gov.ph
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Source: Yearbook of Labor Statistics. BLES-DOLE as cited in R. Aldaba (2012). The rates for 2011 & 2012 are from Labor Force Survey of NSO. Note: Starting April 2005, NSO changed the definition of unemployment (see above).
Parallel to unemployment is the challenge of a growing number of the underemployed. The 2011 underemployment rate was 18.8% or around 7 million. Underemployment is a measure of the quality of jobs that are available in the economy. More than half (about 4 million) are visibly underemployed.3 But what are the reasons why unemployment and underemployment rates have remained high over the past years? The following discusses the labour market constraints affecting these rates. 2. Demand for Labour Constraints
The demand for labour is a derived demand i.e. it results from an increased demand for goods and services. Thus, any factor constraining the growth potential of the country is also a hurdle for employment generation. The ADB (2007) study on Philippine Critical Development Constraints points to the following key bottlenecks to economic growth in the country4: continuing tight fiscal situation which restricts government spending to improve human and physical capital and investments in technology upgrading (R&D) inadequate infrastructure, particularly in electricity and transport which increases the costs of doing business and adds to supply chain problems weak investor confidence due to governance concerns, in particular, corruption and political instability and includes the speed in business registration, rule of law, enforcement of contracts and property rights, corruption, etc. inability to address market failures leading to a small and narrow industrial base e.g. antiquated labour laws (including high cost of hiring and firing and litigation costs) Weak Investments The countrys performance in attracting both domestic and foreign investment has been relatively weak. The countrys gross domestic capital formation (GDCF), the best indicator of business expansion, as a percentage of gross domestic product (GDP) has been on the decline since 2001, rising only very recently. While in double digits, the Philippines GDCF is still well below that of its ASEAN and East Asian peers. In terms of Foreign Domestic Investments (FDI), the performance of the Philippines vis--vis our ASEAN neighbours like Singapore, Malaysia, Thailand, Indonesia and even Vietnam, has also been poor. Because of this lack of investments, manufacturing and industry suffered lackluster growth for many years. Poor quality of key infrastructure services, a fragile and underdeveloped financial system are key factors affecting investments. Firms also identified corruption and macroeconomic instability as the two biggest impediments to a good investment climate in the Philippines. Electricity supply, security and regulatory uncertainty also figured prominently.
3
4
Visible underemployment are those working below 40 hours a week but are willing and looking for additional work . These remain true up to current time
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SMEs Lack of Access to Credit and other Types of Support SMEs contributes around a third of the employed workers in the country (www.dti.gov.ph). However, the lack of access to financing has severely constrained the growth of SMEs as private banks are reluctant to lend to SMEs because of their general aversion to dealing with a large number of small accounts. Many SMEs cannot access available funds due to their limited track record, limited acceptable collateral, and inadequate financial statements and business plans. With their limited management and financial capabilities, many MSMEs have remained domestic oriented rather than take the risks of focusing on export markets. Linkages of SMEs with large firms especially multinational enterprises still need to be strengthened by fixing coordination problems and bottlenecks. Another key concern is the low productivity of MSMEs due to lack of access to new technology, weak technological capabilities, and failure to engage in innovation and research and development activities (MSME Development Council, 2011). 3. Supply of Labour and Human Capital Constraints5 Challenges in providing quality education The challenges for government stem from the following: (i) the inadequacy of budgetary support to public educational institutions providing both basic and higher levels of educational training relative to the student population and (ii) the inability to address issues of quality via regulatory policies. The result of these gaps is the weakened capacity of the countrys labour force to respond to skill requirements of the workplace. The education sector is also characterized by increasing drop-out rates, poor student-input ratios, poor performance in national achievement tests and a more disappointing showing in international achievement tests. Table 5a: Elementary Achievement Rates (2006-11)
Grade Six Achievement Rate (MPS) Mathematics Science English Hekasi Filipino
Source: www.deped.gov.ph
2006-07 59.94% 60.29% 51.58% 60.78% 61.05% 66.02%
2007-08 64.81% 63.89% 57.90% 61.62% 67.44% 73.18%
2008-09 65.55% 67.37% 58.86% 61.81% 67.84% 71.90%
2009-10 68.01% 63.26% 63.14% 67.81% 70.88% 74.98%
2010-11 68.15% 68.43% 60.37% 65.12% 70.40% 76.45%
Table 5b: Secondary Achievement Indicators (2006-11)

