Prelude to ‘2015’: Gov’t urged to invest in human capital

The government is being urged to spend more on education and skills training, and to keep granting conditional cash transfers to the poor in the run-up to 2015 to ensure the Philippines reap the economic benefits of its entry to the so-called “demographic window.”

According to the Bangko Sentral ng Pilipinas, the promise of faster and sustained economic growth to be brought about by the country’s entry to the demographic window three years from now would be realized only if certain requirements—led by improved human capital—are met.

The demographic window is the period when bulk of a country’s population is of working age and, therefore, is also the time when the economy is most productive. In particular, it is the period when the proportion of the population aged 15 years old and younger is below 30 percent, and when the proportion of the population aged at least 65 years old is less than 15 percent.

Estimates said the Philippines will enter this window by 2015, thus becoming the last emerging Asian economy to do so. It is said that countries entering this period experience growth of at least 7 percent a year over a decade or more.

BSP Deputy Governor Diwa Guinigundo said the benefits of entering the demographic window are not automatic. Instead, he said, investments, more so on human capital, must be made beforehand.

“We must upgrade the quality of our education and skills and training programs. There should be greater access to both academic education and skills training. That would require more public spending,” Guinigundo told the Inquirer.

He also said subsidies currently given to poorest households should continue.

“While we are doing the transition, the national government should sustain its conditional cash transfer to ensure that the poorest of the poor are given the right condition to receive basic education,” he added.

Under the conditional cash transfer program, the government gives food subsidies to poorest households. One of the requirements for recipient households is to send their children to school. The objective of the program is not only to alleviate hunger but also to improve school participation among the poor.

For 2012, the government has allocated P39 billion for conditional cash transfers.

Guinigundo also said larger investments in infrastructure are also necessary. He said favorable demographics should be complemented by sufficient infrastructure to ensure the country corners the supposedly higher foreign direct investments.