Page last updated at 05:21 Asia/Manila, Tuesday, 05 February 2013 PH
Through the years since at least the EDSA Revolution, I have followed closely the special reports of CLSA Asia-Pacific Markets on Asia consumers and their behavior. Because of my interest in the age group that is comprised by recent graduates of the University of Asia and the Pacific, where I have been teaching for decades, I read with special attention a recent report that the CLSA Asia-Pacific Markets put out last September on Philippine consumers. Entitled "Pinoy Yuppies," the article written by Jacqui Evangelista and Alejandro Molina describes the young urban professionals or yuppies to which our more recent alumni belong, many of them young professionals working for IT companies like Accenture, consumer-oriented firms like Uniliver, banks like BPI, real estate companies like Jones La Salle-Leechiu, hotels like Manila Peninsula, stock brokerages like CLSA, and land developers like Ayala Land.
What struck me about the report is the unusual insight it provided about the demographic shift that was ushered in by the Cory Administration over twenty five years ago. It did not occur to me until now that the "sweet spot" or demographic dividend being enjoyed by the Philippines, and being universally praised by bankers, investors, and international agencies alike, can be partly attributed to a change of mood ushered in by the restoration of democracy under the Cory Administration. Those who are between 25 to 34 years old today were products of that generation. Let me quote the CLSA study: "Cory Aquino's administration in the mid-1980s ushered in renewed national optimism after 20 years of the Ferdinand Marcos administration. The average number of births per year climbed by 40% over 1985-2010 versus 1965-1985, which resulted in the upsurge in 25-34 year olds today. With this young and well-educated talent pool, the Philippnes has become an ideal business-process (BPO) hub, raising employment opportunities that offer significantly better salaries."
I belong to the staff of the Sangandaan Cultural Center in Makati that offers continuing education program for yupppies. A good number of them are alumni of UA&P but there are also many who come from other universities in the Metro Manila area and even from the provinces. The majority of them are not yet married and are targeting the early or mid-thirties for tying the knot in matrimony. Many of them are still staying with their parents and, therefore, have added discretionary income. I can fully appreciate what the CLSA reports states: "From this growing sector, a yuppie class has emerged. Making up just 3% of the population, they already comprise more than 20% of discretionary consumption. As their numbers swell and superior incomes climb, their voracious propensity to spend will be a huge boost to local firms with exposure to this story." It is no brainer to identify which publicly listed companies are benefiting immensely from this "voracious" appetite: Ayala Land, Alliance Global, JG summit, SM investments and SM Prime, among others.
Last year, the CSLA research staff surveyed some 400 yuppies. On average, they make P471,000 (US$11,000) annual income, which is 3.5 times the average Filipino per-capita gross national income. Yuppies are estimated to save some 25% of their income. This means that their cumulative spending capacity is approximately P955 billion (US$22.5 bn). The research revealed that as the current Administration demonstrates the political will to improve governance and the investment climate, the yuppies will tend to shift to long-term, significant investment assets such as property and vehicles, making this group's economic impact even more pronounced and sustainable. Growing at 7.1% in GDP during the third quarter of 2012, the Philippines has been cited as one of the best places in which to invest in Asia. The result of the more optimistic outlook about the Philippine economy is even a more rapid growth in the spending of the yuppies who are expected to outpace the rest of the economy in consumer demand over the next few years by some 10 percentage points. This trend will especially be pronounced in those sectors in which yuppies are concentrated, i.e. BPO/KPO, hotel and restaurant management, entertainment, health services and education. The role of yuppies in the purchase of cars and housing units as well as shares of stocks in the Philippine Stock Exchange will be increasingly predominant. It is estimated that by 2020, the yuppies will contribute 50% of the country's discretionary expenditure and at least 50% of GDP.
The profile of the Pinoy yuppies is as follows: college-educated Filipinos between the ages of 25 and 34; employed in well-paying professions; majority are females (52%) in their mid-20-30s and predominantly single; employed in intellectual and idea-based job functions with the majority holding positions in knowledge process outsourcing (non-voice), financial institutions and fast-moving consumer-goods (FMCG) companies. Of the 400 respondents, 121 hold back-office positions in multinational knowledge-process outsourcing companies. Mainly driven by economics, Filipino yuppies are generally attracted to the knowledge-based sector's above-average salaries, which include distinct premiums (night differential payments or tax incentives, good medical and life-insurance coverage and potential travel opportunities). Furthermore, the employment selection process is less discriminatory because of the sheer number of vacant positions, offering positions to college degree holders from nonbusiness or noncorporate backgrounds. Of the 121 BPO yuppies in the sample, only 69 or 57% are degree holders in business management, economics, accounting or finance while the remaining 43% come from science, engineering, humanities and arts backgrounds. This segment of the population will swell even more as the number of BPO workers is expected to exceed one million by 2016. Needless to say, the huge expenditures of the Pinoy yuppies will have tremendous multiplier effects on the whole economy, benefiting the lower income groups who will be working in the service establishments patronized by the yuppies. For comments, my email address is email@example.com.