2nd Year High School Achievement Rate (MPS) Mathematics Science English Filipino Araling Panlipunan 2006-07 46.64% 39.05% 41.99% 51.78% 48.89% 51.48% 2007-08 49.26% 42.85% 46.71% 53.46% 47.64% 55.63% 2008-09 46.71% 38.03% 42.11% 52.90% 51.05% 49.44% 2009-10 45.56% 39.64% 43.80% 46.95% 58.08% 39.32% 2010-11 47.93% 42.00% 39.35% 46.45% 58.93% 52.03%
This section borrows heavily from Aldaba and Ang (2012)
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Source: www.deped.gov.ph
The tables above show that in terms of quality, those who graduated from the secondary level have very weak foundations that may affect their future productivity levels, scoring less than 50% over-all. High drop-out rates Another major problem is the high drop-out rates of youth from school and the general lack of skill of the youth because of the current quality of education. Education performance indicators show that much needs to be done especially in terms of secondary education. Table 6: Secondary Education Performance Indicators
Indicators Participation Rate Cohort Survival Rate Completion Rate Drop Out Rate 2004-05 59.9% 78.15% 72.4% 7.9% 2005-06 58.5% 67.3% 61.6% 12.5% 2006-07 58.6% 77.3% 72.1% 8.5% 2007-08 60.3% 79.9% 75.4% 7.5% 2008-09 60.7% 79.7% 75.2% 7.5% 2009-10 59.86% 78.44% 73.55% 7.95% 2010-11 60.88% 79.33% 75.06% 7.79%
Source: Department of Education From the total secondary school age going population (13-16 yrs old), only around 60% are actually in school and out of those who enter secondary school only 75% will complete. This means that other external factors are pushing the youth out of school. It is important to respond to these factors since a significant number of out of school youth unable to learn basic skills that will allow them future labour mobility and improve their productivity. Worse, they may become sources of peace and order problems. Years of Schooling The basic education cycle has been pegged at ten years, comprising six years in elementary and four years in high school. This cycle falls short of the normal average of twelve years among countries in the world. This means that many of the graduates of the educational system are either too young or not mature enough to handle professional tasks. Hopefully, the very recent K-12 reform will remedy this but the challenges are daunting for the government in terms of additional school buildings and teacher capacities. Tertiary Level and Technical Education Quality standard issues become more complex at the technical and tertiary education levels. Cultural belief that a tertiary education diploma is the passport to faster social mobility has spawned numerous colleges and universities mostly privately run. There are currently 1,523 private and 537 public higher education institutions (HEIs) nationwide. Under the current set-up the government regulates tertiary education through the Commission on Higher Education (CHeD), while the technical education is supported by the Technical Education and Skills Development Authority (TESDA). About 58 or less than 3% of all HEIs are deregulated and autonomous institutions due to
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their exemplary performance. Performances are also gauged based on the professional licensure examinations. Table 6 below summarizes degrees with licensure examinations with more than 1,000 Examinees. The low quality performance of basic education is reflected on the low passing percentages of Elementary and Secondary Education teachers as can be seen in the table below. These two professions registered the lowest passing percentages among the licensure examinations administered by the Professional Regulatory Commission (PRC). These data also shows the preference courses taken by the students. Most of them take nursing, education, criminology, accounting, midwifery, marine management and engineering. Overall, the average passing percentage of these 10 courses is around 40.5% which is less but may already reflect the average secondary achievement rate of around 50%. Table 7: 2009 Top 10 Professional Licensure Examination and Percentage of Passers Field or Profession Number of Examinees % Passed Nurses 77,898 41.9 Elementary Teachers 67,129 23.1 Secondary Teachers 62,239 26.8 Criminology 21,840 34.2 Certified Public Accountants 11,191 36.8 Midwives 9,807 52.6 Marine Deck Officers 8,534 48.8 Civil Engineers 7,620 45.4 Electrical Engineers 4,103 39.7 Mechanical Engineers 3,381 56.1 AVERAGE PASSING 40.54
Source: Professional Regulations Commission (PRC) as cited by Aldaba and Ang (2012)
Meanwhile, TESDA from the time of its inception has increased its certified manpower from around 24,000 in 1995 to more than 430,000 in 2008.6 It has around 57 accredited offering postsecondary education of up to 3 years. It also offers short-term training program at their 15 regional and 45 provincial centers. The program offerings range from household work to 3D animators. However, graduates are not placed automatically in jobs here and abroad. High Population Growth Rates The continued increase in the supply of labour force which is a consequence of sustained high population growth rates over past decades is a major constraint. The youth population, aged 15-24 which forms bulk of the labour force grew at an average of 2.2% in the last decade which is much higher than the total population growth of 2.0%. This translates to an average of 350,000400,000 potential new entrants to the labour force yearly. The momentum of growth of this agegroup provides a big challenge in ensuring that majority if not all will have the opportunity of
6
www.tesda.gov.ph accessed August 18, 2010
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participating productively in the labour market. The perennial budget constraints coupled by increasing demands for education as the population of school age children grows has resulted in a decline in quality and increasing difficulty in access. Institutional Factors: Long Search Time and Labour Mismatches The long job search time experienced by most college graduates is another factor. Only graduates of top universities in the country have relatively short job search duration. This has been due to asymmetry in information or the relatively high search costs. There is also a general mismatch between the labour needs of firms and the available supply of youth labour, creating a disconnect between courses chosen and the courses taken by the youth and the available work in the labour market. IV. Brief Review of Industrial Policy and Sectoral Strategies and their Employment Effects in the Philippines The following section provides an overview of the industrial and sectoral policies adopted by the Philippine government over the last sixty years. The employment effects of such policies are also briefly discussed when possible as literature on such in the Philippines are relatively scant. Industrial policies may be categorized into two broad types horizontal or vertical. Horizontal industrial policy support concerns a wide range of firms and sectors. It encompasses the broad framework conditions under which the entire enterprise sector operates, including macroeconomic stability, rule of law, protection of property rights, absence of administrative barriers and red tape, good public sector governance, and so on. More narrowly, horizontal industrial policy refers to measures targeting economic activities that are common to many sectors and firms and that are plagued by market failures, notably the presence of spill-over effects in the production process. The most common example of horizontal industrial policy targeting a specific economic activity is innovation support. In contrast to the non-selective horizontal industrial policy, vertical industrial policy targets support to a specific sector or an individual firm. The economic justification for such selectivity spatial externalities and rent shifting by means of strategic trade policy from foreign competitors with market power to a domestic producer and by means of a domestic merger to a domestic producer. In the Philippines, the government utilized the two types of industrial policies from 1946 to the present although horizontal policies dominated the economic environment most of the time. This has been the result of the failed vertical policies during the Marcos administration that was characterized by cronyism and rent seeking. Overview of Industrial and Sectoral Policies Industrial Policies from 1946-607 After the second world war, the government pursued policies that curtailed imports to stem the haemorrhaging of foreign exchange such as import quotas, import licensing according to essentiality and foreign exchange controls. Eventually, these policies evolved into a major tool for
7
Derived mostly from Tecson (1988)
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encouraging investments in the manufacturing sector for import-substituting industries and until the first half of the 1950s, manufacturing was the leading growth sector of the economy with annual growth rates of 13.5%. But because of the import dependent nature of these import substituting industries and the sluggish performance of export, the trade balance deteriorated in the years 195657 leading to an overvaluation of the peso. The tariff policy embodied in the Tariff Code of 1957 also reinforced the import substituting effect of the foreign exchange control policy for domestic industries. In this period, the trade and industrial incentive policies of government had been inward looking with a bias for the domestic market as against export market sales. Industrial Policies from 1961-70 Foreign exchange liberalization commenced in April 1960 with the introduction of multiple exchange rates as the first phase. The second phase implemented in November of the same year when changes were made in the proportion of foreign exchange that can be obtained at the various rates. In terms of export proceeds, only 50% can be exchanged at the free market rate which was around P3.45 to a dollar. A year later, further relaxation of requirements were made but it was only on January 21, 1962 when full decontrol was actualized. It abolished decontrol order licenses but required letters of credit on imports coupled with special time deposits, the amount of which was contigent on the essentiality of the import. The peso was floated in the free market and stabilized to P3.95 to a dollar. Full devaluation and unification of the exchange rate was achieved in November 1965. But to ease the effects of the devaluation on domestic industries, tariffs were raised and fiscal incentives like tax exemptions and duty free importation of machinery, equipment and spare parts. Despite these interventions, manufacturing growth continued to decline while exports growth rates increased from 6 to 7.9% between 1956-61 and 1962-66 with manufactured exports expanding at even higher rates. It was on June 21, 1969 when RA 5490 was passed which provided for the conversion of Mariveles, Bataan into a port of entry establishing the first free port zone in the Philippines. The Foreign Trade Zone Authority was also set up to plan, develop and manage the zone. On 20 November 1972, Presidential decree 66 amended RA 5490 to establish the Export Processing Zone Authority mandated to manage and operate all export processing zones in the country. Pante and Medalla (1990) concluded that in general, these EPZs have not been effective in attaining the goal of regional dispersion of industries. There was substantial unused capacity in these zones that indicated failure of the fiscal incentives offered to lure investors away from MetroManila and its periphery. Tidalgo and Esguerra (1974) highlights that these policies contributed to the bias against backward integration and production for export which continued to stunt the growth of industries, concentrated industries in metropolitan areas especially Greater Manila, and neglected small and medium industries. Thus, the failure of the industrial sector to create more jobs was due not only to the inability of output to expand but also to the nature of the industrialization process itself. Industrial Policies from 1971-1980
