Monday, December 25, 2006

The way forward for the Philippines in 2007

WHAT is governance but the judicious use of power—the ability to achieve certain economic, social and political ends—and authority or legitimacy to use such power? And yet, if there’s one factor that’s really preventing the country’s economy from growing faster and creating more jobs, it’s this widening deficit in authority that’s buffeting this administration.

Certainly, we need to add to and improve infrastructure; we need more investments in human resources. We need a lot more to enhance the economy’s competitiveness. But on top of that we need to have a credible government and political leaders and institutions respected by the public and the investors. For most of the year, this country is hobbled by this problem. It seems we are the only country whose leaders are always being regarded with suspicion and contempt by the global community.

Consider SWS’s survey on net satisfaction rating. Since October 2004, GMA’s presidency has been suffering from a negative satisfaction rating. In simpler terms, the majority of the people are dissatisfied with her leadership in ways not seen since the Edsa Revolution. Presidents Corazon Aquino, Fidel Ramos, and Joseph Estrada had their own worst nightmares, but their satisfaction and trust ratings never dipped this low.

Survey numbers from Pulse Asia show that half of Filipinos simply do not trust the President.
They are critical of her on six major issues: criminality, political killings, workers’ pay, poverty, graft and corruption and inflation—the bread and butter issues of governance. When one fails to address these issues effectively, what is one’s to govern?

GMA’s problem is staying there for the sake of being able to finish her term. In this brave new world of globalization and information revolution, political power is diffusing to various political and economic players like corporations, interest groups, civil society organizations, and the Church. Hence, increasingly, political elites worldwide are finding the need to build political alliances with these various players to get things done one project at a time. GMA’s political isolation makes this hard. That explains why her programs and projects can’t seem to take off. Why, even Congress doesn’t pass the annual budget.

In her last State of the Nation Address, she announced huge budget expenditures for her “super regions” program, but until now, the lethargic bureaucracy hasn’t started moving. Her pet projects and legislative programs are stuck through the policymaking machinery, with allies taking pains to appear “independent” these days.

The year 2007 could mark her out as a lame-duck president, an administration with power sans authority. But if she still has energy to govern this country, she could probably recover by reaching out to various social and political groups.

This is important because 2007 is fraught with dangers for the economy. El Niño is a looming threat. As seen in the past three quarters, poor performance from the farm sector usually drags down the entire economy. The manufacturing sector, despite high expectations from electronics, has slowed down in the third quarter even as dollar remittances kept flowing. Not enough jobs are created despite the continuing growth of the outsourcing sector. And lately, inflation has started to manifest weaker demand, a probable indicator of rising lack of consumer confidence.

We can’t blame the people because in the last four quarters, the government did not show economic leadership. The administration simply tried to survive politically by hanging on to power at all cost. The economy went on “autopilot,” relying mainly on the initiatives of the private sector, overseas workers, and just everybody else who tried to live and survive.
The economy cannot go on like this in 2007. To achieve a higher growth level, the government will have to make the move. Reaching out to various social groups and forging alliances with them for a common growth agenda for 2007 is difficult but the government could probably initiate four major initiatives as confidence-building measures.

First—and the most strategic one—GMA should stop talking politics and truly focus on the economy. She should put an end to all political gambits that proved unpopular in 2006, including Charter change. Cha-cha has been a political lightning rod, attracting all sorts of criticisms from various groups. You take away Cha-cha, you stop talking politics, and you will have time to focus energies and resources on the economy.

Second, the immediate passage of the 2007 budget should be a priority. The passage of the budget would not only provide funds for major government programs and projects but also would signal the government’s seriousness about the economy. In 2006, the failure to pass the budget was a source of recriminations about how the government is (mis)managing the economy. People generally thought the failure to pass the budget was a deliberate move by the government to have the flexibility to squander money for elections.

Third, the government should put flesh and blood on the so-called super regions initiative. We really haven’t seen any tangible details of that plan since the President announced that initiative. The National Economic and Development Authority (Neda) and the Office of the President should come clean on this and start the ball rolling.

