When Karen Danao landed a job in a government agency right after graduating from UP Diliman with a BA in Psychology in 1998, there was barely time to celebrate. Any excitement over her new job quickly disappeared when she and her husband realized that despite their double-income household, they remained financially unprepared for the arrival of their first child. “I was about to give birth, and we had no savings. We were in trouble.”
The law of supply and demand
The dream of financial stability may have eluded them, but Karen and her husband are still among the lucky ones. For many Filipinos, the search for a decent job alone is a daily struggle. Almost three million Filipinos, in fact, are unemployed.
The Philippine Labor Force Survey of April 2006 conducted by the National Statistics Office indicates the addition of about 36 million into the labor force. Total employment grew by 2.5 percent—from 32.4 million in January 2006 to 33 million in April. However, the number of unemployed persons, pegged at 2.8 million in January, went up to 2.93 in April. Incidence of underemployment also went up to 25.5 percent in April, from 21.3 percent in January.
Prof. Jorge V. Sibal, Dean of the UP Diliman School of Labor and Industrial Relations, sees the lack of or slow creation of jobs in the Philippines in terms of supply and demand. “We have the highest population growth rate in Asia,” he explains, “so there are more Filipinos entering the labor force looking for jobs compared to our neighbors.” The oversupply is exacerbated by the incompatibility of those entering the labor force with the jobs available. A mismatch between the skills needed and the skills possessed by those in search of jobs minimizes unemployment. The problem, says Sibal, is that “we are not really good at investing in capability building of our work force, especially the young ones… [And since] there is a mismatch, unemployment will increase. There will be more people looking for jobs where they are not suited, and the jobs that are available will be vacant because people are not capable of performing the required tasks.”
Furthermore, according to Sibal, there are simply not enough jobs to go around. Industry and agriculture may be growing by leaps and bounds elsewhere in Asia, particularly in the newly industrializing countries (NICs), but in the Philippines, the development of these sectors, the two traditional sources of decent, permanent jobs, is at best sluggish, thereby debilitating job creation. “If you are creating too many jobs and there is a low supply of labor, then you will have something like Singapore, Malaysia, the US or Europe,” says Sibal. “In our country, it’s the reverse. We are not creating enough jobs. Those who are out of jobs are forced to seek alternative jobs, and one of these is working as an OFW. What we have then is a brain and brawn drain.”
The path of entrepreneurship
But the choice to pack one’s bags and leave the country is not the only option. “Practically any time is a good time for creative, committed, hardworking, and well-prepared entrepreneurs to enter the market,” says Prof. Ruperto P. Alonzo, Director of the UP Institute for Small Scale Industries and Vice President for Development of the University. Alonzo insists that despite the signs that say otherwise, entrepreneurship is still a viable path to take. “There are local markets that global traders will be hard-pressed reaching and serving. Repair services, customized products and services such as customized software, clothes and other apparel, metal working and fabrication, personal services such as hair grooming and pet grooming, etc. are needs best filled not by global players but by entrepreneurs operating within customers’ immediate vicinity.”
Karen, for example, decided to make use of skills other than those that came with her undergraduate degree to augment her family’s income. Turning to her passion for food, she baked cookies and pastries and sold these to her co-workers and friends. Eventually, her customer base grew and she began selling her products through a mini-coop in her office building. Now she has begun shipping her cookies and baked products to stores as far away as Ilocos and Cebu.
“A food business is one of the best bets of a new entrepreneur,” Alonzo says, confirming the wisdom in Karen’s choice of product. “Prepared food or semi-processed food, from the lowly carinderia to the most upscale restaurant, enjoy increasing demand as the average Filipino spends less and less time in the kitchen due to the pressure of two-salary families, rising price of cooking gas, dearth of domestic help, and such.”
This age of globalized trade and Internet connectivity also offers opportunities for small entrepreneurs to access markets beyond local and national boundaries. “I know somebody who set up a business designing web pages for foreign clients and another who does editing work for international journals,” says Alonzo. “Both of them work from their homes and transact all business through the Internet.”