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Another devaluation amidst an exchange rate float in February, 1970 signalled a definite shift to export promotion. The Exports Incentive Act (RA 6135) granting fiscal incentives to exportoriented establishments was promulgated in 1970 boosting further export growth. But despite these policy changes in terms of the exchange rate and fiscal incentives, the tariff policy still remained inward-looking. After sugar, consumption goods were the most protected, capital goods like machinery the least while exports were being penalized as shown by a negative effective protection rate in 1965. Tariff reforms were introduced in January, 1975 but the structure of protection remained the same. In September 1979 Marcos also announced a 6 billion dollar package (Broad, 1988) proposal and plan for 11 major industrial projects, with the intention of shifting the focus of the nation's industrial economy from consumer goods to basic heavy industry. Included in the plan were steel, petro-chemical, pulp and paper, a copper smelter, aluminum, phosphate fertilizer, diesel engines, gas and oil, a coconut industry, and the nuclear power program. But by 1981, the government seemed to abandon many of the eleven projects as these were heavily criticized even by the World Bank(Broad, 1988). Studies on Employment Effects of Industrial Policies The literature on Philippine employment in the 1970s exhibited a strong bias towards an examination of the determinants of employment as well as the impediments to greater employment generation. However, it has viewed the unemployment situation during those times as merely the result of imperfections in the structure of relative prices arising from the implementation of incorrect policies. As a result, the solution to the problem of unemployment has been reduced to mere job creation, regardless of the terms at which the resulting employment might be obtained. It has not emphasized the role of income levels and income distribution (Tidalgo and Esguerra, 1974). The Over-all Picture 1946-80 and Employment Impacts Over these years, it was clear that exchange rate reforms and the promotion of fiscal incentives were geared towards export orientation but these were not enough to completely eradicate the bias against exports. In addition, the over-all industrial strategy was not able to generate enough jobs towards full employment. There was also evidence that capital intensive technological choices were favoured as large firms grew faster than small and medium ones. After three decades of industrial growth, income disparities even widened. The employment impact of industrialization thrusts initiated during this post-war period created a dominant pattern of fiscal and monetary policies which have conflicting objectives in terms of achieving economic growth and full employment. While these increased investments and output in general, the inherent capital bias resulted in a low rate of labour absorption. Manufacturing also failed in increasing output and generating employment because it has limited its focus on the domestic market. In the 70s when an outward oriented strategy was initiated, the pattern of fiscal incentives remained bias for high cost industries where the country has no comparative advantage and the global environment remained protectionist (Reyes, Sanchez and Milan, 1988)
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Industrial Policies from the 80s to the Present Industrial Policies 1981-908 The structural adjustment program that was instituted in the 80s aimed at pursuing a more efficient and internationally competitive economy and towards this end, the main instruments that were utilized were the Tariff Reform Program and import liberalization. Since 1981, four Tariff Reform Programs had been implemented, with each one staged on a five-year period (except TRPIV) to cushion the impact of the changes in the tariff structure. These Tariff Reform Programs were rationalized by the objectives of liberalizing the trade environment, improving access to essential inputs, making available more choices of goods for the consumers, enhancing competitiveness of local industries in the domestic and export markets, and simplifying the tariff structure for ease of customs administration, among others. The current Philippine investment incentives program is primarily drawn from EO 226 or the Omnibus Investments Code of 1987. A variety of incentives was made available to registered investors and detailed the procedures on how to avail of these incentives. Such incentives are applicable to both Filipino owned and foreign owned investments. This law also specified the role of the BOI, which has been mandated to be responsible for the regulation and promotion of investments in the country while being organizationally attached to the DTI. Industrial Policy 1991-20009 R.A. 6977 of 1991: Magna Carta for Small Enterprises (amended by Republic Act 8289 in 1997), a very important piece of legislation provided the general legal framework through which informal businesses may be able to improve their access to formal resources. The provisions contained in the Magna Carta for Small Enterprises follows four guiding principles: 1) minimize the sets of rules and simplify the procedures and requirements for MSMEs, 2) harness private sector participation in implementing MSME policies and programs, 3) coordinate government efforts at MSME development, and 4) decentralize MSME development efforts by establishing regional and provincial offices and working with local government units and other local partners. A very important provision of the Magna Carta was the establishment of the Small and Medium Enterprise Development Council (SMEDC). A three-pronged policy of privatization, liberalization and deregulation was implemented proactively in the 90s especially during the Ramos regime. Foreign investment liberalization was pursued through the Foreign Investments Act of 1991 or Republic Act 7042. The law permitted foreign equity participation of up to 100 percent in all areas, whether catering to the domestic or export markets, except those that are included in the Foreign Investment Negative List (FINL). In
8 9
From Medalla (1998) Borrows from PIDS (
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1996 however, the FINL was timed down to allow for greater foreign participation in previously prohibited sectors. In 1994, Republic Act 7721 or the Foreign Bank Liberalization Act authorized the entry of 10 foreign banks in the country subject to three different modes of entry. In 1995, three major policies were introduced to liberalize three sectors of the economy: telecommunications, water and air transport. Called the Public Telecommunications Policy Act of the Philippines, Republic Act 7925 was promulgated in March 1995 highlighting that telecommunications services shall be provided by private enterprises within a competitive environment. This legislation effectively broke the monopoly of the Philippine Long Distance Telephone Company and resulted to the entry of other players in the market. In June 1995, Republic Act 8041 otherwise known as the National Water Crisis Act of 1995 was passed leading to the privatization of state-run water facilities. Executive Order 219 establishing the domestic and international civil aviation liberalization policy was released by President Ramos in January 1995. This was consistent with the government strategy of breaking monopolies and expanding investment and trade. While there have been improvements in domestic air transport with the entry of more airlines, there has not been much development in international air transport though more recently, a limited open skies policy was adopted by the Pnoy administration . Exports as a national strategy for sustainable agri-industrial development received a boost with the enactment of Republic Act (RA) 7844 otherwise known as Export Development Act of 1994. In its policy declaration, the law designates the private sector as lead in the promoting exports and as partner of the government in the concerted effort to increase the countrys share in the export market. The law also mandated the Department of Trade and Industry (DTI) to prepare a three-year Philippine Export Development Plan (PEDP), the implementation of which shall be overseen by the Export Development Council. In 1995, the Special Economic Zone Act was passed under RA 7916, which higlighted the objective of accelerating a sound and balanced industrial, economic and social development of the country through the establishment of special economic zones in strategic locations. This law promoted shifted privately initiated and led industrial zones. Moreover, under this legislation, firms are no longer required to be either wholly export-oriented or engaged only in industries being promoted. All firms can then decide to locate in these industrial parks regardless of market orientation, while separate EPZs will continue to be committed to export production. Governance of the special ecozones was given the Philippine Economic Zone Authority (PEZA), replacing the EPZA. The Special Economic Zone Act basically called for greater private sector participation in zone development and management via incentive offerings to private zone developers and operators. Fast forward to the present time, Director General De Lima reported that PEZA was able to generate a total of P288.34 billion in investments for the whole of 2011 or 41 percent higher than the P204.395 billion investments haul in 2010. Employment generation was also up 15 percent to 837,136 total jobs in the various ecozones registered with PEZA as against 728,318 direct jobs generated in 2010. De Lima even noted that jobs generated in PEZA ecozones have six times multiplier effect in terms of indirect jobs creation and eight times for the electronics sector. Integrating Employment in Industrial Policies Page 18
Priority Sectors10 Patalinghug (2000) observes that there were implicit or ad-hoc industrial plans that can be seen from hodge-podge programs of various government agencies attempting to address the issue of growth and competitiveness of Philippine-based industries during this time. An example of an attempt at industry classification was found in the Medium-Term Philippine Development Plan: 19931998) which identified three groups of priority industries: (a) industries with strong competitive potential, (b) basic industries, and (c) industries critical to agri-industrial development. Another classification was done by the Department of Trade and Industry (DTI) which identifiesd 14 export winners in its Medium-Term National Export Development Program: 1993- 1998. DTI also added 16 emerging exports to its original lists of 14 export winners. Another industry priority list was found in the Science and Technology Master Plan (STMP) of the Department of Science and Technology (DOST) which enumerated 15 priority sectors. DOSTs Science and Technology Agenda for National Development (STAND clustered priority industries into four categories: export winners, basic domestic needs, support industries and coconut industry. In addition, the Development Bank of the Philippines (DBP) identified priority subsectors for restructuring. And the Board of Investments (BOI) 1997 Investment Priorities Plan (IPP) classified priority industries into six major groups: export-oriented industries, catalytic industries, industries undergoing industrial adjustments, support activities, mandatory inclusions, and priority investment areas for the Autonomous Region in Muslim Mindanao or ARMM. Employment Impacts of the Ramos Years The government has not done badly in the area of employment generation during the early years of Ramos, creating some 3.0 million net new jobs in the three-year period 1993-1996 or an average of about 1 million net new jobs per year. The average growth rate of employment in the four-year period 1992-1996 was 3.5 percent. This is clearly superior to the 2.7 percent average of the preceding four years of 1988-1992 (Sanchez and Jurado, 1998). Come 1997-98, the economy was battered by the East Asian Financial crisis which saw the unemployment rate shoot up to 10.3% in 1998 from 8.8 in 1997. Industrial Policies 2001- present In 2001, a key horizontal industrial reform through the passing of a vital legislation, this time impacting on the electric power sector. Republic Act 9136, also known as the Electric Power Industry Reform Act of 2001 called for key reforms in the sector particularly calling for, (1) enhancing the inflow of private capital and broadening the ownership base of the power generation, transmission and distribution sectors; (2) providing for a transparent privatization of the assets and liabilities of the National Power Corporation (NPC); and, (3) establishing a strong and purely independent regulatory body and system to ensure consumer protection and enhance the competitive operation of the electricity market.