And fourth, the government should launch a major initiative on education. It can jumpstart the process by bringing together the House and the Senate to pass a law bringing back English as the medium of instruction in all levels of the educational system. It could also announce a streamlining of the school curriculum to give it more focus on the English language, science and mathematics. Such could probably involve certain policy reforms, including higher financial incentives for language, math and science teachers; teacher-training programs; and the opening up of education to foreign participation.

Countries like Malaysia, Indonesia, Thailand, and Singapore have been attracting a lot of world-class universities and there’s no reason why the Philippines can’t do the same to boost the country’s educational institutions. A serious student loan program is an investment in human resource. In this age of globalization and information technology, investment in human resources seems to be the fastest way to progress.

Four things, for a start. Christmas is over, let’s get to work.

Sunday, December 24, 2006

Is the Philippine economy hollowing out?

FORGET about gross domestic product growth rates. Forget about export statistics. Forget about improving fiscal balance. Instead, focus attention on the latest labor force survey. If we want to understand how we really fared in 2006, and what we could do in 2007 to make a difference, the labor force survey is the one that could tell us the real score. The rest of the statistics would be a mirage.

The October labor force survey (LFS) says that unemployment rate has improved a little from 7.4 percent in October last year to 7.3 percent in the same period this year. That 0.1-percentage point improvement is nothing to sneeze at since it meant there were 312,000 more people with jobs. Also, the underemployment rate has improved from 21.2 percent to 20.4 percent. In absolute terms there were more than 200,000 workers less satisfied in their jobs.

These seem to be interesting statistics, except that when we look at the bigger picture we can see that the improvement in the jobless rate is significantly influenced by the fact that there were fewer people joining the labor force. In October last year, the labor force participation rate was almost 65 percent; it’s 64 percent in October this year. This seems to indicate that a significant number of Filipinos opted not to work either because they don’t expect to find work or that they don’t have the qualifications to meet industry requirements. In other words, the bus ride felt a little bit comfortable simply because more people did not take the ride.

Certainly, the drop in underemployment suggests that many of those who got better jobs this year are those who are already working. They simply moved to whatever better jobs the economy has created, thus crowding out fresh entrants and those who are less skilled.

This explains why there were only 310,000 incremental jobs created within the survey period, not even enough to soak up 312,000 more people who joined the labor force. The name of the game in the labor market these days is “qualification” and those who got the incremental jobs necessarily are those who are with skills and practical experience.

The labor force survey also showed certain distressing signals that government planners should look at carefully. For instance, in October this year, there were 64,000 less entrepreneurs while unpaid workers rose by an additional 167,000. That means some of those who were listed as “employed” when the National Statistics Office knocked on peoples’ doors were working—without pay.

In the last three quarters, agriculture and the manufacturing sectors were doing quite well. But it’s a surprise that these sectors have declining employment numbers. The farms had lost 7,000 jobs while the factories had 31,000 less jobs. About 79,000 artisans (trades and related jobs) lost their businesses while 20,000 operators of plants and machines, as well as 21,000 laborers, lost their jobs.

Is the Philippine economy hollowing out? These figures seem to suggest just that. Whatever incremental jobs were created within the survey period came largely from the services sector (a total of 305,000 jobs). Major contributors of incremental jobs are real estate (79,000 jobs), private households (67,000), government agencies, including public administration and defense (48,000), hotels and restaurants (42,000), and financial intermediation (35,000). What this trend suggests is that the jobs created are concentrated in the cities—specifically Metro Manila, Cebu, Davao and other major secondary urban areas—while the countryside is losing jobs! And these jobs are largely grabbed by the more educated or skilled people.

These trends should worry us all because we are seeing the worsening polarization of incomes, economic opportunities and wealth in the country. We could see this polarization at various levels.

First, the cities are economically expanding while the countryside is stagnating. With this trend we can only foresee that premature rural-urban migration will worsen, thus stretching urban services to the limits. Do we wonder why we can’t seem to address urban congestion?

Second, economic expansion is felt by the relatively well-off. Notice how the middle-class is largely grabbing whatever quality jobs were created during the survey period. This means that while government economic planners were yakking about the benefits of outsourcing and the booming electronics industry, the ranks of slum dwellers who can’t partake of the emerging economic bounty are swelling. Do we wonder why the numbers of those who say they experienced hunger are rising?

