Can GMA deliver on job creation promise? 10 M target inconsistent with government’s own numbers

Labor groups cast serious doubt on the Arroyo administration’s sincerity in fulfilling its promise to create 10 million jobs in the next six years.

In a joint press briefing, the Alliance of Progressive Labor (APL) and the Labor Education and Research Network (LEARN) revealed that the 10-million goal is inconsistent with the government’s own economic numbers.

APL and LEARN noted that the economy must expand seven percent every year in the next six years to reach the 10-million target. Presidential Chief of Staff Rigoberto Tiglao has cited estimates saying that the creation of 10 million jobs requires the economy to grow by an annual average of seven percent.

But the Development Budget Coordinating Committee (DBCC) does not see the economy growing seven percent at anytime during President Arroyo’s term, according to Clarence Pascual, LEARN senior researcher. The DBCC approves the government’s macroeconomic and inflation targets, which are used in formulating the budget. Based on the proposed 2004 budget, the inter-agency body is looking at an average 5.5 percent growth between 2004 and 2009. It expects a growth rate of 4.8 percent in the next three years, way below the required seven percent.

To fulfill its promise, the government must either revise its growth targets or significantly improve the ability of the economy to generate new jobs, Pascual said. But both options require a radical departure from current economic policies.

The labor groups warn that if the DBCC raises its growth targets and these are not achieved, the government will lose its credibility in financial markets. This would hurt government’s ability to raise funds in international bond markets to finance the growing deficit. But if the DBCC’s growth targets are maintained, and there are no radical policy changes, then the President loses her credibility to the Filipino people, according to them.

From 6M to 10M target

President Arroyo is expected to elaborate on the 10-point agenda in her state of the nation address to Congress early next week. Earlier, she had vowed to create at least six million, possibly 10 million jobs during her term.

But the six-million target, according to labor groups, may have been abandoned after it was shown to result in even higher unemployment by the end of President Arroyo’s term.

Estimates by LEARN show that creating only six million jobs in the next six years means that number of unemployed workers will increase to six million by 2010, from four million today.

In the last three years, the working age population (15-65 years old) grew 3% per year while the labor force expanded 4%. If we take the midpoint and assume that the labor force will grow 3.5% in the next six years, it will reach 43 million in 2010, from 35 million today-an increase of eight million workers. But since only six million jobs will be generated (the lower end of the administration's target range), two million workers will swell the ranks of the unemployed.

With four million unemployed today, this will bring the number to six million in 2010. Already, the current unemployment rate of 12% matches levels reached during the mid-1980s depression. With its 10-point legacy, the Arroyo administration will drive unemployment to record high levels in the next six years.

Repeating the six-million-jobs mistake, according to the groups would make the president look ridiculous. They add that it would be like promising that unemployment will rise during Arroyo’s term.

But at the rate President Arroyo is doing her job, they note, rising unemployment is not a remote possibility. According to LEARN, unemployment rose by 600,000 in the first three years of the Arroyo administration. If the current pace of job creation, roughly one million jobs a year, is sustained in the coming years, unemployment will rise even more under Arroyo’s watch. That’s because 1.3 million workers are expected to join the search for jobs every year.

No strategy, ineffective programs

Raising the job creation target to 10 million calls attention to the government’s employment strategy. The government has presented its 10-point agenda as geared towards job creation. It cites the development of Subic and Clark , providing more loans to small and medium scale enterprises, building of classrooms, reviving peace talks with insurgents, computerizing elections as projects aimed at encouraging investments and generating employment.

APL and LEARN described the administration’s 10-point agenda as highly ineffective in the face of massive joblessness and poverty. They argued that each of these measures will bring benefits, but they do not constitute a full employment strategy.

The provision of loans to small and medium scale enterprises and the development of Subic and Clark are probably the government’s best shots in creating employment. But these are not enough to generate 10 million jobs, according to them.

They point out that the other measures have an indirect and small effect or are likely to impact on job creation only after Arroyo’s term. They cite as examples the building of classrooms and the provision of universal education. Still others have uncertain and dubious impact as far as job creation is concerned. The groups doubt the automation of the electoral process, peace talks with rebels, and reconciliation with the political opposition, if achieved, will impact on employment generation.