PH HIGH UNEMPLOYMENT RATE MARS ECONOMIC GROWTH

Unemployment rate in the Philippines stood at 7 percent—or seven of every 100 Filipinos are jobless—despite the “robust” economic growth” in the past two years, the International Labor Organization (ILO) said in its Global Employment Trends 2014 report. Too, 11 percent of the nation’s workers are classified under “extremely poor,” individuals living on less than $1.25 a day, or about P55 a day. The country recorded over 6.8 percent growth in 2012 and 2013, but the ILO said “job growth has been subdued and the unemployment rate” remained at a high of 7 percent in both years. This is relatively high compared with the rest of the Southeast Asian region. In most of Southeast Asia, the unemployment rate has a downward trend—from an average of 6 percent between 2000 and 2008, to around a projected 4.5 percent in the next few years.

ALSO: Peso to hit P46/dollar

The Philippine peso is seen to hit P46 to a dollar in the weeks ahead as pressures from portfolio rebalancing continues, according to think tank Global Source Partners. In a research report titled “Peso In A Free Fall?” the think tank said that the peso’s “free fall” has raised worries that the country’s external payments position may come under pressure, as imports to fund reconstruction and other infrastructure needs increase this year. It said that the peso depreciation was seen as a region-wide response to continuing speculation about the likely strength of the United States economic recovery and its impact on the speed of the Federal Reserve taper on its bond-buying program. But Global Source Partners said that government economic managers see relatively less risk of global financial market turmoil that could negatively affect the country’s domestic growth prospects, on the account of its strong external payments position.

ALSO: World Economic Forum in Davos: Served, not ruled

This week’s World Economic Forum held in Davos, Switzerland saw the gathering of the most influential names in business and politics. As they do year after year, they broke out into smaller discussion groups – donned in designer suits, munching on pricey food and sipping expensive wine -- talking about the things that run the global economy and the threats confronting it. As always, too, the grim reminder of inequality despite advances in technology and wealth continues to haunt the high-level meetings. According to a report from Oxfam, the richest 85 individuals in the world have as much wealth as the poorest 3.5 billion – half the world’s population put together. No less than Pope Francis has criticized what is known as trickle-down economics. According to the pontiff, this system assumes that those in power would know the right thing to do and find ways for wealth to be distributed justly. But the assumption is wrong, because the elite actually act in their own interest. As a result, there are many who are excluded. Pope Francis might as well have been speaking to Philippine leaders, who have early on established that their long-term objective was inclusive growth and development.


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High unemployment rate mars PH growth


Despite strong economic growth, the unemployment rate in the Philippines remains the highest in Southeast Asia. The government admits it has not been able to meet its target of creating one million jobs a year, and now hopes to create employment by drawing in more investments.

MANILA, JANUARY 20, 2014 (TIMES) by Bernice Camille V. Bauzon & Kristyn Nika M. Lazo -Unemployment rate in the Philippines stood at 7 percent—or seven of every 100 Filipinos are jobless—despite the “robust” economic growth” in the past two years, the International Labor Organization (ILO) said in its Global Employment Trends 2014 report.

Too, 11 percent of the nation’s workers are classified under “extremely poor,” individuals living on less than $1.25 a day, or about P55 a day.

The country recorded over 6.8 percent growth in 2012 and 2013, but the ILO said “job growth has been subdued and the unemployment rate” remained at a high of 7 percent in both years.

This is relatively high compared with the rest of the Southeast Asian region.

In most of Southeast Asia, the unemployment rate has a downward trend—from an average of 6 percent between 2000 and 2008, to around a projected 4.5 percent in the next few years.

The unemployment rate for both genders in the country also remained higher than the average rate of Southeast Asian region.

“Women in the region face slightly higher chances of unemployment than men,” the ILO said.

There is a 4.4 percent unemployment rate for women in the region while 4.1 percent was recorded for men. In Indonesia, for example, the unemployment rate for women in May last year was 6.3 percent compared with 5.5 percent for men.

However, the Philippines has higher unemployment rate for both genders last year—7.2 percent for women in July 2013 and 7.3 percent for men.

Another major challenge for the region is the estimated youth unemployment rate of 13 percent in 2013.

That rate is three times of the total unemployment rate, and approximately five times that of the adult unemployment rate.

“Given the young demographic profile of many of the countries in the region, adequately equipping youth with education and skills and enabling youth to obtain productive jobs that have upward earning prospects are likely to remain key policy concerns,” the ILO said in the report.

But because the Philippines is part of the Association of Southeast Asian Nations (Asean) Economic Community 2015, it will be presented with both opportunities and challenges “in terms of growth prospects across different sectors, shifting trade patterns, the need to nurture comparative advantage within each country, skills mismatches and their implications for the labor market.

“In particular, a freer flow of labor is envisioned within the Asean community, signalling both new opportunities and challenges for jobseekers.”

Asean is composed of the Philippines, Singapore, Vietnam, Thailand, Indonesia, Malaysia, Laos, Cambodia, Myanmar and Brunei Darussalam.

ILO predicted that in Cambodia, Laos, Malaysia and the Philippines, the labor force growth will continue to grow “relatively rapidly at well above 1.5 percent per year.” The Philippines has an average annual labor force growth rate of 2.46 percent from 2010 to 2014 and a predicted 2.31 percent from 2015 to 2020.

In Myanmar, Singapore, Thailand and Vietnam, there will be a “notable slowdown” in labor force growth to less than 1 percent a year.

The disparity in labor force growth and diverse employment opportunities within the region, as well as the differences in income, will create “push and pull factors” for workers “to move across borders.”