What’s happening right now is the result of government neglect in terms of providing crucial economic infrastructure. In an effort to produce better statistics on “fiscal balance,” the government deliberately withheld investments on roads, bridges and ports, among others. And yet, these government bureaucrats actually hired tens of thousands more of people despite the fact that government agencies were not implementing any major economic projects.

Naturally, the country’s farmers and factories suffered. Because of problems like lack of decent infrastructure, rising production costs forced them to lay off workers. Owner-cultivators also employed fewer farm hands. One is left to imagine how poverty in the countryside these days must be worsening.

The solution? This administration should start getting those social and economic infrastructure projects moving, as promised, in the last State of the Nation Address. There are so many other things to do but starting right there would be a big step in the right direction.

Monday, December 18, 2006

Towards a green Christmas

GLOBAL warming is here with us, and it’s useless to debate the extent to which it’s going to change our lives in the near or distant future. The important thing is to change the ways we celebrate Christmas and the New Year.

Since “Christianity” started taking root in these Fiesta Islands, we have been celebrating Christmas and the New Year in successive orgies of bacchanalian excess that would put the Romans to shame. Millions of Filipinos ate, drank and were so merry many of them died of hypertension, cholesterol overload, and cardiac arrest from nights of stressful alcohol-laden bliss. And many got literally blown off to bits by firecrackers so huge they literally look like those improvised explosive devices used by insurgents in Iraq.

From what is supposedly a solemn affair about the Savior who came as a humble child in the manger, we have transformed Christmas into a seasonal paganistic overkill.

No, we are not concerned with morality here. Different strokes for different folks. We are concerned more with the fact that, while we are destroying our own health through frenzied overfeeding, we are destroying the planet as well by hastening global warming.

Consider this: On the 25th and the December 31st, many among us are shooting hundreds of thousands of tons of firecrackers, thus sending huge volumes of sulfur and other air pollutants high up into the atmosphere. The smog lingers in the air for days after the festivities, as if we had just burned millions of hectares of our rainforest in wildfires.

After the smog clears, we can see clearly the gigantic piles of garbage in streets coming from the gift wrappers, nonbiodegradables like discarded water bottles, styrofoam packs, plastics, spoiled food, and other stinking refuse. Much of the waste ends up getting burned in the dumps, thus causing even more pollutants and carcinogens. The rest of the garbage in the streets are scattered by feral cats and stray dogs and these clog the sewer pipes, thus causing floods and the spread of leptospirosis when the rains come. The original sin, ours, of starting all this mindless bacchanalian feasting is not exactly the act of people who are supposed to be responsible stewards of God’s creation.

If we want to celebrate Christmas in a truly “Christian” way, therefore, we must learn to celebrate it in a truly “sustainable” way. We can do this by reducing our carbon footprints and there are a thousand and one ways.

For instance, we can reduce the volume of waste by giving gifts sans the usual wrappers. Those gift wrappers are superfluous. People who receive gifts usually tear the wrappers away and throw them into the trash bin. Ultimately, they end up in the dumps or in the piles of garbage in the streets where they are burned—again, emitting noxious chemicals.

So giving gifts without the wrappers is one surefire solution. That way we can also save money. The recipients will surely understand if we just explain the principle behind it. Come to think of it, the Magi actually didn’t wrap their gifts when they went to see Jesus at the manger.

In these days of the Internet, sending “virtual” gifts, e-cards, and e-mail is a perfectly accepted way to connect with our friends and loved ones. Electronic cards are free. That way, we don’t have to burn so much cash. In reality, enjoying Christmas with people who are dear to us is not really about the material things we send and receive. It may sound mushy but it’s a timeless truth: it’s all about the idea that our loved ones are thinking of us in this season of good cheer.
Yes, we should maximize the use of the Internet to connect with friends. With the advent of broadband, we don’t need to drive to a friend’s or relative’s house. We can always do teleconference or e-chat. Or send a text message. We could leave the car at home during the Simbang Gabi. No driving means less traffic congestion, less burning of fossil fuel, less emission of ozone-depleting substances.

