A study by the Philippine Institute for Development Studies (PIDS) reveals that labor emigration, remittances and foreign direct investment (FDI) flows are not inclusive because they seem to worsen the situation in agriculture.
“Empirical evidence shows that although labor emigration increases employment in the capital-intensive sector of manufacturing, it reduces employment and production in agriculture,” according to the study “Inclusivity of Factor Flows in a Labor-Surplus Economy: Experience of the Philippines” authored by Dr. John Paolo Rivera, officer-in-charge executive director of the Asian Institute of Management’s Dr. Andrew L. Tan Center for Tourism and Dr. Tereso Tullao Jr., fellow and professor emeritus of Economics at De La Salle University.
The study was presented in a public webinar.
Tullao says while the expectation was that emigration would create space for unemployed Filipinos to fill the gaps left behind, the findings of the study suggest that this has not been the case.
The study says the presence of remittances from labor emigrants has led to a noticeable rise in the reservation wage or the lowest wage a worker would be willing to accept for a particular type of job. This means fewer people are willing to work in labor-intensive sectors, which usually pay less.
“The data suggests a trend where FDI favors the capital-intensive sector over the labor-intensive one,” Tullao said.
This underscores the need for policy interventions that address these imbalances and promote inclusive growth, he said.
Reacting to the presentation, Professor Michael Angelo Cortez of Ritsumeikan Asia Pacific University said that education and other forms of certification would enable inclusivity.
This can address the need for specialized skills and qualifications to facilitate labor mobility. He also emphasized the importance of categorizing the skill sets of emigrants to understand how they impact labor-intensive and capital-intensive sectors, he said.
