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The ‘demographic sweet spot’ is pure crap

The Manila Times, 09 May 2015 - WE are living off a myth, a hopeful scenario that is impossible to take place: That the Philippines is blessed with a “demographic sweet spot” that can easily fill up jobs in either the domestic or the global market. In contrast with the graying workforce of other countries, we have a young and able demography that is an asset very few countries have.

But while we all want that scenario to be so, that our young (which we have plenty of) are easily filling up jobs in the domestic and global market, it is not the reality. Let us look at the employment data.

The official unemployment rate measured in January 2015 showed a 6.6 unemployment rate. Not the ideal, but not bad either. Until you go into the profile of the 2.6 million or so unemployed Filipinos (let us take the data at face value, despite our knowledge it is understated).

Of the unemployed (look at the figures and weep), those in the age bracket of 15 to 24 years old make up 47.3 percent. Those in the prime of their lives, those in the age group between 25 to 34, posted a 31.6 percent unemployment. It turns out that those about to be past their prime, and those about to join the senior citizen status, those of the ages 35 to 60, are the ones with the lowest unemployment rate.

Most of the unemployed are young men (66 percent of the unemployed are young men in their prime) in that supposedly blessed demographic sweet spot.

Why is it so? Where have all the young men gone? The answers are ugly.

The problem is the demand side, few jobs are being created by the economy. Hiring has been limited, and for every job opening, hundreds if not thousands apply. While one sector, the BPO sector, is indeed experiencing a shortage of skilled workers – or workers with language and IT skills in particular – this is not generally the case.

The micro version of this is a typical job fair. More than 15,000 applicants jam the limited job fairs room. And at the end of the day, just over 1,000 are hired on the spot. Job fairs are simply being overwhelmed by armies of jobless young men often with diplomas or college credits.

The public and the private sectors have to admit that the demand side is weak. There are no alibis.

Other countries can claim that a sizable percentage of the young men missing from the labor force are in college, or are pursuing graduate courses or are in the prestigious universities doing post-graduate work. That is not the case in the Philippine setting. Of 100 kids that are now in Grade One, only two will finish college and that is a very generous stat. The young drop out, and drop out very early, from the educational mainstream.

The harsh truth is this: Instead of a “sweet spot” for the young in the economy, we have armies of young men and women, mostly men, with drifting, wasted lives.

Ok, here is the follow-up question. The economy, at least on paper, is doing great and growth has been a sustained thing over the past five years of the Aquino administration. And, the Aquino administration has been claiming surges and spurts in job creation. Even the International Labor Organization, with some amount of caution, says the job market has been improving, along with strides in the broader economy. Why then are many of the young either pounding the streets for jobs or have decided to drop out of the labor force for good?

Growth, it is clear, does not necessarily mean that jobs are created on a massive scale, or at a level that is enough to absorb the employment-age young into the job mainstream. A growth where the rentier class thrives, in which a bulk of the income comes off renting land and office buildings or spaces in giant malls, does not lead to real job creation.

The growth of finance and banking does not, in most cases, lead to massive job generation. Trading financial instruments makes money but does very little, or very insignificant, job creation. This is the Great Gatsby’s East Egg and West Egg all over again. A thriving stock market does not necessarily lead to massive job generation.

The type of growth that we have been experiencing is the type called “jobless and joyless growth” in which a sizable gain from the growth is sucked up by the rentier class.

So, where are all these “missing young men?” Some answers:

They just drift and waste their lives and they are a sad presence in both urban and rural communities.

They join crime gangs, they become meth peddlers, they become thugs-for-hire, which are undertakings not captured by the census.

They join the Underground Left to give meaning to their hopeless lives.

Oh, yes, they are in those rickety gyms aspiring to be boxers, all Kid Kulafu wannabes.


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