Espiritu, Danielle Torrance Y.

1A6
SDG Assignment: 8 – Decent Work and Economic Growth

The Root of Poverty: Inflexible Labor Regulations

As of this year, over 26 million Filipinos are living in poverty which is almost 25% of the
population (Keck, 2022). This pressing issue in the Philippines continues to grow as more people
become victims of the ongoing pandemic, the inaccessibility to productive capital and market
access, high levels of population growth, natural calamities, etc. Though, what remains as the
most evident cause of such is in-work poverty. Thus, the major contributor to poverty is the lack
of productive job opportunities caused by inflexible labor regulations.

The central goal of economic development is poverty reduction which can only be
achieved if productive job opportunities favor the poor as much as the non-poor. Despite the
achieved economic growth for years, the quality of the jobs created has hardly improved. It did
not bring wage growth; in fact, wage inequality is higher in the Philippines compared to
developed European countries. Consequently, the status of low-paid workers did not improve,
and workers’ low-earning capacity is high. (Rutkowski, 2015). These factors established barriers
to economic development.
Nevertheless, significant impacts on poverty reduction can be observed through the initial
levels of economic growth and income inequality (Kakwani and Son 2004). This suggests that
economic growth and the creation of productive and fair jobs must be hand-in-hand to improve a
nation's standard of living. Hence, the problem lies within inflexible labor regulations. Effective
labor policies must be implemented for the reallocations of labor to more productive activities.

Considering the aforementioned aspects, a call for the improvement of labor regulations
must be addressed since in-work poverty hinders economic development. These regulations must
be reviewed and revamped to also favor informal sectors and promote more productive jobs for
the poor. This could be implemented by local governments first to gauge its long-term
sustainable growth rate, and to observe how different sectors such as the local communities’
standard of living has improved because of such. If proven to be cost-effective and development
is observed, it could be proposed as a nationwide agenda.
Word Count: 340

References

Keck, M. (2022, January 11). The pandemic pushed 4 million more Filipinos into poverty in first
half of 2021. Global Citizen. https://www.globalcitizen.org/en/content/philippines-
poverty-covid-19/#:~:text=Socioeconomic%20Planning%20Secretary%20Karl
%20Kendrick,at%2015.5%25%20to%2017.5%25.

Rutkowski, J. J. (2015). Employment and poverty in the Philippines. The World Bank.
http://hdl.handle.net/10986/26320

Son, H. H. & Kakwani, N. (2004). Economic growth and poverty reduction: Initial conditions
matter. Working Paper No. 2. New York: International Poverty Center, UNDP.