Christmas is when people seem to get afflicted with a certain travel madness. They travel to and fro and circle and shop as if there is no tomorrow. As a result, the streets leading to the malls, shopping centers and restaurants are always congested. Clogged streets do not only fray the nerves, they also force drivers to burn lots of fossil fuel. Lessening travel demand certainly is sustainable. Nevertheless, if we couldn’t help it, we may have to plan our trips well. Carpooling is an option. Or we could use public transport. Or better still, we shop online.

And most of all, we should avoid shooting fireworks. There are certainly other creative ways to make noise than burning sulfur and other harmful chemicals that poison the air.

A “green Christmas” may sound like taking away the fun from Christmas. It surely does sound like that but it’s only a matter of redefining our perspective. Global warming—manifested increasingly each day in unpredictable weather and destructive droughts and storms and other “inconvenient truths”— is a real issue all must confront squarely. Who knows, by pursuing a green Christmas, we may yet bring back the true spirit of the season, the original idea about the Messiah who came upon the world to save us from ourselves.

Wednesday, December 13, 2006

Monster on the loose!

ON December 12, the National Statistics Office (NSO) released the latest numbers on merchandise exports, saying the Philippines sold more than US$39 billion of tangible products to the rest of the world from January to October, up 16 percent from the numbers in the same period last year.

That’s certainly good news because, when we look at the NSO report more closely, our export growth was broad-based. Electronics grew by more than double digits (11 percent), but so did other sectors like manufactures, copper cathodes, petroleum, woodcrafts and furniture, bananas, processed tropical fruits, tuna, iron agglomerates, gold and copper concentrates.
But who really has heard about that good news? Not many. And that’s because most people’s minds these days are focused on the commotions and scandalous behaviors at the House of Representatives as the gang of Speaker Jose de Venecia Jr. tried, but failed, to ram through Charter change through the constituent assembly. Not even the cries of Typhoon Reming victims in Bicol could drive them to pause and ponder how they are ruining the country’s growth prospects this year and the next. Now they are trying to revive the corpse once more through the Con-con.

Such antics at the House somehow mirror the current bifurcation of the Philippine society at its worst, a social chasm that has been hampering the country from economically moving faster. We seem to have a Janus-faced society that is so conflicted we can’t figure out which face to show, the nice or happy face or the monster riding roughshod on our hopes and dreams.

On one hand, we have in our midst the people—private business, entrepreneurs, office workers, farmers, civil society groups—who are just so sick and tired of dirty and brazen politics, and are hoping that somehow, their leaders would come to their senses and stop doing anything that would threaten the economy’s prospects. They represent the nice and happy faces of our society. These are the people who are aware of their surroundings and of the fact that the rest of the world is moving on headstrong toward progress. The people, therefore, are hoping that somehow, these “political leaders,” who act like spoiled brats and rotten teenagers, would mature and start working for the common good.

On the other hand, we have “political leaders” who are so disconnected from the pulse of the nation, so remote and isolated from the wishes and aspirations of the people that they actually don’t give a heck whether or not we are headed to perdition. For them, what seems to matter most is political survival and it matters not that the economy, meaning the living standards of the people, might be derailed. They are the monsters whose obsession for power is matched only by their brazenness.

In the last several quarters, the happy face of this country has actually tried to manifest in decent gross domestic product growth rates, rising exports, stable factory capacity and utilization, a “strong peso,” rising remittances and domestic demand, improving finances, exuberant stock markets, and enthusiastic call centers. Somehow, the monsters in our midst lied low to give us an improving reputation as hosts to outsourcing. Lately, there have even been encouraging talks about the Philippines becoming a “knowledge-processing” center in Asia-Pacific.

Now we know at this time that efforts of the people, the happy struggling faces of our society, are not enough to lift us all from poverty and pervasive joblessness unless the rulers do their share of the work. What has been doing well all along was largely the external sector, whose dynamism is beyond the country’s control and influence. We have come to realize that our current exports growth, rise of call centers and the billion-dollar remittances are not enough to lift us to the levels of development achieved by our neighbors.

Thus, the people, especially the private business sector, have been saying that it’s time now for the country’s ruling elite to rise up and do their mandated work and clear all the logjams that have been hampering economic growth: lack of absorptive capacity, red tape, inefficiency, incompetence and plain lack of vision.

