News Analysis Society

Economic people power

Deployment subindex

Better educated, innovative and creative workforces have the capacity to boost labour productivity, and with it, economic growth. Indeed, increasingly, long-term economic growth is becoming dependent on the evolution of human capital. And economies which ignore this do so at their peril.

This, then, is people power; the human force that drives the engine of growth of all economies. Their efficiency and effectiveness, however, depends on how well that force is being deployed. In short, whether it’s being used to it full potential.

With that, let’s turn to the World Economic Forum’s 2017 Global Human Capital Index (GHCI) which evaluates 130 countries world wide. In this infographic, specifically, we’re looking at the GHCI sub-index which deals with ‘Deployment’. This comprises four indicators: the labour-force participation rate; the employment gender gap, the unemployment rate, and the underemployment rate.

From that list we’ve extracted the global rankings of the 10 member states of the Association of Southeast Asian Nations (Asean). This is the region where Philippines has to compete. So, let’s get straight to it. Here are the results for that sub-index. Cambodia, 4th; Vietnam, 6th; Thailand, 7th; Laos, 12th; Myanmar, 23rd; Singapore, 36h; Brunei, 55th; Malaysia, 70th; Indonesia, 82nd; Philippines, 87th.

Last among its peers in Asean is not where the Philippines wants to be; but why is it last? For the answer to that we need to look at a couple of those indicators which have contributed to this assessment – specifically, the 25-54 age group for (a) the labour-force participation rate, and (b) the employment gender gap. And here’s what we found. We’ll look at these in turn.

The labour-force participation rate measures the active part of the labour force and comprises people who are either employed or seeking employment. Here are the Asean’s global rankings for that: Myanmar, 5th; Vietnam, 7th; Laos, 8th; Cambodia, 17th; Thailand, 31st; Singapore, 50th; Malaysia, 84th; Brunei, 86th; Indonesia, 99th; Philippines, 102nd.

Out of 130 countries, that’s low. And this is the labour market’s biggest and most productive age group by far. Furthermore, it’s the labour-force group where the numbers are least likely to be skewed by the numbers pursuing further education at one end and those retiringat the other.

Of course, what’s not measured in this is the employment size of the black economy – the underground economy; that area of commercial activity which lies beyond the grasp of taxation and regulation – and statisticians. Euphemistically known as the “informal sector”, because of its nature there’s no way of accurately measuring the size of its workforce.

All we know is that it’s considerable. This is a thriving sector in the Philippines and covers smuggling, jueteng and other forms of illegal gambling, the illegal drugs trade, prostitution and everything in between – transport operators, trikes and jeepneys; massage parlours; street venders; loosely employed domestic helpers and other non-contracted casual workers and much more. The chances are, if all that was taken into account, the Philippines would be nearer to the front of Asean. The ‘informal economy’ is a big employer.

Now, the employment gender gap. Quite simply, this is the difference between male and female employment rates. Here again are the global rankings for the Asean states: Laos, 9th; Vietnam, 19th; Thailand, 54th; Singapore, 64th; Brunei, 68th; Cambodia, 71st; Malaysia, 95th; Philippines, 101st; Myanmar, 104th; Indonesia, 112th.

What this signifies – the black economy aside – is that women as a resource of human capital, are under utilised in the Philippines. And that’s a waste of labour potential. A high participation of women in the workforce is essential for sustainable economic growth. After all, as Mao Zedong, the founding father of the People’s Republic of China, observed: “Women hold up half the sky”. The fact is, the greater the gender gap, the greater the economic loss.

But also worth taking into consideration in the Philippine context, is human-capital flight – in a phrase, Overseas Filipino Workers (or, OFWs). For while this group of around 10 million has taken itself out of the national workforce – an OFW working in the retail sector in Dubai for example, is contributing directly to the Dubai workforce, not to that of the Philippines – it’s responsible for around 10% to the Philippine gross domestic product.


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