Employment zones key to economic growth
THE importance of creating employment zones to boost the economy was emphasized during a meeting between Sen. Edgardo Angara, Dr. John Nye, Executive Director of the Angara Centre for Law and Economics and Frederic Bastiat Chair in Political Economy at the Mercatus Center at George Mason University, and Dr. Arsenio Balisacan, Director General of the National Economic and Development Authority.
Said Nye, “The discussion must begin to how to improve structural transformation. Structural transformation is just a buzz word for moving people out of poor or underperforming agriculture into faster performing industry, especially export promoting industry. That involves moving the people out from the countryside into developing cities.
“But we have lots of things, anything from problems of capitalists, to competition, to monopoly, to poor infrastructure, to overly rigid commercial labor law, to complicated taxation, to constitutional restrictions. Plus, zoning needs making very hard to convert agricultural land into commercial land. You add that all up, almost all studies of development say that the fastest way to grow is to move people from low productive sector to high productive sector.
“And yet, the bulk of Philippine rules, regulations and laws work against that. The best evidence for that is we have all these OFWs [overseas Filipino workers]—these highly skilled, highly desirable workers who cannot get jobs at home. Why is it so easy to employ Filipinos abroad? How do you employ Filipinos in the Philippines? That’s the simple question I ask. If it’s easier to employ them abroad than in the Philippines then there must be something preventing you from opening factories and businesses in the Philippines.”
Responding to Dr. Nye’s arguments, Dr. Balisacan pointed out that it is capital shortage that makes it hard to employ people. He noted that when an economy is exporting more people and capital, then there must be something else that makes both the capital and the labor hard to employ in the Philippines.
The NEDA boss added, “The big challenge facing our economy is that we can’t seem to create high quality jobs for the unskilled labor force. Creating these jobs to match the skills of the population of the poor must be high in the agenda while investing in the human capital in the Philippines. For me, the revival, the resurgence of the industry is critical to create these jobs. But at the same time, we should also promote the jobs for the skilled. It is true that we are creating employment. If we look at the employment statistics, the employment rate is increasing and the unemployment rate is declining.
“But if we look at the underemployment, it remains very high and worse, it’s the very low quality jobs that are created. It comes down to the observation of Dr. Nye especially the institutional ones. I don’t understand why one who opens a business must go through the DTI [Department of Trade and Industry] personally to pay for the registration or renewal. You expose these entrepreneurs into physical and direct contacts to bureaucrats. Those are very easy things to do and can be done quickly.
“For his part Sen. Angara pointed out that he was very obsessed with the issue of lack of income because that’s the root cause of many social problems in this country—unable to go to school, unable to take care of the sick, rampant malnutrition.
“How do we create employment in this country? We have to think very simply. We will now start creating employment zones in Samar, Leyte, Davao Oriental, along the pacific coast, Palawan up in Cagayan and Aurora. Those are underserved, very poor areas. Then we can bypass all these maze of regulatory tapes, all these things that we’re complaining about. We can now create a zone, especially an economic zone, where we can bypass this regulatory maze and start giving immediate employment. I think that’s our concern now, not five years from now because five years from now, we will be 115 million; 10 years from we will be almost 120 million then it will be harder for us to cope with those demographics.”