But so isolated are these people from the wishes of the larger society that they heard the message wrong. Instead of seeing the improving numbers as a chance to ratchet up growth, they instead started embarking on another political misadventure through the Con-ass, a sinister project that would further infuriate and polarize the entire society.

Why are they so insensitive to the wishes of the people? Why are they so blind to the desires of the private sector for stability and continuity? Why are they so brazen to challenge the patience of the people?

After the House retreated from the Con-ass, the administration became isolated. But we fear that they have already done great damage to the economy and its near-term prospects.
The administration is so embarrassed about its humiliation in the Con-ass that it had to cancel the Asean summit to avoid Asean delegates seeing all the rambunctious and scandalous antics of politicians in the House of Representatives. That Malacañang had to blame a typhoon for the cancellation has made it all the more ridiculous.

But there is a huge price to pay for that: our image as an investment destination, and the competence of the country’s leadership. It would be bad enough that we lose our face, but it would be worse that the jobs are not going to be created for lack of investor confidence.
And the worst scenario is that, with an angered citizenry that has lost respect for the current political leadership, we might see yet again mammoth demonstrations, street confrontations, and utter chaos that, in the past, had given us an image of a nice, resilient people governed by insensitive politicians behaving like monstrous, rotten teenagers.

Monday, December 11, 2006

Read the people's lips: no short cuts!

NOW that Con-ass is dead, will the government please do the real business of governing?
In the last several years, the residents in Malacañang have been pretending to govern while putting out political fires. Now it has to do it for real because the stakes are high for the Philippine economy. We are approaching 2007 and that year might yet be a crossroad for us Filipinos.

In the last several months, international institutions have been saying positive things about the Philippines. For instance, the World Bank, traditionally conservative about our growth prospects, has predicted a better figure for the country’s gross national product. We just had our upgrade from Moody’s to stable. Revenue collections are improving. Tourism arrivals are improving. And investments, although loose change by Chinese standards, have started to breach a billion-dollar mark. And for sometime last month, the stock market was brimming with exuberance.

But lately, dangers signs are appearing in the horizon. Typhoons have ravaged the country’s agricultural production areas and the manufacturing sector—based on the third quarter economic performance—is slowing down. El Niño has started to rear its ugly head. And the inflation rate, normally a positive sign when it’s slow, has declined uncomfortably for too long, indicating a strong likelihood that people are not buying. December is normally a season of good cheer but we don’t seem to see retailers jumping up and down like monkeys. It seems like consumers, the main pillar of the Philippine economy, are holding on to their money.

Why? Political uncertainty related to Charter-change campaigns by the administration and its allies at the House of Representatives should really be the reason. When Speaker Jose de Venecia Jr. tried to railroad Charter change through the constitutional assembly in the wake of the Supreme Court rejection of the “people’s initiative” months ago, many people (many of whom stayed apolitical in the last several years) were jolted out of their political slumber. Had de Venecia and his gang pushed through with their antics despite popular opposition, they could have had another “revolution” in our midst, an event that would have killed whatever respect the world has for us Filipinos.

From the start, JDV and his manipulators in Malacañang should have realized that Con-ass didn’t really have an iota of a chance to succeed. For one, its acronym really stinks, something that sounds like a brazen con game straight out of some despicable trapo’s ass. Second, the haste with which they rammed it through the House of Representatives tells us they are up to something that we ordinary people don’t know. Or maybe they are really desperate to push a certain agenda, making them even more dangerous.

Of course, we all know that Malacañang dwellers dread the coming May election as it will produce a Senate that is totally dominated by the opposition. With an opposition-dominated Senate, it would be much easier for the many balimbing in the House of Representatives to shift allegiance away from the ruling party as they, more than ever, have the greater chance of getting a conviction for President Arroyo in the Senate. So Joe de Venecia huffed and puffed but he had to back off when they saw the dark clouds of public opinion in the horizon brewing dangerously like a supertyphoon about to sweep off Malacañang from it foundations.
It’s a good thing that JDV and Malacañang backed off from Con-ass; but there are indications it’s just a tactical retreat, and it would help us right if they would start burying it in the dumps of history.