10
This section was derived from Patalinghug (2000)
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Industrial Clusters Industrial clusters, or geographical concentration of firms and auxillary units in the same sector, can create various advantages for small firms, from agglomeration economies to joint spillover effects. The cluster model highlights internal linkages, whereby cluster benefits are produced by local firm cooperation, local institutions and local social capital. The nature of interconnectedness enables firms within the cluster to be more productive and competitive. Firms can have access to stable sources of inputs, and market and technical information (Ignacio, 2011). External linkages also matter, global buyers can help local clusters access distant markets, acquire new forms of knowledge and upgrade. Clustering is one of the key elements of the Philippine Export Development Plan since 2002. In fact, a National Cluster Management Team (NCMT) under the Export Development Council has been created to sustain this program. The Department of Trade and Industry (DTI) is implementing the three-year National Industry Cluster Capacity Enhancement Project (NICCEP), which seeks to enhance SMEs capability for job creation, investment generation, export growth, SME development, and poverty alleviation. During the series of industry cluster development planning workshops, strategic development plans for target industry clusters were drafted using the value chain framework. The following industries were chosen after a series of consultations with key industry players and experts: milkfish, dairy products, coffee, bamboo, tourism, information and communication technology (ICT), health and wellness, wearable and homestyle in Luzon; gifts, decors and housewares, tourism, ICT, health and wellness in Visayas; and banana, mango, coconut, seaweeds, wood, mining, tourism, ICT, rubber, poultry, tuna and palm oil in Mindanao. Through the NICCEP, these industry clusters capacities to plan, implement, and evaluate projects will be enhanced. This project also intends to improve the competitiveness and business environment of these industry clusters. The NICCEP is funded by Japan International Cooperation Agency (JICA) in coordination with the DTI to develop and mobilize pilot industry clusters nationwide. Twenty-four pilot projects were already identified in Luzon, Visayas and Mindanao11. The employment impact of this relatively new endeavour remains to be seen. Enhancement of the Magna Carta for MSMEs Enacted by the Philippine Congress in 1991 as RA 6977, amended by Republic Act 8289 in 1997, and further amended by RA 9501 in 2008, the law is geared towards the development of the Filipino entrepreneurial spirit by providing a business environment conducive for MSMEs. This law included the micro sector in its coverage and increased the mandatory lending from 8% to 10% (8% for micro and small and 2% for medium). Further, it limited the alternative compliance mechanisms to improve direct compliance by banks and enhance better access to loans by the MSMEs. The Bangko Sentral ng Pilipinas (BSP) reports over-compliance to the law as of September 30, 2010 - the percentage compliance for micro and small is 8.07% (out of the required 8%) and for medium enterprises 7.36% (out of the required 2%) for a total MSME compliance of 15.43%.
11
SME Clustering to Boost Economy by Bernie Cahiles-Maglikat, www.mb.com.ph, May 13, 2012
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In 2003, the Philippine government launched its National SME Development Plan for 20042010. Recently, it has drafted the new Plan for 2011-2016. To develop a vibrant MSME sector, the new Plan envisions the implementation of measures to create an enabling business environment and provide government support not only to improve MSME access to finance and expand market access but also to strengthen MSME productivity and competitiveness and their linkage with large enterprises and value chain networks. Moreover, coordination and monitoring of activities among national agencies and local government units (LGUs) will also be intensified to harmonize the implementation of the Plan. MSMEs contribute around 90% of total employment in the country. One Town One Product (OTOP) Program The OTOP is a program managed and spearheaded by the Department of Trade and Industry (DTI) in close partnership with municipal local government units. Its key feature is the identification, development, and promotion of a specific product or service over which a particular municipality has a competitive advantage. Municipal LGUs take the lead in implementing the OTOP program in their localities and in providing the proper enabling environment for identified businesses to grow and develop. The DTI and the other partner government agencies assist the LGUs in delivering the necessary support services to the identified businesses such as product design and development; skills and entrepreneurial training; marketing assistance; and introduction of appropriate technologies. Financing assistance is also provided via the SULONG program. From a miniscule contribution of just around 1,500 employed persons, the OTOP Program has generated 70-85,000 jobs annually as reported by the Department of Trade and Industry. Figure 3 Generated Employment OTOP Program
Source: DTI-OTOP website
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V.
Key Reforms to Address the Perennial Employment Problem12
Addressing the Critical Constraints to Sustained Economic Growth Many of these critical constraints are clearly interrelated. Only when the fiscal situation sufficiently improves will the Government be able to allocate more resources to infrastructure investment. However, improved infrastructure alone is not enough to reduce the cost of doing business and to catalyze private investment. Better infrastructure has to be matched by increased investor confidence, which can be done if Government adequately addresses governance concerns especially reducing corruption and improving political stability. Removing these three constraints (e.g., tight fiscal space, inadequate infrastructure, and weak investor confidence) will result in increased private investments from domestic and foreign sources. But, to ensure that growth can be sustained at a high level similar to that achieved by many Southeast and East Asian economies in recent decades, the Government will also need to address the market failures (such as information and coordination externalities) in order to encourage investments in diversifying and expanding the manufacturing sector and exports, and in upgrading the level of technology. Sustained and high growth, resulting from removing its critical constraints, will create more productive employment opportunities. This is essential because insufficient employment is the most critical constraint to poverty reduction in the Philippines. By solving key investment constraints particularly the high cost of doing business in the country, the country will be able to attract both foreign and local investors in the economy. Helping small and medium enterprises to flourish (as they are the main generators of jobs in the country) Any serious job creation strategy must strengthen SMEs through: Access to credit and finance - Some private banks were able to overcome these challenges by providing assistance in preparing accounting records, business advice, and simplifying loan documentation and tailor fitting loans to match the borrowers cash flow. Establishment of institutions to monitor and diffuse new technologies and provide technological services e.g. material testing, inspection, certification of quality, instrument calibration, establishment of repositories of technical information, patent registration, research and design, and technical training Formulation of programs for the provision of information exchange to local firms to make strategic linkages with multinational corporations (MNCs) like the Singapore model Assisting local governments to create an adequate environment to attract and sustain investments especially labor intensive ones Full support to the program of the National Competitiveness Council for the 120 spark plug LGUs and maximizing the emulation and spillover effects of these LGUs
12
Derived mostly from Aldaba and Hermoso (2009)
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Institutionalize involvement of key LGU representatives in the formulation of industrial policies and job creation strategies and programmes
Development of financial markets to tap domestic savings and harness remittances into productive investments especially in local rural economies (to provide both in farm and off farm employment) Creation of a variety of financial instruments that would attract savings from the middle and upper classes including remittances from OFWs which could then be channeled to various private sector initiatives especially in the rural areas. Enhancement of the equity markets and open access to such by capable and efficient SMEs
Improving the capability of our workforce Creation of a sound population management policy. Passing the Reproductive Health Bill into law will be a very good start. Forming the young by improving the quality of basic education (primary and secondary), health and nutrition Implement substantial reforms in all stages of education and training system Tap public-private sector partnership mechanisms to improve the quality and completion rates of primary and secondary school students. The length of schooling must be brought at par with international norms through the sound implementation of the the K-12 reforms. Skills upgrading and training for out of school youth and those who drop out of school Establish key programs to address youth unemployment Strengthening of vocational and technical training especially for in-demand jobs and occupation - Technical schools must reorient their curricula to serve employer needs and requirements and address specific skills needed by industries. - The dual tech system is a good practice which may adopted by technical schools and their partner training institutions.
Solving labour market information and mismatch problems This can be done through more efficient by Institutionalizing a private sector academe-government mechanism to analyze labor market demand and supply and formulate strategies for such Involving the private sector in curriculum development and agree on longer and earlier internships Encouraging the private sector to train people beyond their requirements through doublededuction of training expenses
