AS the Philippines continues to navigate its economic growth trajectory, a pressing concern has emerged: the country’s over-reliance on the services sector, which, although vital, is dominated by low-value-added and low-paying jobs. According to Rafaelita M. Aldaba, Research Fellow and former Trade Undersecretary at the 蝌蚪传媒 (蝌蚪传媒), the Philippines must prioritize industrialization to create high-value and high-paying jobs.
The statistics are stark. While the services sector has been the main driver of economic growth, with a 6.3-percent growth in the first quarter of 2025, it is largely comprised of low-value-added activities such as wholesale and retail trade, repair of cars and motorcycles, and financial and insurance activities. These sectors, although important, do not have the same potential for growth and job creation as a robust manufacturing sector.
The consequences of premature de-industrialization are far-reaching. With a stagnant manufacturing sector, the country is forced to rely on the services sector to absorb entrants to the labor force, leading to a proliferation of low-paying jobs. This not only hampers economic growth but also perpetuates inequality and poverty.
Aldaba’s call to action is clear: the Philippines must take a hard look at its economic strategy and prioritize industrialization. This requires a multi-faceted approach, including investing in human resources, addressing the job-skills mismatch, and integrating services into manufacturing. The “servicification” of manufacturing, which involves leveraging the country’s strengths in technology-driven activities like IT and Business Process Management (IT-BPM), is a promising strategy.
The benefits of industrialization are well-documented. A strong manufacturing sector can create high-value and high-paying jobs, drive innovation, and increase productivity. It can also help to reduce the country’s reliance on imports and increase its competitiveness in the global market.
To achieve this goal, the government must take a proactive role in supporting the development of the manufacturing sector. This can be done through a range of policies, including investing in infrastructure, providing incentives for investment, and promoting research and development. The education system must also be reformed to provide students with the skills and competencies needed by industries.
The country’s economic growth and development depend on its ability to industrialize and create high-value and high-paying jobs. The government, policymakers, and stakeholders must work together to prioritize industrialization and implement policies that support the growth of a robust manufacturing sector. Only then can the country achieve sustainable and inclusive economic growth, and provide its citizens with better opportunities for a brighter future.