Certainly, people are sick and tired of the convenient and short-sighted shortcuts that characterized Philippine politics in the last decade. After all the mess that came in the wake of the extra-constitutional means with which former President Joseph Estrada was removed from power, the people—including the Church—have certainly matured politically by ignoring attempts in the past to topple Mrs. Arroyo’s government through yet another extra-constitutional means. And certainly it maddens them that Mrs. Arroyo herself would seem to resort to the same sleazy shortcuts just to push for a Con-ass amid popular resentment.

Read the people’s lips: no short-cuts!

If JDV and GMA want to change the Constitution badly, they should do so using the right and constitutionally mandated procedures. Certainly, there are archaic provisions in the Constitution that need to be updated (like allowing more competition in utilities, media, banking, shipping, port operations, retail, among others, we would effectively deal with monopolies), but we have to do it the right way, through open debates, in a truly transparent and democratic way. We reform while ensuring that the beneficiaries of such changes are the people and not the current crop of politicians who are a party to the current state of paralysis and incompetence.

Certainly, JDV’s and GMA’s defeat should be painful. But they can redeem themselves by refocusing their energies on the economy. As we have pointed out earlier, we are at the crossroads; what they do in the next two or three years would define much how our economy would perform and where this country will go. If they would do further stupid political mistakes in the next few months (like reviving Con-ass in other forms), the creeping political uncertainty would gain momentum, thus derailing the economy in 2007 and beyond. But if it is stopped and officials started to exercise prudence, we might yet come out of 2006 and 2007 with better economic numbers.

As they lick their political wounds, GMA, JDV and their minions could do this country some good if they work together to focus their minds, energies, and resources on the Philippine economy. We haven’t seen anything tangible since the President promised to spend billions for the “super-regions.” We have not seen anything tangible since the President held an investment summit with the local and foreign chambers of commerce and industry. We haven’t seen any gains in terms of mobilizing government resources to pursue infrastructure development. Now that all their political gambits were check-mated by the people at every corner, they should have more time to really look at the Philippine economy and do their jobs.

Thursday, December 07, 2006

Global warming creates uncertainties for the Philippine economy

ARE we prepared for the new reality fostered by global warming? That’s a big question we should ponder as we count our losses, bury our dead and try to get back on our feet after Typhoons Reming and Milenyo.

It’s a material question since it seems we haven’t seen the last of these supertyphoons that pack winds strong enough to peel off roofs and destroy much of our budding hopes for a better future. It’s a new reality that we need to confront squarely if we want to sustain the economic momentum of the last three years.

Prior to Milenyo, observers said the Philippine economy was “on the mend” and cited the upgrades in sovereign rating, the all-time highs in the stock market, the double-digit growth rates in exports, and the improving tax collection of the government. In fact, before the supertyphoons, top Neda officials were walking around with PowerPoint presentations projecting the economy as headed for a continuous climb to a 5.5-percent to 6.2-percent growth rate this year.

Neda was confident of attaining such growth targets as the economy, its top officials kept saying, has new growth drivers—electronics, outsourcing, crop production and agro-processing, livestock and poultry, aquaculture, furniture and fixtures, transport equipment, mining, hotels and restaurants, medical tourism, construction, and shipbuilding.

The PowerPoint slides were convincing: in the last few years the numbers indeed were improving. Investments were breaching the one-billion-dollar mark, tourist arrivals were growing at double-digit rates and foreign currency reserves kept posting record highs, the peso has been gaining strength, and the national government deficit has been improving significantly from more than 4 percent of GDP to about 2 percent this year.

Then came supertyphoons Milenyo, Paeng and Reming. Suddenly everything changed. Coming after Neda’s announcement the industry sector slowed down in the third quarter, Reming’s fury highlighted the possibility that the economy is probably losing steam and could no longer achieve the growth targets.

The statistics, specifically the monthly integrated survey of selected industries (Missi), had been showing these negative signs all along, yet government planners ignored them and regaled themselves with the other numbers that seemed to be doing well.

But Reming was a reality check, unmasking the vulnerability of such growth, forcing the government to accept the targets are a tall order. Sales of manufactures, said the usually optimistic Donald Dee, president of the Philippine Chamber of Commerce and Industry, are tepid even as we approach Christmas. And this is likely to worsen as the farms lost much buying power to the forces of nature.

