In Focus Archived (July 2015)

Investing in human capital is a key factor that can sustain the high growth rate the Philippines has been experiencing in the past years. Education and health are crucial in achieving labor effectiveness and productivity. The poor, however, are confronted by the high rate of unemployment, underemployment, and low incomes.

People with access to education and health have better chances of getting well-paying jobs. Education is a fundamental long-term solution to the Philippines development challenge. It is a way to escape poverty and achieve better future and higher incomes. Addressing Late School Entry and other Demand-Side Barriers to Primary Schooling, a policy note by a team led by Dr. Jose Ramon Albert of PIDS discussed educational disparities and the need to improve the quality of education aside from attaining universal primary education. It is crucial to keep children in school, maximize their learning, and ensure that they complete their schooling.

Despite the growth of the Philippine economy in the past years, the gap between the richest and the poorest Filipino households in terms of health financing, access to services, and health status has not significantly improved. A policy note titled The Puzzle of Economic Growth and Stalled Health Improvement in the Philippines, by PIDS consultant Oscar Picazo and co-authors stressed that while macroeconomic growth and financial stability are important, the goal of a countrys growth efforts should be human development in a sustainable environment.

On top of these is the pressing need for job creation. In 2013, the unemployment rate was 7.3 percent while underemployment stood at 19.8 percent. Given this backdrop, Drs. Aniceto Orbeta, Vicente Paqueo, and Leonardo Lanzona, in a PIDS study titled Labor Policy Analysis for Job Expansion and Development underscored the importance of addressing the jobs challenge through the massive expansion of poverty-reducing jobs and sustained human capital development through education and training. Dr. Rafaelita Aldaba, in The Philippine Manufacturing Industry Roadmap: Agenda for A New Industrial Policy, High Productivity Jobs, and Inclusive Growth, stressed that the manufacturing sector can provide higher wage and higher productivity jobs than the services sector. The manufacturing sector is vital for the countrys economic transformation that can create more opportunities to improve the quality of life of Filipinos.

To know more about PIDS research on human capital development, visit theSocioEconomic Research Portal for the Philippines. Simply type education, health, jobs, human capital, poverty, and related terms in the Search box.

The Philippines enjoys rapid economic growth. From 2008 to 2013, it registered an average GDP growth rate of 5.1 percent. In 2013, the economy grew at a remarkable rate of 7.2 percent despite the combined effects of typhoons and other disasters, the tamed growth of some sectors, and the global economic slowdown in the Euro zone and other trading partners. This can be attributed to improved macroeconomic fundamentals, better financial management, and the reform efforts of the present administration. Nevertheless, income inequality and poverty incidence remain high and stable in the last two decades. It is widely believed that this failure to attain greater inclusiveness is due to widespread joblessness and underemployment because of the countrys inability to rapidly expand quality job opportunities. Philippine growth has often been criticized as jobless growth. Senior Research Fellow Dr. Jose Ramon Albert debunks this in a policy brief titled Is Growth Really Jobless?, noting that small net changes in unemployment rates are full-time jobs being created in industry and services sectors and part-time jobs lost in agriculture.

At any rate, the jobs problem has to be confronted head on, by looking at the underlying causes. PIDS research has found that decades-old labor regulations have been ineffective, indicating that new approaches are needed. A study titled Labor Policy Analysis for Jobs Expansion and Development, by Drs. Aniceto Orbeta, Vicente Paqueo, and Leonardo Lanzona, found that the overall impact of the minimum wage is negative. It is disadvantageous particularly to smaller firms that dominate the economy. Moreover, it reduces the employability of young, female, and inexperienced workers, and lowers the proportion of working-age family members who will be hired. The study proposes a 12-point agenda, referred to as the Jobs Expansion and Development Initiative (JEDI). It would be better to use direct and temporary income subsidy, carefully targeted toward extremely poor households, to meet suitable norms that society considers as public good. Other measures are better educa tion, increased labor-intensive manufacturing, and greater opportunities for training on the job.

Transforming and upgrading the manufacturing industry is crucial to achieve inclusive growth, create quality jobs, increase incomes, and reduce poverty, according to the study titled The Philippine Manufacturing Industry Roadmap: Agenda for New Industrial Policy, High Productivity Jobs, and Inclusive Growth, by Dr. Rafaelita Aldaba, PIDS senior research fellow on secondment to the Trade department as assistant secretary. The study underscores the importance of implementing a new industrial policy that would take advantage of market opportunities and face the challenges of the AEC. Moreover, a paper titled Regional Integration, Inclusive Growth, and Poverty: Enhancing Employment Opportunities for the Poor, written by Senior Research Fellow Dr. Celia Reyes as lead author, explains that the manufacturing sector can provide employment opportunities for the poor and can offer relatively higher wages. To promote inclusive growth and reduce poverty, the manufacturing sector has to be made more competitive. At the same time, productivity in the agriculture sector, which is the major employer of the poor, should increase.

To know more about PIDS research on jobs and inclusive growth, visit the SocioEconomic Research Portal for the Philippines. Simply type job, inclusive growth, education, poverty, and related terms in the Search box.