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Strengthening Social Protection Implementation of a comprehensive social protection that covers both the formal and informal sector especially the poorest of the poor or the chronic poor. - Formal Sector: unemployment insurance, Philhealth policy on unemployment - Informal sector (entrepreneurial poor): micro finance and microinsurance (MBAs) - Poorest of the Poor: Conditional Cash transfers; 100 day guaranteed employment - Continued implementation of National targeting system towards a database on poor households regularly updated. - Rationalization of remaining social protection programmes to avoid duplication and wastage. Labour Migration and Development Policy Providing an explicit policy on labour migration is a must. It is high time for the government to accept that given the current state of development of the country, Filipino workers especially the more educated ones include in their options, the choice to go abroad. An explicit labour migration policy must be established to ensure that Filipinos leaving to work abroad get quality jobs and that they are amply protected in the host countries. This should be complementary to the labour migration management programmes that the government already has through POEA and OWWA.
Institutionalization of the Employment Strategy Mainstreamed Employment Strategy Mainstreaming an employment-creation strategy (jobs created must be high quality and emanating from sustainable enterprises in sectors that have huge scale and market potential and where the country has comparative advantage) in Major Development Plans from the Philippine Development Plan (PDP) to the Philippine Labor and Employment Plan to Local Development Plans (LDPs) Regular Review of Employment Strategy Ensuring that any new and major economic policy or program must be reviewed for its employment impact; assigning government and private sector champions to spearhead these reviews; offer incentives for labor-intensive investments A Feasible Implementing Mechanism Establishing a multi-stakeholder mechanism (including the private sector champions) that will generate ideas for policies and programs for job creation and monitor implementation of such shall be established in coordination with the National Competitiveness Council (NCC)
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Empowering LGUs Key national agencies in cooperation with the National Competitiveness Council (NCC) shall assist the Local Government Units (LGUs) in incorporating an employment creation strategy in their Local Development Plans (e.g. Spark Plugs Project) Strengthen the coordination of the three training and education institutions Deped, Ched, and Tesda There must be a well coordinated education and human resource development programme for the country and this can only be done through institutional coordination among three agencies Deped, Ched and Tesda.
Monitoring of Indicators Various key indicators on employment creation shall be regularly gathered and monitored (e.g. unemployment and underemployment rates, official and those privately generated like SWS; hiring and firing rates, etc.) as these are important inputs for policy and program formulation Crafting and implementing a sound industrial policy And finally as the main focus of this paper for job creation, we also recommend the need to craft and implement a sound industrial policy to generate good quality jobs. According to Harvard economist Dani Rodrik, a sound industrial policy is founded on a strategic collaboration between the government and the private sector with the aim of identifying where the constraints and obstacles for industrial restructuring lie and what type of interventions most likely will remove them. It is should also be complementary to market forces not distortive and should maximize its contribution to growth while minimizing its risks of generating waste and rent seeking. The focus is not on policy outcomes per se but on the policy process where a venue in which public and private sector collectively solve problems in the production sphere knowing the opportunities and constraints confronted by each other. Industrial policy applies not just to manufacturing but to other sectors as well as activities that are characterized by constant or increasing returns to scale The state through industrial policy must also be utilized to translate successes in global integration into more productive employment and higher household incomes through the promotion of backward and forward linkages between externally related activities and the rest of the economy. (Montes, 2008). The government must: Provide venues of collaboration and support for sunrise and potential industries where the country is competitive and has comparative advantage especially for highly labor intensive sectors or for those that create multiple linkages (backward and forward) in the economy. Assess strategically sunrise and potential industries and sectors examining their strengths and weakness and looking at how government will be able to assist in improving the global competitiveness of such sectors in terms of basic infrastructure support to industrial clusters, market information, linkage and networking, research & development and favorable policy environment (Usui, 2012) Page 25
VI. A Framework and Possible tools for the Analysis of the Employment Effects of Industrial Policy or Sectoral Strategies Employment as an Important Criterion for Selecting Priority Sector Vertical industrial policy as opposed to the horizontal one virtually selects sectors that the government will support towards growth and expansion. Several criteria are proposed in selecting good candidates for industrial promotion13: (1) that they have strong inter-industry linkages i.e. backward and forward linkages (2) that they are a leading sector in the rest of the economy i.e. they have high growth possibilities and wide spillover effects for the rest of the economy (3) that they can be characterized by a high share of industry-specific innovations in output growth and (4) that they (and their linked sectors) have high labour absorption. The last criterion is what we are actually focused on in the paper. In a developing economy where there is a dearth of good quality jobs for a big bulk of the population, a sectors capacity to generate jobs will certainly be an important criteria for the government to prioritize such a sector. However, one should note that it is only one of the criteria which means that it is still possible for a non-labour intensive sector to be chosen as long as it satisfies the other criteria. For example, if it has very strong backward and forward linkages leading to the creation of jobs not directly linked to the concerned sector. But of course, the government must weigh the various trade-offs in selecting the sectors especially if the economy suffers from chronic unemployment and underemployment resulting in high levels of poverty. A. Framework for the analysis of employment impact of industrial policy or sectoral strategies in the Philippines (Please see Figure 4 below) This section discusses a framework in tracing the employment effects of industrial and sectoral policies. From Figure 4 below, industrial policies affect employment through labour demand and labour supply. It may even influence both labour supply and demand if government decides to intervene in wage policy setting. A caveat in this framework is that there are other economic policies which may affect labour demand fiscal and monetary, trade and exchange rate policies for example. Direct and indirect employment effects We are concerned on both the direct and indirect employment effects of industrial policy. Direct effects refer to the actual number of workers employed in the sector (or sectors) itself which is subject of vertical industrial policy. Indirect effects meanwhile are the number of workers employed in the backward and forward linkages of the aforementioned sector. It also includes employment due to other spillover effects that the industrial policy generated. This means that our framework also gives consideration to the employment spawned by the linkage of the selected sector with its related sectors of the economy and the spillover effects it created among non-related sectors. It might not be impossible then to have sectors that have greater indirect rather than direct employment effects.
13
Reasons 1-3 are from Noland (2004)
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Quantity and quality of jobs created of selected sectors We are also interested not only in the total number of jobs created in the economy that results from industrial policy but also with the types of employment generated. Thus, a priority or target sector may produce jobs that are mostly skilled and semi-skilled than non-skilled or vice versa. Or it could happen that the sector promoted is dominated by subcontracting arrangements with SMEs. In other words, it would also be important to be able to monitor the types and quality of jobs created even if this would prove to be relatively difficult to implement. Maximizing backward and forward linkages of selected sectors The raison detre of industrial policy is the need for coordinated investments in terms of Rosenstein Rodans idea of the big push in the 1950s. Many development economists claim that the possibility exists for welfare-enhancing industrial policies through government coordination activities to capture inter-industry externalities, thus promoting growth and industrial development. The significant factor is the existence of inter-industry externalities, which when captured, expand the production set and possibilities of the economy. Backward and forward linkages were first presented by Hirschman in 1958 with his classic paper, The Strategy of Economic Development. The linkage concept is generalised to the observation that ongoing activities induce agents to take up new activities. Backward linkage effects are related to derived demand, i.e. the provision of input for a given activity. Forward linkage effects are related to output usage, i.e. the outputs from a given sector will induce attempts to use this output as inputs in some new activities14 or sectors. However, according to Hirschman, backward and forward linkages are not automatically created. It is thus not just the relation between the market size and the economic size of a plant that will spark the required entrepreneurship or coordination for linkage investments. Variables such as technological proximities of the new economic activities in relation to the ongoing ones, as well as obstacles in the form of the need of large amounts of capital due to scale requirements and the lack of marketing access and knowledge are also important. Positive spill-over effects of coordinated investments15 In thinking about how industrial policy targets a key sector that affects the whole economy, it is helpful again to use a taxonomy provided by Albert Hirschman. There are three possible linkages between the priority sector and the other sectors of the economy. The first of these are fiscal linkages in which a measure of resource rents are appropriated by the government and used to promote industrial development in unrelated sectors. The second linkage is the consumption linkage in which incomes earned in the production of the concerned sector can in turn generate the demand for other locally produced goods. However, the removal of protective tariffs has meant that
14
This is measured by Rasmussens index, the power dispersion index - describing the relative extent to which an increase in final demand for the products of a given industry is dispersed throughout the total system of industries. 15 The three ways were suggested by Hirschman in terms of the commodity sector as cited by Kaplinsky (2011)