The government just released the November inflation rate confirming the continuing slide of the consumer price index. That’s nice, except that it confirms Donald Dee’s observation about weak sales in the run-up to Christmas. Besides, electricity, gas and water, the consumer price index on most items, especially food, beverages, and tobacco; clothing; services; and miscellaneous manufactures are sliding. It could mean people are not buying, either because they don’t have much money or they feel so uncertain they’d rather save for a rainy day.

We’re back to reality and we better be prepared for the worst. If talk about global warming is accurate, we could expect more crazy weather (e.g. increasing frequency of supertyphoons followed by withering dry spells) that could ruin the technocrats’ planning models. There’s probably no more Milenyo or Reming very soon, but we all know that an El Niño is already under way.

What does Philippine Atmospheric Geophysical and Astronomical Services Administration (Pagasa) say about this? “Based on the latest observations and international forecast models, intensification of the El Niño episode is expected during the next three months and will likely continue through April to June 2007.”

There you go. We are going from the supertyphoon to another dry spell. While that may not cost so much lives and limbs, it might hobble the economy further through low agricultural growth, and trigger another water crisis in Metro Manila as previous storms failed to fill the dams that store water for the metropolis. Are we prepared for this?

Global warming may have introduced a new source of uncertainty for the economy. Neda may have to revisit its plans and programs to see if it’s still attuned with the times.

The greater variability of weather suggests we may have to work harder to boost the manufacturing sector by lowering tariffs for their inputs and the cost of electricity. We may have to enhance economy-wide competitiveness by introducing more competition in shipping and port operations, telecommunications, and banking. We should strengthen outsourcing and cyberservices by restoring English as the medium of instruction and beefing up general education. We need to train more skilled workers in engineering and construction to meet rising demand for these workers here and abroad.

Neda periodically prepares the regional physical framework plan on which all programs and projects are based. The Neda staff must revise them to highlight danger zones and strengthen the framework for coordination in disaster management.

The government may have to reorient programs toward drought-resistant crops, the use of efficient irrigation systems (like drip irrigation) and the deployment of shallow tube wells in strategic agricultural zones. Over the medium and long term, the Department of Agriculture and the Department of Science and Technology will have to focus research to these.

Most of all, we need to get serious with our environmental programs, including reforestation, watershed protection and the preservation of water bodies. Simple lip service and a business-as-usual attitude will not do.

For almost a decade, policy analysts have talked of the need to use economic instruments (e.g. variable levies, charges and taxes) to provide incentives for responsible behavior among consumers. For instance, the National Water Resources Board should reflect the true cost of water by detailing expenses in water-source development and charging a variable fee based on water level at the Angat and La Mesa dams. If water is cheap on rainy days and gets expensive as the dry season wears on, people will be forced not to use potable water to irrigate their lawns and wash their cars.

At bottom, adjustment requires something of each one, the government especially. But the cost of inaction will be worse. (Photo credit:

Tuesday, December 05, 2006

Solving the jobs-skills mismatch puzzle

ASK human resource practitioners and they will swear the jobs are there but employers are having a difficult time finding the right kind of people. The problem, they say, is a mismatch between jobs offered and the skills provided by the country’s educational system, a weird sort of scarcity amid plenty that is being accentuated by the rapid growth of business-process outsourcing, and the globalization of the Philippine labor market.

But how could we bridge this widening chasm? First, we need to bridge our understanding of the jobs-skills mismatch and objective condition on the ground.

Many policymakers seem to assume that schools tend to produce ivory-tower intellectuals and artists who will starve because they are not what employers need. The schools, they say, should encourage “employable skills”—short hand for worker bees trained in vocational and technical (VocTech) education; warm bodies who fiddle, tinker and produce concrete saleable products and not those woozy-headed thinkers who agonize over the meaning of life. The schools, they say, should cut emphasis on liberal education and focus on “hard” physical sciences and VocTech.

These views stem from our martial- law hangover when Ferdinand Marcos imposed the National College Entrance Examination to screen out and channel more people into one- or two-year courses. But do these old notions about the skills-jobs mismatch still stand?

