By Marlen V. Ronquillo
The 5.5 GDP growth rate that experts say the Philippines will post this year will be an impressive one. While that growth rate would be nightmarish for the likes of China, most western economies would be overjoyed with a slight uptick in their growth rate and a three percent growth would provide a great relief. On the two sides of the Atlantic, the mood is either of hopeless desperation or very little optimism.
Definitely, a 5.5 percent GDP growth will make the Philippines a showcase of economic dynamism and defiant of the overall lethargy that has characterized most economies.
And we Filipinos, whether critics or admirers of the Aquino administration, are generally praying for a good economic year.
Something, though, is holding back the good cheers built around that rosy projection of growth. As if to spoil the rosy forecast, two negative data were announced on the same glorious day the 5.5 percent growth was forecasted by experts.
These were the 2.9 percent growth in the number of college graduates from 2000 to 2010. And that close to 80 percent of Filipinos are out of the banking mainstream.
In a less-globalized economy, the drop in the level of college graduates would be less alarming. High school graduates can go back to the farms, this time equipped with reading and computing skills. Or, they can apprentice at the factories and with the real prospect of being integrated into the factory work force later on. Or, they can tie up with the agri-business integrators to start small-time grow-out contracts.
In this day and age, the skill sets needed are built around technology, primarily to serve the BPO sector, easily the fastest-growing generator of employment. The contact center agent working for the voice component of the BPOs and the help desk personnel, which is the entry-level job for the BPO’s technology workers, definitely require college-level education. To be a top-notch programmer, a highly-certified network engineer and systems administrator, or a master of system security, you have to log hours in tough post-college trainings that require a mastery of logarithm.
There is a definite need for warm bodies with college degrees to fill up job openings and a dried up manpower source may push the BPOs to rethink their Philippine location and move elsewhere.
Countries with college trained warm bodies that do not price themselves out of the job market are winners in the service economy and the Philippines is an example of such countries.
What do you think is the reason behind the decision of US companies to move their BPOs here, despite the punitive measures being imposed on companies that offshore jobs? The presence of college-trained warm bodies that do not price themselves out of the job market.
What about our decently-paid OFWs? They are workers in the allied medical health profession, engineers, accountants and newspaper editors and broadcast journalists even. A MBA-trained master of the universe at Wall Street sends a level of remittance that is a 10 times more than what a semi-skilled worker in the Middle East sends.
What is more distressing about the news on the dropping number of college graduates is the fact that engineering and technology graduates have suffered most from the drop. These are precisely the jobs that are most in demand and decently compensated in a globalized job market.
The drop comes at a very worrisome stage of the tertiary educational system. There is a marked under-investment in the state colleges and universities, the SUCs, which have been the go-to schools of most low-income families.
The figure of 78 percent is a passing grade in many professional board exams and is a passing grade in college. But when you say that 78 percent of Filipinos households have no bank accounts and are out of the formal banking mainstream, you are talking of a country with a less-than-mature economy.
The Bangko Sentral ng Pilipinas has spelled out what this means. This means:
• 78 percent of households have very little access to formal credit
• There is inadequacy of money (the brutal term is poverty) in these households
• They have no access to rudimentary financial instruments as basic as a credit card
• Worse, they go to loan sharks, the informal credit system with usurious rates, when they need money for health or employment purposes.
And what is the going rate of the informal lenders? Anywhere between four to 10 percent per month.
The 5.5 percent GDP growth may be attainable for this year. Everything points out to realizing that growth target. But whether posting decent growth rates year after year is sustainable is another issue.
Two steps that can certainly help sustain the growth momentum involve correcting the anemic growth of the number of young people graduating from college and including more households into the banking mainstream.
The expanding job market has to be supported by college-trained warm bodies. Otherwise, those locating their jobs here will look for new offshoring havens. The OFW market is also evolving from one that requires semi-skilled workers to one that requires the most sophisticated of skills.
Ramping up the support for tertiary education, this is a no-brainer for policy makers, is imperative.
The enrollment/inclusion of at least 40 percent of the Filipino households into the banking mainstream will be a bonanza for the capital market. A regime of low interest for business start-ups is top on the list of the requirements for success of the start-ups. An inclusive financial system with a tent vast enough to accommodate credit card users, small borrowers, big and institutional borrowers and investors of low-yielding and high-yielding investments will help hasten up the maturity and sophistication of our financial system.
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