To benefit Asean economies and workers, ILO is recommending an improvement of the labor market information systems, cross-country skills recognition framework and job placement mechanisms.

Peso to hit P46/dollar January 22, 2014 9:50 pm by Mayvelin U. Caraballo Reporter


MANILA -The Philippine peso is seen to hit P46 to a dollar in the weeks ahead as pressures from portfolio rebalancing continues, according to think tank Global Source Partners.

In a research report titled “Peso In A Free Fall?” the think tank said that the peso’s “free fall” has raised worries that the country’s external payments position may come under pressure, as imports to fund reconstruction and other infrastructure needs increase this year.

It said that the peso depreciation was seen as a region-wide response to continuing speculation about the likely strength of the United States economic recovery and its impact on the speed of the Federal Reserve taper on its bond-buying program.

But Global Source Partners said that government economic managers see relatively less risk of global financial market turmoil that could negatively affect the country’s domestic growth prospects, on the account of its strong external payments position.

It also said that the weaker peso is seen to reverse some of the accumulated loss in competitiveness over the past 10 years versus trading partners, giving exports an extra boost just as demand in developed economies rises.

“Certainly, peso depreciation favors the monetary authorities’ balance sheet,” it stated.

Meanwhile, the think tank explained why the peso is depreciating more than other Asian currencies despite the country’s strong external payments position.

“It appears that the answer lies in the comparatively low domestic yields on peso instruments vs. other Asian fixed income and by extension, a narrower differential vs. US treasury yields,” it said, noting that the Philippine short-term treasury yields were driven to near zero late last year, as the Bangko Sentral ng Pilipinas (BSP) closed its special deposit account (SDA) window to trust accounts, contributing to a 36.5-percent rise in domestic money supply by end-November.

“While interest rates have since risen, they remain rather paltry, especially with the BSP projecting higher local inflation ahead, which analysts fear may climb even higher with the peso’s depreciation,” it stated.

‘Sticky’ domestic interest rates

The think tank mentioned that there are several factors behind “sticky” domestic interest rates, one is monies released from SDAs largely lay idle in bank deposits and will take time to be deployed for production; and the second is that government this year opted to fund a portion of its budgetary requirements internationally.

“While the funds were supposed to be used to retire foreign debts, and were thus largely peso-neutral, it would reduce the Treasury’s local borrowing needs,” it said.

Moreover, Global Source Partners said that signals from the BSP are that expected increases in inflation will be manageable and thus, policy rates will remain on hold in the near term. The BSP said that inflation rate outlook for 2014 was at 4.5 percent, and 2015 at 3.2 percent.

The think tank said that these suggest that interest rates will remain low for a while, perhaps through midyear, which may mean continued currency weakness.

“And to the extent that continuing portfolio rebalancing by both residents and nonresidents leads to capital outflows, there may be additional pressure on the peso. We would not be surprised if it tests the P46 to a dollar level in the weeks ahead,” it said.

However, Global Source Partners said that there is a more than even chance of the peso settling at about P43 a dollar to P44 a dollar by yearend, while reverting to a P40 a dollar exchange rate is highly unlikely.

“We think that the improving outlook on current account earnings, particularly electronics exports, BPO [business process outsourcing] services and remittances, due to the prospect of improved growth in advanced countries especially the US, will in time lead the peso to reverse course,” it said.

Served, not ruled By Manila Standard Today | Jan. 26, 2014 at 12:01am


The goals of the World Economic Forum, held each year in Davos, Switzerland, align strongly with SAP’s mission to improve people’s lives. As global leaders in business, politics, academics and other influencers convene to discuss and debate the world’s most pressing problems, SAP Co-CEOs Bill McDermott and Jim Hagemann Snabe join them to show how people and technology can make a difference in a global, digital world.

DAVOS, SWITZERLAND - This week’s World Economic Forum held in Davos Switzerland saw the gathering of the most influential names in business and politics. As they do year after year, they broke out into smaller discussion groups – donned in designer suits, munching on pricey food and sipping expensive wine -- talking about the things that run the global economy and the threats confronting it.

As always, too, the grim reminder of inequality despite advances in technology and wealth continues to haunt the high-level meetings. According to a report from Oxfam, the richest 85 individuals in the world have as much wealth as the poorest 3.5 billion – half the world’s population put together.

No less than Pope Francis has criticized what is known as trickle-down economics. According to the pontiff, this system assumes that those in power would know the right thing to do and find ways for wealth to be distributed justly. But the assumption is wrong, because the elite actually act in their own interest.

As a result, there are many who are excluded.

In fact, the Pope has more words for the captains of industry present at Davos. He reminded them to use their ability to innovate and improve the lives of people to help address the gaping inequality, going beyond a mere welfare mentality.

He might as well have been speaking to Philippine leaders, who have early on established that their long-term objective was inclusive growth and development.

These are nice to hear; they offer a measure of comfort that the government knows nominal economic growth is not its ultimate growth. But more than three years into this administration, these goals have remained just that, as administration officials have focused more on playing politics and going after its enemies than improving how economic benefits are distributed.

The conditional cash transfer program has provided, at best, short-term relief without enabling families to increase their earning capacity. This might have been the welfare mentality we cautioned against – in the end, people are conditioned to receive money from the government that they feel entitled to it when instead they should feel entitled to being empowered to improve their own lot.

Wealth is good. It allows families to take care of their basic needs and makes societies thrive. The Pope reminds us however that humanity must be served by wealth and not ruled by it. Wealth is not the end-goal. It is instead a tool so that people can live in dignity.

Let us ask ourselves every day if we are doing enough to emphasize the difference.


Chief News Editor: Sol Jose Vanzi

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