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in the modern era, many of these consumption leakages are being experienced abroad rather than domestically. Third, according to Hirschman, are the production linkagesbackward in the supply of inputs and forward in the processing the output of the said sector. We add to this the possibility of horizontal linkages in which capabilities developed in backward and forward linkages also serve the needs of other sectors. For example, the development of an entire supply chain may create spillover effects toward the other non-priority sectors. Complementary investments in human capital and training responding to new demands of selected sectors The issue of skills and human resources is a crucial component of industrial policy. Effectiveness of policies in this area will directly affect the success of any industrial strategy and will help in creating a sufficient level of qualified employment. Low level of skills in the labour force poses serious barriers to the competitiveness of the private sector. Cognitive and practical skills acquired by individuals during their education determine the future productivity level of the labour force. Problems in hiring employees with sufficient qualifications for certain positions in the private sector constrain the growth of the economy. These are often the result of labour mismatches where schools and universities produce graduates not needed by the private sector. Inadequacies in technical education are also the main reason for the lack of qualified intermediary level employees. Coherence between industrial policy goals and policies designed for the improvement of human resources must be given importance. B. Diagnostic tools to measure employment effects of industrial and sectoral policies Ex ante and ex post employment assessment of selected industries and sectors Estimating employment effects of industrial policy is important before and after implementation. Ex-ante assessment may be significant in terms of selecting priority sectors in vertical industrial policy. For example, one needs independent evaluation of employment generation claims of specific sectors vying for prioritization in terms of government support. Ex-post assessment will be important for monitoring and evaluation especially in terms of whether targeted jobs generation has actually been achieved. Thus various tools may be used whether its ex ante or ex post assessments. Estimating employment elasticities16 One indicator widely used for analysing the operation of the labour market is employment elasticity. The most basic definition of employment elasticity is the percentage change in the number of employed persons in an economy or region associated with a percentage change in economic output, measured by gross domestic product. Hence, the elasticity of employment seeks to capture the responsiveness of the labour market to changes in macroeconomic conditions (as represented
16
This section on elasticities is derived mostly from Islam and Nazara(2000) and Kapsos (2005)
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by GDP growth). However, the aggregate employment elasticity is sensitive to the method of measurement as well as the time period over which the measurement is carried out. Issues in the estimation of employment elasticities There are a number of criticisms that one can make against the notion of employment elasticity. First, the notion of employment elasticity focuses only on the demand side of the relationship between GDP and employment (with GDP acting as a representation for aggregate demand) and ignores the supply side (the output-creating effect of labour utilisation). Second, even if it is valid to focus primarily, or only, on the demand side of the employmentGDP relationship, the notion of employment elasticity is valid for a given state of technology and knowledge. As technology changes and knowledge about best-practice production processes change, it can make a given percentage growth of GDP more or less employment intensive. Furthermore, the notion of employment elasticity is endogenous to the policy regime. A given policy regime could be more or less conducive to the growth of employment, promote labour-using technology or they could impart a capital bias in production processes. The third issue is that the impact of GDP on employment is not symmetrical. Implicit within the indicator (of employment elasticity) is the assumption that economic growth will promote employment while economic contraction will result in unemployment. The latter is not necessarily the case because of the so-called unemployment as luxury hypothesis. In the absence of any comprehensive unemployment insurance in a developing economy, unemployment during an economic contraction becomes a luxury that only those with adequate non-labour income can afford. Fourthly, an economy-wide employment elasticity is also unable to distinguish between the impact on employment of changes in sectoral GDP and total GDP. It will be necessary to disentangle two effects: a direct effect on job creation working through the channel of sectoral GDP; an indirect substitution effect (the movement of people between sectors) as the economy as a whole expands (as reflected in the growth of overall GDP). Any estimation procedure should thus be able to identify the net effect of economic growth on sectoral employment. In the Philippines, it is important to note that the manufacturing and industry sectors have the highest employment elasticity among the three major sectors. Lanzona and Felipe (2005) estimates from 1993 to 2004 that industry has elasticity of 1.09, services, .744 and agriculture, .64. Thus with low growth in industry, generation of quality jobs remained insufficient. Jobs in agriculture and services are mixed with the so-called low quality, unpaid type of jobs prevalent in the informal sector. Using input-output to estimate employment effects (backward-forward linkages and supply chain analysis)
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Linkage Analysis Linkage analysis, an important method used to examine the interdependency of production structures, was introduced by the works of Rasmussen (1956) and Hirschman (1958). Since that time many different methodologies were improved and expended for the measurement of linkage coefficients. One of the well-known methods for the analysis of interdependency between economic sectors is backward and forward linkage analysis. Backward and forward linkages are descriptive measures of the economic interdependence of industries in terms of the magnitude transactions. Linkages show the estimate of the direct and indirect increase in output following an increase in final demand. Backward and forward linkages, which were first proposed by Rasmussen (1956), are calculated from what is called the Leontief inverse or total requirement matrix. Input-Output Analysis Among many measurement methods, researchers prefer to use the input-output model to measure the employment effects of changes in final demand. The input-output (I-O) technology can reflect the interdependence among industries in national economic system comprehensively and systematically. An I-O model is created from actual data for a specific economic zone (e.g., a country, region, province, etc). The data consists of flows of products from each sector or activity, considered as a producer, to each of the sectors considered as consumers. These flows, usually in monetary terms, are calculated over a certain time period (e.g., annually) and are arranged in a transactions table. The rows of this table give the allocation of a sectors output over the economy and the columns indicate the allotment of inputs required by a particular sector to produce its output. Also, there are consumers who are external to the sectors that comprise the producers in the economy (e.g., governments, households, and foreign trade). The demands of these exogenous consumers are referred to as final demand. These are included in the transactions table as columns to the right of the endogenous sectors. Furthermore, a sector pays for other items, like labor and capital, and uses other inputs such as inventoried items. These are called value added in sector i and are incorporated as additional rows in the transactions table. El Ackhar (2010) used the 2000 InputOutput tables as one of the bases of his one digit PSIC level employment projections for the Philippines. Other Examples of the use of Input-Output Analysis in analyzing Philippine industrial sectors include the following: An Input-Output Analysis of the Philippine BPO Industry Nedelyn Magtibay-Ramos, Gemma Estrada, and Jesus Felipe (2007) This paper provides a profile of the Philippine business process outsourcing (BPO) sector and analyzes the industrys intersectoral linkages and its potential impact on compensation and employment. The Philippine BPO sectors growth is largely driven by the contact center subsector due to its large share in total BPO employment and revenues as well as government support. The input-output linkage analysis shows that the BPO industry is not a key sector in terms of stimulating production in other sectors of the Philippine economy. However, growth in the sectors revenues can have a significant impact on compensation and employment. An increase in the sectors
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revenues will generate a considerable increase in the sectors total wage bill and in that of the other sectors. If appropriate policies are enacted and with improvements in human capital, it is estimated that the Philippine BPO sector may become an important employment-generating sector. The sector can provide 7-11% of the new jobs for the labor force entrants between 2007 and 2010. It is also estimated that the BPO total workforce size will reach 500,000 to 600,000 in 2010, which is considerable for a single economic activity. Employment Impact of E-commerce De vera (2002) The study seeks to estimate the employment effect of ecommercespecifically business -toconsumer or B-to-C e-commerceon Philippine workers. Specifically, the objectives of this study were: (1) To formulate different scenarios describing how B-to-C e-commerce will influence purchase processes; (2) To estimate changes in employment levels, with B-to-C e-commerce, for selected industries; and (3) To assess the changes in the nature of future jobs with the coming of ecommerce. Revenue projections were used to estimate corresponding employment impacts for the 11 industries related to e-commerce, as well as for the whole economy, using input-output (IO) methodology. The projection period for the estimation of the impact of B-TO-C ecommerce on employment is from the year 2000 to 2005. An Agenda for High and Inclusive Growth-Mining Habito (undated) The inclusiveness of the growth that the sector can provide is analyzed. The relevant questions were (i) how much employment growth in the sector would generate; and (ii) how much other sectors in the economy would benefit from mining growth, through its backward and forward linkages. This would be indicated by the industrys labour intensity (labouroutput ratio), and measures of its backward and forward linkages with the rest of the economy. Inputoutput analysis, using the 2000 InputOutput Table of the Philippine Economy showed the following: In terms of employment generation, mining and quarrying has relatively low labouroutput ratios. Labour compensation accounts for only 13.3% of the sectors output, against an economy-wide average of 20.7%, giving a labour absorption index of 0.64. With a backward linkage index of only 0.46, the industry uses relatively little input from other domestic industries. Likewise, a low forward linkage index of 0.82 indicates that forward linkages are below the average for all sectors of the economy. This is because a major proportion of the industrys products are currently exported in primary form with less processing done within the country. Other examples include the Employment Effects of Multinational Enterprises in the Philippines By Miranda (1994) and Employment, Productivity and the Informal Sector in the Philippines, 197488: An Input-Output Analysis by Venida (1998) Limitations of I-O model Compared with other methods, input-output has an comparative advantage in measuring total impact of changes in final demand on employment. However, the classical input-output model