Perks
The reasons for putting up one’s own business are varied. “For many, the biggest motivation for going into business is the chance to be rich,” says Alonzo. “A successful entrepreneur put it this way: ‘For many years I helped my employers prosper. I got tired doing that. So I put up my own business and now am busy trying to become rich myself.’”
Other possible reasons to take the path of entrepreneurship include the prospect of being one’s own boss, being able to own one’s time, and being able to express one’s creative and leadership abilities. Some entrepreneurs also derive a sense of fulfillment from having done something which at first they thought they could not do. “I have the satisfaction of doing something I love and making delicious food,” says Karen. “Even better, I have the satisfaction of knowing people are willing to pay for it.”
Alonzo also notes that aside from gaining recognition and respect from family, friends, and the community as a whole, entrepreneurs find satisfaction in having provided jobs for fellow Filipinos.
The greater picture
Given the risk, capital, and hard work entailed in setting up one’s own business, entrepreneurs need all the help they can get to survive and succeed. “It needs a lot of determination on the part of the entrepreneurs and strategizing on the part of the government to give [entrepreneurs] a fighting chance, to be protected, while doing business in their own country,” says Sibal. But since the government relies heavily on the earnings of OFWs to keep the country running, it is the service sector—including shopping malls, retail, merchandising, and similar industries—which thrives, leading to the evolution of a consumption-led development strategy rather than a producer-driven consciousness, which emphasizes the creation of jobs at the level of the local producer of native materials for manufacturing.
Although this consumption-led development is far from ideal and is, in fact, an example of short-sighted planning on the part of the government, Sibal believes this is where we can begin. “We cannot compete head-on when it comes to industry and agriculture, because this requires long-term investments and money and right now, we don’t have that,” he says. “The reality now is that we have to start somewhere.” With a strong service sector as a starting point, “what is needed is a mechanism or strategy for the services to link with local producers and workers toward substituting imported products with locally-made products.” A good example is the local low-end garment industry, which has taken a mortal blow from the rampant smuggling of imported, second-hand clothes sold in ukay-ukays, leaving hundreds of tailors and sastre out of work. “If we can bring back all the sastre and the tailors and be strict on the smuggled garments, we will again create an industry for the local manufacture of low-end clothing,” says Sibal. “This will create a lot of jobs.” Although the jobs still fall within the realm of the service sector, those in the work force will be playing a central role in the creation of the product.
Risks
In becoming an entrepreneur, says Alonzo, “the risk of failure is foremost. By its very nature a small business is risky. It is often weaker and more likely to fail than a large enterprise, because of its inability to access institutional loans, limited bargaining power, competition from bigger, more experienced companies.”
Other challenges include long hours of hard work and a lot of sacrifices along the way. The money will also not come overnight. Perseverance and patience are survival tools. Alonzo also emphasizes what may be considered “unwanted responsibilities.” Entrepreneurs are responsible for and answerable to their employees, customers, and community. “They are obliged to pay decent wages, provide value for the customer’s money, compete fairly, and share their wealth and profit with the community and society.”
Still, given both the individual satisfaction and its potential contribution to job creation and the health of the economy in general, the risks may be well worth it and the returns may be more far-reaching than anticipated.
Government support may also be forthcoming, especially for small and medium enterprise. After all, says Alonzo, the creation of three million new entrepreneurs tops the 10-point economic agenda announced by President Arroyo in her 2004 inaugural.
“No, the business climate isn’t all that bad. The latest UPS Annual Business Monitor survey results show that 50 percent of small and medium enterprise leaders are optimistic their businesses will improve in 2006. Fifty percent expect their current work force to grow.”
Karen embodies such optimism, as she dreams of eventually quitting her job and putting up her own coffee shop. “Although it’s the government’s responsibility to ensure that all Filipinos have jobs, the reality is that it is not often able to do so,” she says candidly. “But instead of just sitting around, you can do something. You can change the system from inside.”
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