  1. Is growth really jobless?

  2. Labor Policy Analysis for Jobs Expansion and Development

  3. Economic Policy Monitor 2013: Addressing the Jobs Challenge toward Inclusive Growth

  4. The Philippine Manufacturing Industry Roadmap: Agenda for New Industrial Policy, High Productivity Jobs, and Inclusive Growth

  5. Where Are the Poor Employed? Profiling the Working Poor

  6. Regional Integration, Inclusive Growth, and Poverty: Enhancing Employment Opportunities for the Poor

  7. Effects of minimum wage on the Philippine economy

  8. Promoting Inclusive Growth Through the 4Ps

The large and rising numbers ofpoor people amid the continuing growth of the Philippine economy reflect the need for stronger and sustained efforts to protect the poor and vulnerable. Between 2009 and 2012, the proportion of the population with per capita incomes less than the poverty threshold barely declined. The magnitude of poor people also increased to 23.7 million in 2012 from 22.6 million in 2006 and 21.7 million in 1991. The poor are most vulnerable to economic downturns and crises and natural hazards whose impacts may push them further down to poverty.

Social protection thus is an important component of the governments development policy to empower and protect the poor, vulnerable, and disadvantaged individuals from all kinds of risks. Given the large population of poor Filipinos, sustained growth that attracts investments and creates jobs are critical to achieve inclusive growth. High investments, massive infrastructure development, and employment generation need to be complemented by human capital development through programs that promote health and education improvement and facilitate equitable access to basic social services.

The Pantawid Pamilyang Pilipino Program (4Ps) is by far the largest poverty reduction and social development program implemented in the country. For its second phase, the current administration heeded the recommendations of PIDS researches to improve the program design by targeting high school completion of beneficiary children instead of merely elementary graduation. A study by Celia Reyes and Aubrey Tabuga, PIDS senior research fellow and supervising research specialist, respectively, shows that the average daily wage of a person who completed elementary is only 10 percent higher than what he would get had he been only an elementary undergraduate. However, a person who completed high school would earn 40 percent higher on the average than if he had completed only some years of elementary education. From a poverty reduction point of view, additional years of schooling can provide better employment opportunities and higher incomes for the poor.

In terms of support to specific vulnerable groups, efforts targeted to persons with disabilities (PWDs) remain wanting. There are approximately 1 million PWDs in the country or 1.23 percent of the total 88 million population in 2007. They remain among the poorest of the poor, with 30-40 percent of them being children. While there are laws present to protect and uphold the rights of PWDs, a study by Tabuga indicates that they continue to experience difficulties in exercising their privileges such as bus fare and medical care discounts. According to Tabuga, the main constraints that PWDs face are their lack of awareness of their privileges and the lack of the required identification card to avail of their privileges. In addition, many PWDs do not participate because of low self-esteem due to their immobility and unemployment. Their situation tends to be more problematic if they are residents of poorer localities. Richer local government units have the resources to implement programs for them and have the capacity to effectively assist a greater percentage of the PWD population.

The degraded state of the environment and natural resources is also mostly experienced by the poor, particularly those in the rural areas, whose livelihoods are primarily dependent on agriculture. In 2009, fishers and farmers were among the poorest groups with poverty incidences of 49.9 and 44 percent, respectively. They suffer the brunt of natural calamities. Roehlano Briones and Danilo Israel, PIDS senior research fellows, estimate that the total value of agricultural damage caused by natural calamities from 2000 to 2010 amounted to more than PHP 100 million. Agricultural insurance is an important risk protection instrument for farmers and other types of agricultural workers. While programs exist, their effectiveness remains problematic. The preliminary results of an impact assessment study of the governments crop insurance program reveal the minimal participation of farmers. The PIDS researchers headed by Reyes report that the penetration rates of the rice and corn insurance packages of the Philippine Crop Insurance Corporation (PCIC) were below 10 percent from 1981 to 2013. Awareness of the program, including the terms and conditions of the different insurance products being offered by the PCIC, was also found to be very low.

The poor are a heterogeneous group but with a common need for empowerment and assistance to prevent and overcome adverse situations, reduce poverty, and manage economic and social risks. The current system of social protection in the Philippines is characterized by multiplicity of programs, poor coordination, high leakage due to weak targeting, inadequate information dissemination, and poor monitoring and evaluation. Auspiciously, the Philippine Development Plan 2011-2016 has emphasized convergence of service delivery, maximized synergies, and active and strategic participation of stakeholders as a key strategy to improve the countrys social protection program. The government is in the right direction in pursuing a convergence approach. Hopefully, this will be sustained in the next administration.

You may access PIDS studies on social protection from the SocioEconomic Research Portal for the Philippines. Simply type social protection, poverty, persons with disabilities, and other relevant keywords in the Search box.