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always assumes that the relationship between the output of various sectors and its employment is linear. According to economic theory, employment is more sticky than output, which implies employment has a non-linear relationship with the output. Thus, the linear model will overestimate the employment effects of the changes in final demand. To solve the problem, econometric models are designed to estimate employment elasticity by sector and introduce the results into the inputoutput model to get a partial non-linear input-output model. One must also note that the latest Philippine input-output table was still developed in 2000 and certainly needs updating. Using computable general equilibrium analysis to estimate employment effects of industrial policy reforms17 Computable general equilibrium (CGE) models are a class of economic models that use actual economic data to estimate how an economy might react to changes in policy, technology or other external factors. A CGE model depicts the economy as a web of interrelated activities by four types of agents: producers, households, government, and the rest of the world. The economy is organized into markets. A market is a hypothetical place in which a product is traded; it comprises a demand and supply function for the product. Markets exist not only for products by the industrial sectors, but also for the production factors labour and capital. All markets are assumed always to be in equilibrium, that is, quantity supplied equals quantity demanded (this constitutes general equilibrium). CGE models synthesize the process by which general equilibrium comes about, but a conceptual explanation is offered usually by an underlying economic theory or relationship of variables. A CGE model consists of (a) equations describing model variables and (b) a database (usually very detailed) consistent with the model equations e.g. a social accounting matrix. The equations are neo-classical, often assuming costminimizing behaviour by producers, average-cost pricing, and household demands based on optimizing behaviour. However, most CGE models conform only loosely to the theoretical general equilibrium paradigm. For example, they may allow for: non-market clearing, especially for labour (unemployment) or for commodities (inventories) imperfect competition (e.g., monopolies and oligopolies) demand not influenced by price (e.g., government purchases) negative externalities, such as pollution introduction of fiscal variables like taxes
Strengths of CGE models The strengths of CGE models are obvious: They are able to accommodate detailed economic data and can trace indirect economic effects of various variables. Thus they allow us to analyze the distribution of policy impacts over different groups of the population, by occupation, region, and income depending on the extent of model detail.
17
R. Aldaba (2012) discusses CGE models for trade and employment
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Issues on CGE Models Traditional CGE models use a number of assumptions that obviously lack realism. This casts doubt on the plausibility of model results (projections on prices, sectoral output and employment); also, the assumptions lead to unwarranted normative conclusions. As for the realism of CGE model assumptions, the most sweeping criticism can be levelled at the assumption of the rational actor who possesses perfect information and pursues an exogenously given objective. Another problematic assumption is that there are no missing markets. In CGE models, prices are the main stimuli for economic activity. But in reality, there are no markets, and hence no prices, for things like air or water quality and peace and order, even though these constitute important influences and constraints on human behaviour. Finally, CGE models focus on equilibrium but there is possibility that equilibrium may be unstable, difficult to reach and maintain. Multiple equilibria may also exist both bad and good equilibrium. There is also no credible price adjustment mechanism that guarantees movement from a state of disequilibrium to equilibrium. The Dynamic Social Accounting Matrix Model (DySAM) The CGE models are typically based on Social Accounting Matrix (SAM). A Social Accounting Matrix (SAM) embodies the flows of all economic transactions that occurs within an. In essence, it is a matrix representation of the National Accounts for a given country, but can be extended to include non-national accounting flows, and created for whole regions or area. SAMs refer to a single year providing a static picture of the economy. More recently time series SAMs were introduced the Dynamic SAMs which the ILO suggests as a most appropriate diagnostic tool for studying the employment effects of industrial and sectoral policies. Since the seventies, the SAM framework and model have been utilized in empirical work dealing with growth and distribution issues. Some computable general equilibrium (CGE) models were developed using the SAM as a consistency framework to calibrate those models. As discussed above, CGE models are based on a high number of assumptions such that results may become too contingent on them. Thus, the SAM accounting model has been further developed to include behaviour of agents, as well as employment variables trying to capture the labour market structure of a given country. The DySAM is dynamic and considers changes over time, but also provides some distinction on technology choices. Estimating changes in labour productivity in selected sectors due to human capital investments and/or institutional reforms Many studies have been dedicated to the importance of labour productivity growth. The reason is that the rate of productivity growth can have a relatively large effect on real output and living standards. As a component of total productivity, the growth of labour productivity is one important marker in determining the rise or fall of overall economic growth. Labour productivity is a leading indicator of other economic indicators as it offers a dynamic measure of economic growth, competitiveness, and living standards within an economy. Labour productivity can be defined as how
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efficiently and effectively human resources are used at lowest possible cost. It is also a major determinant in attracting both foreign and local investments. Industrial policies may specify various human capital interventions that will increase labour productivity and corresponding returns through higher wages. Other qualitative quantitative and tools Government may also use other tools in the effort to measure jobs generated through: Surveys among firms within sectors that are subject to industrial policies The collection of administrative data by agencies involved in industrial policy; can be used to estimate cost per job generated Case studies within specific sectors or geographic areas where industrial clusters or zones are located Key informant interviews and FGDs with industry and sector experts to determine employment potential of sectors
VII. Summary and Conclusions The paper highlights the perennial unemployment and underemployment problem of the country and discusses the main labour market constraints that affect them. Several recommendations were made to be able to meet the challenge of employment and job creation. A key strategy to generate good quality jobs is to promote industrial upgrading and restructuring through industrial policy. Then, a framework for analyzing the employment effects of industrial policies is explained and a description of various diagnostic tools that can be utilized for such analysis. The endeavour to determine the possible and actual employment effects of industrial policies must be integrated in the process of the over-all strategy of industrial upgrading and restructuring. The multi-agency and multi-stakeholder mechanisms established to oversee the implementation of industrial policies must also regularly monitor and evaluate such in terms of employment creation. For the government, greater coordination among DTI, DOLE and NEDA is needed to be able to regularly assess the employment effects of industrial policies. In the end, a successful implementation of such policies must clearly result in greater investments and an upward shift in the demand for labour not only in the priority sectors but possibly in the other sectors of the economy.
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References:
Aldaba, Fernando T. and R. Hermoso (2009). Sustainable Employment Creation: A Strategic Concern for the Philippine Economy, National Competitiveness Council, Makati City. Aldaba, Fernando T. and A. Ang (2012). National Action Plan for Youth Employment and Migration, Bureau of Workers with Special Concerns and International Labour Organization, Manila (draft) Aldaba, R. (2012) Trade and Employment Linkages (draft) Broad, R. (1988) Unequal Alliance : The World Bank, the International Monetary Fund and the Philippines, University of California Press. De Vera, R. (2002) The Employment Impact of E-Commerce, Philippine APEC Study Centers Network, PIDS, Makati. El Achkar, S. (2010) An Employment Projections Model for the Philippines A Technical Guide / User Manual, ILO Manila Felipe, J., Estrada, G. And N. Magtibay-Ramos (2007) An Input-Output Analysis of the Philippine BPO Industry, Asian Development Bank, Manila Habito, C (undated) An Agenda for High and Inclusive Growth-Mining, unpublished manuscript. Hirschman, A. (1958) The Strategy for Economic Development, Yale University Press Ignacio, L. (2011) Industrial Cluster Strategy. Bangko Sentral ng Pilipinas Economic Newsletter. Manila Islam, I. And S. Nazara (2000) Estimating Employment Elasticities in Indonesia, ILO-Indonesia, Jakarta Kaplinsky, R. (2011) Commodities for Industrial Development: Making Linkages Work, UNIDO DEVELOPMENT POLICY, STATISTICS AND RESEARCH BRANCH Working Paper, Vienna. Kapsos, S. (2005) The employment intensity of growth: Trends and macroeconomic determinants, ILO Geneva Labor Code of the Philippines Presidential Decree No. 442: Book II Human Resources Development Program. Retrieved March 5, 2012 from http://www.chanrobles.com/legal4labor2.htm Lanzona, L. and J. Felipe( 2005). Unemployment, Labor Laws and Economic Policies in the Philippines: A Stocktaking Review, ADB, Mandaluyong City.
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Medalla, E. (1998) Trade and Industrial Policy Beyond 2000: An Assessment of the Philippine Economy , PIDS DISCUSSION PAPER SERIES NO. 98-05, Makati City. Medalla, E. And F. Pante (1990). Philippine Industrial Sector: Policies, Programs and Performance, Philippine Institute for Development Studies, Makati City. Miranda, C. (1994) Employment Effects of Multinational Enterprises, International Labour Organization Montes, M. and E. Memis, 2008, Whos afraid of industrial policy? UNDP Discussion Paper, July, UNDP Regional Center, Colombo Noland, M. (2004) Selective Intervention and Growth: The Case of Korea, Working Paper, Institute for International Economics. Nubler, I. (2011) Industrial policies and capabilities for catching up: Frameworks and paradigms Employment Working Paper No. 77, International Labour Organisation, Geneva Patalinghug, E. (2000) Competition Policy, Technology Policy, and Philippine Industrial Competitiveness, Social Science Diliman, University of the Philippines, Quezon City. Philippine Institute for Development Studies (2008) Industrial Agglomeration and Industrial Policies: The Philippine Experience, Discussion Paper 2008-13 Makati City. Rasmussen (1955), Studies in Intersectoral Relations, Amsterdam: North Holland. Rodrik, D.(2004) Industrial Policy for the 21st Century, Harvard University John F. Kennedy School of Government, September. Rosenstein-Rodan, Paul. (1943) Problems of Industrialization of Eastern and Southeastern Europe Economic Journal 53(210-211) June-September: 202-211. Tecson, G. (1983) Trade and Promotion Policies in Industrial Development, The Developing Economies, Volume 21, Issue 4, pages 386414 The Philippine Development Plan 2011-2016, NEDA, Pasig The Philippine Labor and Employment Plan 2011-2016, DOLE, Manila Tidalgo, R. And E. Esguerra (1984) Philippine Employment in the 70s. Philippine Institute for Development Studies. Makati. Usui, Norio (2012). Transforming the Philippine Economy: Walking on Two Legs, Asian Development Bank, Manila Venida, V. (1998) Employment, Productivity and the Informal Sector in the Philippines, 1974-88: An Input-Output Analysis, unpublished
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Research Paper of DR Fernando Aldaba (As of 21 May)

