Holidays, elections may boost jobs, but only temporarily, economists say

The Christmas holidays and elections next year would most likely create temporary jobs for many Filipinos, while a more dynamic business environment due to easing inflation and lower interest rates will create more quality jobs toward the second half of 2025.

But the government must raise the employability of new and existing workers through upskilling and reskilling, and foster changes in the job market that are aligned with emerging domestic and global manufacturing and service sector trends to fully harness its demographic dividend, economists said.

The Southeast Asian nation should also create job opportunities by boosting public-private partnerships, expanding exports, developing the tourism sector and boosting farm output, Cid L. Terosa, former dean of the University of Asia and the Pacific School of Economics, told BusinessWorld.

Likewise, the state should promote both traditional and nontraditional entrepreneurship such as digital and gig economy-related entrepreneurship, he added.

Mr. Terosa said recent Philippine job data were seasonal since about half-a-million new graduates started looking for work in June.

The Philippine jobless rate fell to 4% in August from the one-year high in 4.7% in July and 4.4% a year earlier, due partly to women’s increased participation in the labor force. This translated 2.07 million unemployed Filipinos, down by 149,000 from a year earlier.

“The prospects appear to be good both for the near and medium terms because of lower inflation and interest rates,” Mr. Terosa said in an e-mailed reply to questions.

The Philippines has failed to harness its demographic dividend unlike most of its Southeast Asian neighbors, with population programs having suffered budgetary declines in recent years, Juan “Jeepy” A. Perez III, former executive director of the Commission on Population and Development, said in an e-mail.

“It’s the eighth country in Southeast Asia to achieve its demographic dividend, but has lagged behind countries like Thailand and Indonesia, which are actively pursuing policies for the dividend,” he said.

“Beyond acknowledging that the country has entered the window of opportunity, it has not developed or enacted new policies in health, education and employment to take advantage of this opportunity,” he added.

Mr. Perez said the budget for programs of the Department of Health and Population Commission for family health fell significantly to PHP 8.3 billion this year from PHP 18.88 billion in 2020.

Family planning budget declined to PHP 750 billion this year from PHP 873 billion in 2023 despite more Filipinos becoming more interested in modern family planning methods, he added.

Another state program that could have helped Manila fully reap the benefits of its demographic dividend is the Philippine Health Insurance Corp.’s (PhilHealth) subsidy for premiums paid by the poor, seniors and people with disability, which was cut by 50% for the first time since 2011. It fell to PHP 40 billion this year from PHP 80 billion in 2023.

“(The House of Representatives) approved its 2025 version of the budget that retained the cut in premium subsidy and a loss of 11 million members who are poor, elderly and disabled,” Mr. Perez added.

Mr. Perez said the Philippines should learn from Thailand, which has extended its benefits for its population in the next two decades after entering into a demographic transition, a phase in which a nation experiences sizable changes in the age distribution of its population, in the 1990s.

“It’s a leading example in our region in terms of exploiting the demographic dividend,” he said.

Thailand provided a child support grant to the bottom 60% of the population with children aged up to 14 years. Its demographic dividend was projected to end in 2011, but it has launched efforts to extend it up to 2040 after simulating the effects of its National Transfer Accounts, such as raising the retirement age and increasing public support for newborns and senior citizens.

The accounts are a tool for projecting the long-term economic impacts of the decrease in working-age people and the proportional increase in older people, with an eye on the expected decrease in the number of taxpayers who are contributing to funding for social services.

‘FAILED POLICY’

To reap the benefit from its demographic dividend, the Philippines should avoid backsliding on efforts to maintain its level of fertility by keeping pace with the demand for family planning services — now 8.8 million and increasing by a few hundred thousand annually — and addressing the demand for postponing fertility among the 25-29 age group.

“Thus, family planning must be focused on women below 25 years who want to use family planning methods to avoid fertility.”

The country should also shift to a living national wage policy from a regional wage setting, Mr. Perez said, noting that attracting foreign direct investments by promoting cheap labor has been a “failed policy since the 1970s.”

“The country should move to a national policy on a living wage, as promised in the National Economic and Development Authority’s Ambisyon 2040,” he added.

It should also increase female employment to at least 60% by removing structural barriers and rolling out incentives, significantly address youth unemployment and boost financial literacy for workers.

But Leonardo A. Lanzona, who teaches economics at the Ateneo de Manila University, said the one-year high jobless rate in July was concerning and could mean that growth was not inclusive enough to absorb more people reaching their working ages.

In 2023, he said, the youth unemployment rate covering ages 15 to 24 stood at 13-14%, significantly higher than the national unemployment rate at 4-5%.

“As the country is completing its demographic transition, it is expected that more new entrants are joining the labor market,” he said. “The observed weakness then is likely to be worse in the coming years.”

He said realizing the full benefits of the country’s demographic shift depends on how well the labor force is integrated into productive employment.

“If a large segment of the working-age population remains unemployed or underemployed during this period, the country risks squandering its chance to enjoy a sustained period of economic growth and improved living standards,” Mr. Lanzona said.

Mr. Lanzona urged the government to pursue economic policies that promote growth in sectors that can absorb young workers such as manufacturing, entrepreneurship and the digital sector.

“But this can happen only if the Department of Education and Technical Education and Skills Development Authority align basic education and vocational training, respectively, with the needs of the labor market to reduce the skill mismatch,” he added.  – Kyle Aristophere T. Atienza, Reporter