Bernardo-M.-Villegas-125

Of late, there have been numerous articles appearing in both domestic and international media about the “future of work.”  Understandably, most of them focus on such topics as working from home; closing the future skills gap in the digital sector; achieving more productive, efficient and meaningful interactions through innovative workplace technologies; and similar trends that have been intensified by the COVID-19 pandemic.  Without underestimating the importance of the digital sector to the Philippine economy, let us have a reality check about the nature of the Philippine labor force for many more years, even decades, to come.  As I discussed in a series of articles in this paper, the Philippines is straddling four industrial revolutions, i.e., the mechanical, the electrical, the electronic and the digital ones.  This can be discerned very clearly from data about our labor force.

As of May 2021, Filipinos and Filipinas who are 15 to 65 years old and are looking for work (the labor force) number 48.45 million.  Of these, 44.7 million are employed; 3.73 million are unemployed (7.7%) and 5.49 million are underemployed (12.3% have jobs but are looking for more work because of below-subsistence incomes). Of those employed, 57.8% are in services; 23.8% in agriculture and 18.4% in industry (manufacturing, mining, public utility and construction). In terms of sectors, there are 10.24 million working in wholesale, retail, repair of motors and motorcycles; 9.49 million are in agriculture and forestry; 4.40 million in construction; 3.53 million in manufacturing and 2.91 million in transport and storage (logistics).  Considering the types of occupations, 7.8% are managers; 5.9% are professionals; 3.5% are technicians and associate professionals; 5.9% are clerical workers and superintendents; 20.6% are service and sales workers; 11.5% are skilled agricultural, forestry, and fisheries workers; 6.9% are in crafts and related trades; 7% are plant and machine operators and assemblers; 29.9% are in elementary occupations; and 0.3% are in the armed forces.

Finally, the classes of workers are as follows:  61.8% are wage and salary workers who are classified further as follows:  4.3% are working for private households; 47.4% for private enterprises; 9.7% for government; and 0.4% for their own family businesses.  Those who are self-employed with paid employees are 28.5%; those employed in their own family-operated farm or business constitute 1.7% and unpaid family workers represent 8.0%.

It is obvious that those who can be in the digital sector or have the choice to work at home are a small minority of the Philippine labor force.  Some 76.2% or more than three-fourths of the workers are in occupations such as services and sales; agriculture, forestry and fisheries; crafts and related trades; plant and machine operators and assemblers; elementary occupations; and the armed forces.  These have very limited possibilities to work at home and are not part of Industrial Revolution 4.0 which mainly refers to Artificial Intelligence, Robotization, the Internet of Things, Big Data and related technology.  A rough estimate of those who are in the digital sector can be gleaned from figures arrived at by Frost and Sullivan for the IT & Business Process Association of the Philippines (IBPAP) in a study known as Accelerate PH (Future Ready) Roadmap 2022.  According to this study, the number of people employed in the IT-BPM sector is estimated at 1.15 million full-time equivalents in 2016 or 2.9% of Philippine employment. By 2022, it is expected that the number of full-time equivalents in the IT-BPM sector will grow to 1.8 million or about 4.1% of the total Philippine workforce. The pandemic might have slightly affected this forecast but in my opinion, the figure for 2022 may even be an underestimate. As the developed world follows the US in a strong economic recovery once the pandemic is put under reasonable control, the Philippines may actually become even a more preferred site for BPO-IT services as compared to its number one competitor, India, that has suffered a great deal more from the pandemic.  If we add to these 1.8 million workers in the IT-BPM or BPO-IT sector those working in the industrial, commercial and financial sectors who are in IT-related jobs, we may arrive at 2 million people who are directly involved in Industrial Revolution 4.0, still a small portion of the total Philippine labor force of close to 50 million.

The acceleration in the digitalization of many sectors of the economy will not necessarily lead to the loss of the traditional jobs, especially in the services industry which account for almost 60% of the labor force. Take, for example, the big jump in e-commerce made necessary by the many lockdowns during the pandemic. There might have been a big drop in the demand for waiters in restaurants but there has been an equally big increase in the demand, not only for those working in the kitchens of restaurants to prepare the food in the take-out market but also in the thousands of delivery people working for Foodpanda, Grab, Lalamove and similar delivery services, not to mention the increase in the demand for motorcycles, bicycles and even foot carriages. The same can be said of the drop of demand in sales clerks in the malls that have lost a great deal of their business because of the many lockdowns. The shift to e-commerce has led to a big increase in workers in the transport and logistics sector. The future of work is bright for those workers involved in transport and logistics as long as we can address the issue of how to provide these delivery workers with the same job security and workers’ benefits enjoyed by those in the formal sectors such as manufacturing and financial services.

In the banking sector, will there be a massive disappearance of demand for bank tellers because of the increased shift to digital payments being espoused by the Bangko Sentral ng Pilipinas? Because of the huge number of unbanked people in the Philippines, estimated to be 70% of the population, none other than Governor Benjamin E. Diokno of the BSP, is strongly advocating the move towards digital payments in the whole economy.  In a recent webinar sponsored by Megaworld International, he enthusiastically reported the phenomenal increase in the business of such digital payments platforms as Instapay, Pesonet, GCash and PayMaya from just 1% of total payments in 2017 to 5% in 2018 and 14% in 2019. Latest figures show 125 million transactions amounting to P1.7 trillion pesos in digital payments.  Will this trend lead to massive unemployment in the existing banks?  The answer can be found in a book, Thank You for Being Late by prominent US journalist and author Thomas Friedman. The short answer, which will be fully explained in my column “The Human Side of Economics,” is that there may actually be an increase in the number of bank tellers. The reason is that when you automate a job that has largely been done manually, you make it hugely more productive. When that happens prices go down and demand goes up for the product.  As the 70% unbanked people begin to have access to banking services, the volume of business will surely expand and the result could very well be an increase in the number of bank tellers who will be upskilled and reskilled to perform additional functions. This can be summarized in a dictum suggested by Friedman that Artificial Intelligence can actually lead an increase in the demand for Intelligent Assistants. As long as our society is ready to provide opportunities for our millennials and centennials for lifetime education, there will always be work for those willing never to stop learning.

 

Bernardo M. Villegas has a Ph.D. in Economics from Harvard, is Professor Emeritus at the University of Asia and the Pacific, and a Visiting Professor at the IESE Business School in Barcelona, Spain. He was a  member of the 1986 Constitutional Commission.

bernardo.villegas@uap.asia