Exploring the impact of employment on economic growth

The World Bank has identified a compelling link between employment and economic growth: a 1% rise in employment corresponds to a 0.6% boost in GDP. This relationship underscores why many economies prioritize job creation as a cornerstone of economic strategy.

According to Keynesian multiplier theory, employed individuals have increased purchasing power, leading to higher demand for goods and services. This demand, in turn, drives business expansion and creates additional job opportunities.

Recognizing this vital connection, the current administration has focused on job creation to combat poverty and stimulate economic growth. The results of this approach are becoming increasingly evident, particularly through the rise in foreign direct investments which are generating substantial employment opportunities.

In the recent second-quarter performance report, President Ferdinand Marcos, Jr. announced a 6.3% economic growth rate, one of the highest in Asia and ASEAN.

The unemployment rate has dropped to a historic low of 3.1% over the past two decades. He noted that over 50.3 million Filipinos are now employed, with 63.8% in the formal sector, reflecting a more empowered workforce and progress towards middle-class status for more Filipinos.

Understanding the pivotal role of job creation, the Philippine Economic Zone Authority (PEZA) is actively promoting its ecozone program to attract long-term investments.

These investments are crucial for generating jobs, supporting livelihoods, and fostering micro, small, and medium enterprise (MSME) development. In the first half of 2024 alone, PEZA approved 144 projects that created 29,524 new jobs, marking a 60.4% increase in employment compared to the previous year.

Currently, PEZA oversees 423 operating economic zones across the country, hosting 4,380 predominantly export-oriented projects and providing direct employment to over 1.8 million Filipinos. The National Economic and Development Authority (NEDA) reports that each direct job in an ecozone generates an additional five indirect jobs.

This demonstrates the significant impact of PEZA and other investment promotion agencies on the government's job creation goals and the ambition to elevate the economy to upper-middle-income status during President Marcos, Jr.'s term.

In collaboration with the Department of Trade and Industry (DTI) and the Office of the President, alongside supportive agencies like DOLE, TESDA, DOST, and UP, PEZA is committed to enhancing partnerships with business leaders and the private sector.

The goal is to generate more jobs, address employment gaps, and create opportunities in rural areas through ecozones. Efforts will also focus on improving ease of doing business measures and adapting to the evolving needs of ecozone investors to future-proof the nation's economy and job market.