The answer is no. BusinessMirror’s job ads monitoring (JAM) project, now on its fifth month, shows that the world is no longer what it used to be. This much is obvious in the October JAM report, where employers in three major national newspapers and three major online jobsites posted almost 35,000 advertisements for jobs.

The top 20 advertisers, from the highest to the lowest, are: cyberservices; construction and engineering; human resource/manpower firms; manufacturing; wholesale and retail; hotels, restaurants and resorts; financial intermediation; transportation, storage and communication; health and social work; education; personal, community and social services; real estate and renting; business consulting; mining and quarrying; advertising and promotions; extraterritorial bodies; and agriculture, fishery and forestry.

And what sort of skills do they require? Again, in descending order: professional and technical, clerical, production and related workers, administrative and managerial, sales workers, and service workers.

These numbers indicate that employers require skilled people, most of them highly schooled. Data seem to suggest that employers need both those who tinker and produce concrete stuff and those who think and produce intangible knowledge-rich products and services.
The recent study by the Personnel Management Association of the Philippines (PMAP) supports this paper’s JAM findings. In a study that covered fast-growing industries like pharmaceuticals, banking, consumer goods, hotels and restaurants, semiconductor, information technology, telecommunications, retail, and call centers, employers say they want people who have good communications skills, with strong analytical and conceptual skills, and have initiative.

These preferred basic competencies perfectly sound like those “soft” skills from a good liberal education. Certainly, the country needs more programmers, engineers, architects, physicists, welders and pipe fitters, but the workplace these days demands no less than a good liberal or general education for these people of the hard sciences to make a difference.

This new information on skills mismatch suggests that universities don’t have to junk their liberal and social sciences. In fact, the real issue seems to be how to strengthen it to compliment the hard sciences and the VocTech.

Gone are the days when all that engineers or chemists had to do was dazzle people with designs, numbers and formulas. Now they need to have leadership and social sophistication as well. They need to have self-confidence, assertiveness, flexibility and maturity; a global perspective and awareness of their social milieu, in contrast to the old notion of technical guys as introverted, remote number crunchers.

So, do our schools have what it takes to produce the workers demanded by the new, transformed and globalized workplaces? The evidence so far is mixed. While we have several centers of excellence providing quality education, the overall verdict seems to say the schools don’t produce enough “employable” graduates. Not even the VocTech school, according to PMAP, as their graduates are not doing good in the labor market either despite the rising demand for workers here and abroad. In the last six months, 80 percent of the job advertisements in construction and engineering were for overseas placements. Yet, according to the POEA, the Philippines could only fill half the job orders each year, a proof that those VocTech schools are not providing the required skills either.

What we see here therefore is not just a problem of mismatch, but a complete disconnect of the educational system with the dynamics of the labor market.

Solutions? Experts in the last tripartite human resource summit hosted by PMAP suggested greater industry-academe tie-up, especially in curriculum development. That’s fine, but it may not be enough to bring this country out of its low-growth equilibrium. If we want world-class education that could make this country the dragon economy we always dreamt of, we need a strategic look at how we fund the education of our children; and to look at education as an investment on the country’s future.

We are not talking of giving more money to the Commission on Higher Education. The idea is to set up a huge fund for a student loan program similar to those in the United States and Australia. Australians, for instance, have the so-called Higher Education Contribution System (HECS), lately renamed HELP or Higher Education Loan Program, where students borrow money from the government to be repaid once they are gainfully employed.

They could use such money to enroll in whatever school they want. To ensure that schools provide quality services—and weed out diploma mills—independent bodies should develop and provide benchmark information to the public, like a school ranking index to denote quality, to guide students’ decisions. This information system will pressure schools to innovate and improve as the annual ranking or index would penalize lousy providers by not enrolling in their schools.

Sometimes, policymakers wonder why it’s so easy for the best and brightest to leave for foreign shores. Economics certainly is the reason. But it’s also because many of them feel “the system” doesn’t care enough to invest in their future. A student loan program could meet this problem. And bridge the gap between the rich and the poor that, over history, has been causing their deep social fissures and hampering our efforts toward progress.