Bernardo M. Villegas
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Rebalancing Strategy
published: Mar 31, 2017

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Social Value of Self Employment

           The 7 to 10 percent unemployment rate usually reported by government agencies can be quite misleading as an indicator of the plight of the poor in the Philippines.  The more reliable indicator of the economic condition of the poor is what is called "underemployment" which can rise to high as 30 per cent of the labor force.  The underemployed is usually someone who is self-employed and may be working for more than 60 hours a week in highly unproductive occupations like coconut farming, garbage recycling, gardening and other odd jobs but is still looking for additional employment because he or she may not be earning enough to support the family at a minimum of comfort and decency, which in today's prices may require a monthly income of some P20,000 for a family of five.  We can include among the self-employed also the hundreds of thousands of sari-sari store owners, market vendors, taxi and tricycle drivers.  Of course, like the coconut farmers who are among the poorest of the poor, the self-employed include the other destitute people in the countryside such as the fishers, the landless farmers, and the small-scale miners. Both the Government and the private sector must assist these bottom poor among the population to increase both the safety and productivity of their respective occupations.  The landless farmers can be either absorbed as employees of  agribusiness companies such as those involved in banana, pineapple, palm oil, rubber, coffee and cacao plantations.  For these high-value crops to prosper, the new approach to agrarian reform must give way to the consolidation of larger farm sizes by allowing small farmers to lease their lands to the more productive ones or to agribusiness corporations.

          Giving access to credit to the self-employed who put up microenterprises in retailing, transport, food services, repair shops and a host of other personal services is definitely an effective way of attaining more inclusive growth.  The increasing presence of micro-credit organizations can do much to make the income of self-employed workers more sustainable.  It must be kept in mind, however, that a good number of these means of self-employment among poor households are temporary occupations that can give way in the future to more permanent jobs in the organized business sector where many of the self-employed, once provided with technical training, can be hired as employees.  We should be careful not to romanticize such micro-enterprises as sari-sari stores, tricycle and jeepney operators, and market stall owners.  With the spread of malls to even the most remote areas and the restructuring of public transport, these micro-enterprises will have to give way to more cost efficient means of serving the consuming population, contributing to lower inflation. Those involved in microcredit must be selective and perceptive enough to identify which of these small operations have a reasonable chance of evolving into larger and more viable enterprises.  Microcredit should be employed as much as possible to build up sustainable enterprises rather than to finance the consumption needs of the poor, which should be the responsibility of the State through such programs as the Conditional Cash Transfer and other ways of subsidizing the consumption of the poorest of the poor.

          Self-employment will be a major means of livelihood for the millions of small farmers who are in the traditional crops of rice, corn, coconut, vegetable farming, and livestock growing.  The State has a grave responsibility of helping these self-employed farmers improve their productivity and cost effectiveness by providing them with the infrastructures that they have been cruelly denied for so many decades.  They need more farm-to-market roads, post-harvest facilities, agricultural extension services, and irrigation systems, especially in the coconut regions which need to diversify into other higher-value crops through intercropping.  They can be helped by businesses, social enterprises and NGOs to enhance, not only their technical skills, but also their entrepreneurial and management skills.  As Dr. Rene Gayo of the Meralco Foundation has been advocating for some time now, these farmers should be converted through the appropriate training into farm entrepreneurs who will acquire minimum knowledge in the basic business tools like bookkeeping, production planning, credit management and marketing.  In the rural areas, the last two years of high school in the K to 12 curriculum should contain subjects which will prepare the young farmers for agribusiness entrepreneurship.  There is a pressing need to prepare the younger generation of farmers to take over from their parents, considering that the average age of a Filipino farmer is nearing 60 years.

          In the urban areas, there is a need to increase the supply of self-employed industrial workers like electricians, plumbers, masons, carpenters, mechanics, butchers, etc.  In addition to their plying their trade as individuals, some of them can also be the founders of small businesses that can evolve into at least medium-sized service centers.  To improve the supply of these individual service workers, educators should work with parents to remove the bias against manual work that is prevalent among the   middle class and even among the poor households.  As I have written repeatedly, more and more of our high school graduates, especially in the K to 12 curriculum, must be convinced that they can be more gainfully employed in these blue-collar occupations than if they were to pursue college degrees that do not equip them with the skills that are in great demand in an industrializing and urbanizing society.  Many of those who take general courses in business administration, health sciences and liberal arts would have greater chances of employment with higher wages if they are convinced to enroll in such TESDA-approved technical schools like  the Meralco Foundation and Dualtech in Manila or the Center for Industrial Technology and Enterprise (CITE) in Cebu.    For comments, my email address is