PHL urged to make manufacturing sector competitive, raise agricultural productivity

Rice farmers in Batangas. Daniel Zuckerkandel / Shutterstock

MANILA — The Philippines needs to undertake measures to make the manufacturing sector more competitive and increase the productivity in the agriculture sector in an effort to promote inclusive growth and reduce poverty.

A study released by government think tank Philippine Institute for Development Studies (PIDS) indicated that the manufacturing sector provides employment opportunities for the poor and also offers relatively higher wages compared with agriculture, which is the major employer of chronic poor workers.

“However, expected high productivity employment opportunities from the manufacturing sector were not fully realized due to some bottlenecks in the sector. This partly explains the persistence of poverty in the Philippines,” it said.

The PIDS study underscored the need to increase the demand for less-educated workers to absorb the significant number of less-educated workers among the poor.

“Regional economic integration that leads to regional production networks resulting in a more dynamic manufacturing sector can be a source of that increased demand,” it noted.

Likewise, it said investments have to be made to increase the access of the poor to quality education “so that they can take advantage of employment opportunities that are not available to most of the poor right now.”

Alongside an industrial policy that aims to develop local firms, an earlier study also suggested that the government must carry out some measures that would improve the investment climate in the country and increase the participation of local firms in higher segments of the industry value chain.

However, it recognized that the manufacturing sector employs only 8.3 percent of the total workforce, of which 23 percent are less educated.

It is thus unlikely that the manufacturing sector can quickly absorb all the excess labor in the agriculture sector, where 74 percent of the chronic poor workers are currently employed.

“If the government aims to reduce poverty more quickly, it is equally important to increase productivity also in the agriculture sector,” the study said.