Overview
- Over the past 15 years, the Philippines has delivered rapid, investment-led, and pro-poor, and spatially balanced growth. GDP growth averaged 5.2% from 2010 to 2023, placing the country in the top quartile of middle-income performers. Employment expanded faster than the working-age population. And incomes of the poorest 40% grew faster than those of the richest 20%, driven by job creation, mobility from self-employment to wage jobs, and to some extent, social protection.
- This growth was built on a strong combination of an acceleration of public investment and pro-investment reforms that crowded in private investment. Sustaining progress—and delivering better jobs for a growing population—requires a shift. Productivity and human capital remained untapped sources of growth. Meanwhile, global developments, including technological disruptions, global policy uncertainty, and climate change are raising the bar for what it takes to compete and converge.
- This Growth and Jobs Report presents a forward-looking roadmap for the Philippines to make this transition: from input-led expansion to productivity-driven growth that is inclusive, job-rich, and resilient.
Key Findings
- The economy grew fast, but productivity gains were limited. Since 2010, over 90% of growth came from capital accumulation. Total factor productivity accounted for less than 10%, and human capital contributions were negligible.
- Job creation was strong, with real wages increasing too. Over 11.7 million jobs were added since 2010. But three out of four were in non-tradable sectors, typically less prone to faster productivity growth. Real wages rose, on average, by 24%.
- Growth was more spatially inclusive and pro-poor. Low- and middle-income regions drove much of the post-2010 growth. Incomes of the bottom 40% grew faster than the top 20%, a reversal from earlier decades.
- Macroeconomic stability helped. Inflation remained contained, fiscal sustainability was preserved despite large shocks, facilitating increases in public investment, which, as a share of GDP, rose from 2.9 in 1999-2009 to 4.1 in 2010–2023.
- Growth and job creation concentrated on non-tradables. Three out of four jobs created were in sectors that are not exposed to international competition. Export competitiveness instead declined, and so did the number of export firms over the past decade. Because export firms are about 20% more productive than comparable non-exporting ones, this is a challenge.
- Other challenges remain. Business dynamism is constrained by regulatory complexity and challenges to competition. The firms at the top are not creating employment at scale. Technology adoption is constrained by skills scarcity and by lack of incentives. Recurring climate shocks affect firms’ productivity and wages, particularly those of small and medium enterprises.
Why It Matters
As the Philippines approaches upper-middle income status, it must navigate a steeper path. The traditional drivers of growth—demographics, remittances, and infrastructure—are no longer enough to ensure convergence with high-income economies.
At the same time, global forces are reshaping how growth and jobs are created:
- Technological disruptions are altering labor markets and reducing the job intensity of growth.
- Recurring climate events are redefining competitiveness and investment.
- The middle-income trap looms: without structural reform, many countries stall before reaching high income status.
The Philippines must act now to sustain faster, more durable growth—and to ensure that growth delivers quality jobs and rising incomes.
Reform Roadmap: Three Strategic Pillars
The report outlines a reform agenda built around three mutually reinforcing pillars. Here are some highlights:
Pillar I: Foundational Investments in Infrastructure and Human Capital
- Preserve public investment, particularly in connectivity. Expand transport, logistics, and digital infrastructure to reduce costs of connecting people to opportunities
- Invest in early childhood nutrition, education quality, and job-relevant skills, including digital and emotional competencies
- Strengthen local government capacity and public service delivery to close spatial and social gaps
Pillar II: A More Competitive and Enabling Business Environment
- Streamline business regulations and reduce policy uncertainty
- Strengthen competition policy and address barriers to firm entry, scaling, and exit
- Lift cabotage restrictions to reduce inter-island transport costs
Pillar III: Mobilizing Private Capital at Scale
- Improve public-private partnership frameworks and investment planning
- Expand support for firms, particularly new and small ones with high potential to access regional and global markets, technology, and services
- Strengthen the financing innovation ecosystem, to facilitate firms’ investment in technology adoption and research and development
Reform Payoff: What’s at Stake
If implemented as a package, these reforms could transform the Philippine growth trajectory:
- Raise long term GDP growth by 1.4 percentage points
- Create 5.1 million additional jobs by 2040
- Boost real wages by 12.9%, with the largest gains in services and industry
With decisive reform, the Philippines can sustain “faster-for-longer” growth and ensure that progress is widely shared.