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2nd demographic dividend may fail on learning poverty

2nd demographic dividend may fail on learning poverty
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(Photo from BusinessMirror)

ADDRESSING learning poverty will allow the Philippines to attain the second demographic dividend which holds the key to fast economic growth all the way to 2100, according to the National Economic and Development Authority (Neda).

Socioeconomic Planning Secretary Arsenio M. Balisacan told reporters on the sidelines of the 61st Philippine Economic Society (PES) that Annual Meeting and Conference the Philippines may already be harvesting the first demographic dividend as the labor force grows faster than population growth.

However, the second dividend, which gives these large numbers of workers high wages, requires greater investment. Balisacan said investments in education and human capital holds the key for sustained economic growth for decades.

“You have to address the learning poverty, you have to address the negative effects of the pandemic,” Balisacan said. He noted that school closures resulted in “the loss of so much….especially for the children.”

Balisacan stressed: “You have to recover those quickly so that the second dividend will be realized; otherwise, you cannot realize the second dividend. If you realize such, that is longer, much longer than the first, [it] can be (good for) several decades…30s, 40s, 50s, all the way to 2100 pa yan. Because the human capital, it stays with you until you die.”

In his presentation on Tuesday, Balisacan said learning losses worsen the inefficiencies in labor markets. Efforts to address this started in the education sector where, he said, the government should “get our acts right.”

Education will pave the way for workers to see higher levels of productivity and income. This will also augur well for the need to improve the country’s support ratio, he pointed out.

If these are addressed, he said, improving the support ratio would increase the country’s GDP by 0.4 to 0.7 percentage points until the 2040s; while higher labor productivity will add 0.1 to 0.7 percentage points to economic growth in the long term.

“In total, this so-called demographic sweet spot could contribute at least 1-percentage-point increase to the country’s growth potential or prospects for the next two to three decades,” Balisacan said.

Support ratio

Last year, in the 55th Session of the United Nations Committee on Population and Development, UP demographer Michael del Mundo explained the importance of increasing the support ratio.

The support ratio refers to the number of dependents being supported by each worker. This, del Mundo said, is crucial if the country wants to reap the demographic dividend.

The number being supported by each worker takes into consideration the workers and two or more family members who are deemed non-productive consumers or those who could not economically support themselves.

Del Mundo said the country’s support ratio is at 0.43 before the pandemic. This is below the recommended 0.5 support ratio that each country must have in order to reap the demographic dividend.

This means, one effective worker is supporting 2.33 effective consumers, or simply put, 100 effective workers in the country are supporting 233 effective consumers.

Del Mundo explained that some of the non-productive consumers are those between the ages of 15 and 64 who are not earning a living. In order to reap the demographic dividend, each worker must be able to support himself or herself, plus one family member.

The demographic dividend, he said, is not only about bringing fertility rates down but also ensuring that the population is able to earn, consume, save, and invest.


Written By
Cai U. Ordinario
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