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Institute for Labour Studies

Integrating Employment in Industrial Policies

Section List of Abbreviations I II

Integrating Employment in Industrial Policies

Integrating Employment in Industrial Policies

Mostly derived from the terms of reference of the project

Integrating Employment in Industrial Policies

Integrating Employment in Industrial Policies

Integrating Employment in Industrial Policies

4.55 14.05 0.49

1.79 17.11 0.02

2.18 18.42 0.05

3.34 19.00 0.00

4.29 20.47 0.01

Integrating Employment in Industrial Policies

Integrating Employment in Industrial Policies

Integrating Employment in Industrial Policies

2006-07 59.94% 60.29% 51.58% 60.78% 61.05% 66.02%

2007-08 64.81% 63.89% 57.90% 61.62% 67.44% 73.18%

2008-09 65.55% 67.37% 58.86% 61.81% 67.84% 71.90%

2009-10 68.01% 63.26% 63.14% 67.81% 70.88% 74.98%

2010-11 68.15% 68.43% 60.37% 65.12% 70.40% 76.45%

Table 5b: Secondary Achievement Indicators (2006-11)

This section borrows heavily from Aldaba and Ang (2012)

Integrating Employment in Industrial Policies

Integrating Employment in Industrial Policies

www.tesda.gov.ph accessed August 18, 2010

Integrating Employment in Industrial Policies

Derived mostly from Tecson (1988)

Integrating Employment in Industrial Policies

Integrating Employment in Industrial Policies

Integrating Employment in Industrial Policies

From Medalla (1998) Borrows from PIDS (

Integrating Employment in Industrial Policies

This section was derived from Patalinghug (2000)

Integrating Employment in Industrial Policies

Integrating Employment in Industrial Policies

Source: DTI-OTOP website

Integrating Employment in Industrial Policies

Key Reforms to Address the Perennial Employment Problem12

Derived mostly from Aldaba and Hermoso (2009)

Integrating Employment in Industrial Policies

Integrating Employment in Industrial Policies

Integrating Employment in Industrial Policies

Integrating Employment in Industrial Policies

Reasons 1-3 are from Noland (2004)

Integrating Employment in Industrial Policies

Integrating Employment in Industrial Policies

Integrating Employment in Industrial Policies

Integrating Employment in Industrial Policies

Integrating Employment in Industrial Policies

Integrating Employment in Industrial Policies

Integrating Employment in Industrial Policies

R. Aldaba (2012) discusses CGE models for trade and employment

Integrating Employment in Industrial Policies

Integrating Employment in Industrial Policies

Integrating Employment in Industrial Policies

Integrating Employment in Industrial Policies

Integrating Employment in Industrial Policies

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