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Philippines expected to post strongest growth in labour force in Asia
Publication Date : 09-09-2013
The Philippines will likely post the strongest growth in labour force in Asia over the next decade and hit its demographic peak at 2085, American investment bank BofA Merrill Lynch said.
It is thus seen an “opportune time” for the Philippines, and other countries with similarly favourable demographics, to capitalise on their abundant labour resources and lower labour costs to attract greater foreign direct investments (FDI),” said a Merrill Lynch research written by Hak Bin Chua dated August 23.
“Asia is only starting to feel the reverberations from China’s shrinking working age population and labour force. Significant shifts within Asia are already taking place in relative production, consumption and investment patterns as the costs and availability of labour diverge. The price of labour in Asia has been rising more sharply in recent years,” the research said.
But Merrill Lynch also noted that as barriers to foreign investments remained “daunting,” the outcome in countries like the Philippines had been “more an outflow of workers and talent to a growing diaspora outside their borders, rather than investments flowing in.”
The report noted that Asia’s demographic divide between North and South appeared stark over the next decade. It said that the latest UN Population 2012 revisions had made the divergence even starker by extending the demographic peaks for the Philippines (to 2085 from 2077) and Indonesia (to 2058 from 2036) while Thailand’s peak had been brought forward (to 2017 from 2020).
“Philippines, Malaysia, Indonesia and Singapore—in that order— will likely see the strongest labour force growth in Asia over the next decade,” the research said, noting that Thailand would emerge as the “old man” in the Asean.
In the coming decade, Merrill Lynch projected that labour force in the Philippines would expand by 21.3 per cent, faster than its forecast for Malaysia (+15.4 per cent), Indonesia (+15.2 per cent) and Singapore (+14.3 per cent).
Overall, the six largest countries of Southeast Asia (including Vietnam) will see labour force grow by an average of 12.2 per cent through 2023—in stark contrast to the rest of Asia, where labour force may only grow by 5.1 per cent led by India, the research said.
Other countries are seen facing decline in labour force as their population ages: Japan (-8.1 per cent), Hong Kong (-5 per cent), Korea (-2.3 per cent), Thailand (-1.2 per cent) and China (-0.9 per cent).
China’s demographic path may, however, be altered with a two-child policy.
“Still, Philippines, Indonesia and India have struggled to attract FDIs despite their resource advantage,” the report said.
The research noted that demographics were useful predictors of real GDP (gross domestic product) growth as changes in working-age population over the past decade (2002-12) were highly correlated with real GDP growth, especially if China is excluded.