Window of Opportunity
We often hear from private and government economists the term demographic dividend that our nation is now reaping or about to earn in the coming years. Economic experts do not doubt this a bit. The Philippines has a big and young population—an economic asset that must be nurtured and exploited.
To put it in layman terms, the growing population of workers will drive economic growth faster in the coming years. The country’s working age group is now growing faster than the overall population. Per the statement of National Economic and Development Authority Secretary Arsenio Balisacan in a recent Senate public hearing, such demographic dividend would add around 3 percentage points to the gross domestic product.
When the number of productive working-age population hits its highest level, the economy’s growth sharply rises, as what we’ve seen in the case of Singapore and Thailand in the 1990s.
And with a larger workforce that can generate higher income and a less dependent population, the Philippines can budget its resources for economic development and social services, like housing, education, health and nutrition. South Korea, Taiwan and Hong Kong earlier experienced this window of opportunity in their economic growth story.
Per the account of Mr. Balisacan, our working-age population covering those 15 to 64 years old as of August 2022 comprised 63.9 percent of Filipinos, up from 63.3 percent in 2015 and 59.1 percent in 2000. This working age group will power the country’s expansion for several decades, in addition to the usual sources of GDP growth.
Our demography has changed, as shown by the marked decline in mortality and fertility rates. The dependent age now hovers from 0 to 14, per the report of Neda, while the workforce has expanded to the 15-to-64 bracket. This transition is resulting in a steady rise in savings and investment, and thus, faster economic growth and improved living standards.
The Philippines, according to a Neda paper prepared back in 2018, is expected to be the last major Asian economy to benefit from the demographic dividend between the years 2025 and 2070. If not properly addressed, the country would need to wait until at least 2050 to benefit from the demographic dividend, or possibly miss it altogether.
We have to learn from the Thailand experience, though. By 2000, Thailand was enjoying high economic growth. By 2011, the World Bank upgraded Thailand’s income categorization from a lower-middle income economy to an upper-middle income economy, based on the country’s gross national income, which stood at $4,210 in that year. The Philippines, in contrast, remained in the World Bank’s middle-income category.
The Philippines’ total fertility rate, according to the same Neda paper, was still high at 2.9 children against Thailand’s less than 1.5 children.
The administration of President Ferdinand Marcos Jr. is taking active measures to steer the country through a demographic transition and reap its dividend. But everything boils down to an effective population management to ensure a highly productive workforce.
In a recent study commissioned by the United Nations Population Fund in collaboration with Neda, Dr. Dennis Mapa of the University of the Philippines’ School of Statistics noted that countries that experienced growth following demographic transition had effective and sustained modern family planning programs.
I believe the government is trying its best to check population growth in the Philippines. Our current K to 12 school curriculum integrates lessons on sex education to help students make informed choices about issues that affect their well-being. The Marcos administration is also investing in human capital through family health and educational interventions to make sure we stay on track with our growth objectives. A stronger and meaningful education system will equip our young population for the next decades of progress.
Heavy infrastructure spending is another way of providing jobs to our young workers and creating more economic opportunities. I am pleased to learn that the government achieved its target spending of 5.3 percent on infrastructure as a percentage of GDP in the first half of the year.
With several big-ticket projects underway like the Malolos-Clark Railway, South Commuter Railway and Metro Manila Subway, I am confident the Philippines will reap the demographic dividend being presented to us. It is an opportunity that we should not miss.