  1. Social Protection in the Philippines: Current State and Challenges

  2. Public-Private Partnership Options toward Achieving Universal Health Coverage in the Philippine Setting

  3. The Sponsored Program of the Philippine National Health Insurance - Analyses of the Actual Coverage and Variations Across Regions and Provinces

  4. Reconnaissance Study on the Implementation of Case-Based Payments

  5. Feasibility of Supplemental Funds from the Private Sector for Catastrophic Illness Financing

  6. Analysis of Catastrophic Health Financing by Key Institutions

  7. Fiscal Costs of Subsidies for Socialized Housing Programs: an Update

  8. Impacts of Natural Disasters on Agriculture, Food Security, and Natural Resources and Environment in the Philippines

  9. What Constrains PWDs to Participate in Discount Privileges? The Case of Bus Fare and Medical Care Discounts in the Philippines

  10. Promoting Inclusive Growth through the 4Ps

  11. Policy Awareness and Participation by Persons with Disability in the Philippines

  12. Review of Design and Implementation of the Agricultural
    Insurance Programs of the Philippine Crop Insurance Corporation


Nearly three decades after the Comprehensive Agrarian Reform Program (CARP) was signed into law, land reform has yet to be completed in the Philippines. Data from the Department of Agrarian Reform website show that as of the end of 2013, the government has acquired and distributed 6.9 million hectares of land, or 88 percent of the total land subject to agrarian reform.

After three deadline extensions, there are again clamors to extend the Comprehensive Agrarian Reform Program Extension with Reforms (CARPER) for another two years after June 30, 2016. This is not the first time that agrarian reform deadlines have not been met. CARPER is an extension of an extension of the agrarian reform program.

The protracted period of implementation and the pending completion of the CARP have resulted in underinvestments in the agriculture sector. Landowners are hesitant to invest while their farms are under acquisition processing. The CARP has also failed to break up large estates. A highly politicized program protected by interest groups with ties to the countrys political elite, many influential landowners have managed to evade the CARP. According to a study by Marife Ballesteros, a PIDS senior research fellow, various schemes are employed by landowners, such as increasing retained areas by registering excess holdings in the name of family members or dummies, mortgaging land to defer land reform, converting land to non-agricultural use, and giving farmers the option to own shares of stock instead of land, a method used by the owners of Hacienda Luisita.*

Once small farmers have the land, the next issue they have to confront is how to finance crop production. The wealth bias of the rural credit market is a major constraint to them. As a result, many farmers resort to selling their land or pawning their emancipation patents and certificates of land ownership awards.

Providing secure property rights to farm workers to foster greater productivity and to enable them to capture the benefits of agriculture is a fundamental objective of the CARP. More than two million beneficiaries benefited from the land transfer program; 84 percent of them acquired individual ownership rights that gave them full control over land operation and management. In another study, Ballesteros stressed the critical role of land administration and management for the successful implementation of the CARP. She revealed that this aspect is fraught with weak land policy and poor land administration issues that resulted in deficient land records, lack of information sharing among government land agencies, tedious land titling and registration process, and unclear land policies. All of these, in addition to the legal maneuvering of influential landowners, have caused the lengthy implementation of the CARP, the flawed land redistribution and land retention, and the incomplete transfer of property rights.

Secure property rights are a necessary condition to reduce poverty in the Philippines, which is largely dominant in agricultural areas. The completion of the CARP, resolution of agrarian reform issues, and provision of adequate support services to farmers, including physical infrastructure, will facilitate the rehabilitation of the agricultural sector and help fulfill the path to inclusive growth.

You may access PIDS studies on agrarian reform from the SocioEconomic Research Portal for the Philippines. Simply type agrarian reform, CARP, poverty, agriculture, land management, property rights, and other relevant keywords in the Search box.

  1. CARP Institutional Assessment in a Post-2008 Transition Scenario: Implications for Land Administration and Management

  2. Land Rental Market Activity in Agrarian Reform Areas: Evidence from the Philippines

  3. The Cost of Redistributive Land Reform in the Philippines: Assessment of PD 27 and RA 6657 (CARL)

  4. Poverty and Agriculture in the Philippines: Trends in Income Poverty and Distribution

  5. Regional Integration, Inclusive Growth, and Poverty: Enhancing Employment Opportunities for the Poor

  6. Targeting the Agricultural Poor: The Case of PCIC's Special Programs

  7. Post-2008 CARP: Extension with critical reforms

  8. Property Rights in Land Reform Areas

  9. Has Land Reform Improved on Landownership Inequality? Evidence from Philippine Rice Growing Villages

*In 2005, the previous administration through the Presidential Agrarian Reform Council (PARC) revoked the stock distribution option (SDO). What followed was a lengthy court battle after the owners of Hacienda Luisita challenged the PARCs decision. In 2010, the Supreme Court came out with a decision that upheld the option of each beneficiary to choose either land or shares; this was again disputed by the landowners. Finally, in 2012, the Supreme Court upheld with finality the 2005 decision of the PARC to revoke the SDO. A total of 4,915 hectares of the estate were ordered by the Supreme Court to be distributed to 6,296 farm workers of the hacienda. (Sources: Cruz, Elfren. 2013. Hacienta Luisita and agrarian reform. The Philippine Star, 3 October 2013; Department of Agrarian Reform website, Awarding of Hacienda Luisita farm lots almost complete,