December 19, 2018

A family of 10 cramped in a half-finished house in Barangay Commonwealth in Quezon City, the Aguases live on a meager income of P12, 000 a month.

Stretching their monthly budget for expenses on food, utilities, transportation, and education is a usual challenge, Aida Aguas, 46, mother of eight, says.

Having eight children to raise, she would constantly look for odd jobs in their neighborhood, such as cleaning and laundry services, to augment the income that her husband gets as an electrician.

With six of their children currently in school, the family still makes ends meet but not without hardships.

Aida admits that family size matters. “Sa tingin ko, dalawa o tatlo ang anak para sa maginhawang pamilya (I think a family should have two or three kids to live comfortably),” she says

The Aguas household could be viewed as a microcosmic example of the strong connection between wealth and population.

No wonder, demographic dividend has become a development buzzword, sought after by emerging economies like the Philippines.

In a nutshell, demographic dividend is the economic growth experienced by a country as a result of the change in the country’s population structure.

It is the product of the demographic transition, which is characterized by markedly declining mortality and fertility rates, resulting in the shrinking of the dependent age (0-14) group and expanding of the workforce (ages 15-64). This transition leads to steadily rising savings and investment rates and, hence, faster economic growth and improved living standards.

Demographic transition has three phases. An initial decline in infant mortality (death rate), with fertility rate remaining high, marks the first phase of the demographic transition. The second phase happens when the share of working-age population becomes large relative to the young dependent ages and the older population (65 years and above).

With the number of productive working-age population at its highest, the economy’s growth sharply accelerates. With a bigger workforce that can generate higher income and a less dependent population, the government can allocate its resources for economic development and social services (education, health and nutrition). This is also often referred to as the demographic-economic window of opportunity.

The success stories of the Philippines’ neighboring countries are examples of how governments can fully maximize dividend from this demographic transition.

In East Asia, countries like South Korea, Taiwan and Hong Kong started reaping the dividend as early as the 1980s. Singapore and Thailand got to this point in the 1990s.

Let’s look at the Philippines and Thailand’s economic growth stories through the World Bank’s open data. Thailand and the Philippines were previously referred to as twins, having about the same population size (40 million) and growth rate (5%) back in 1975.

But Thailand’s population structure entered the second phase of the demographic transition in the 1990s.

Thailand’s total fertility rate (TFR) dropped from 4.48 children per woman in 1975 to 2.1 children in 1990 and 1.7 in 2000. The Philippines’ TFR slowly declined from 5.7 children per woman in 1975 to 4.3 children per woman in 1990. By this time, the Philippines and Thailand were called diverging twins.

By 2000, Thailand was already enjoying high economic growth. In 2011, the World Bank upgraded Thailand’s income categorization from a lower-middle income economy to an upper-middle income economy. This is based on the country’s gross national income, which was at USD4,210 in that year.

The Philippines, on the other hand, remained in the World Bank’s middle-income category.

By 2017, the Philippines’ total fertility rate is still high at 2.9 children against Thailand’s less than 1.5 children. The Philippine’s population is currently 106 million against Thailand’s 68 million.

In a study commissioned by the United Nations Population Fund in collaboration with the National Economic and Development Authority, Dr. Dennis S. Mapa of the University of the Philippines’ School of Statistics noted that countries that experienced growth following demographic transition had effective and sustained modern family planning programs, contrary to the Philippines.

Where is the Philippines now in the demographic transition?

With its population structure, the Philippines remains in the first phase of the demographic transition. By the year 2020, the country is projected to have a population of almost 110 million Filipinos.

Working on reaching for the demographic dividend is no easy task, Socioeconomic Planning Secretary Ernesto M. Pernia said in a workshop led by the Commission on Population (POPCOM) in May this year.

Pernia said the road to demographic dividend is marked by challenges such as high fertility rate, particularly among poor households, and high unemployment rate among the youth.

Indicator results of the recently released 2017 National Demographic and Health Survey conducted by the Philippine Statistics Authority (PSA) showed the country’s average total fertility rate slightly declined to 2.7 births per woman in 2017, from 3 in 2013.

Slow increase in the use of modern contraceptives was also recorded from 37.6 percent in 2013 to 40.4 percent in 2017.

Another concern is the high unemployment rate among the youth. Results of the latest Labor Force Survey conducted by PSA in October 2018 showed that unemployment remains high among young people.

Youth unemployment, at 13.3 percent, is worse than the 5.1 percent national unemployment rate and the 3.7 percent unemployment rate for the 25 to 54 age group.

The Philippine Development Plan (PDP) 2017- 2022 targets youth unemployment rate to decline to about 8 percent by 2022.

The government is likewise concerned about the youth “not in employment, in education, or in training” or NEET.

According to the data from PSA’s Labor Force Survey from 2012 to 2016, percentage of youth “not in employment, in education, or in training” declined from 24.8 percent to 22.1 percent.

Based on these figures, some 4.4 million young Filipinos are still underutilized with skills not being enhanced by education, training, or employment.

Reform Agenda

The government continues to take active measures to steer the country through a demographic transition and reap its dividend. It boils down to an effective population management to ensure a highly productive workforce.

“It is to the country’s advantage to make the best of the increasing labor force in order to boost economic output. But the government must invest in human capital through family health and educational interventions,” Pernia said.

NEDA, with other government agencies, identified the gaps to be addressed and strategies to accelerate the demographic transition. These are detailed in the PDP 2017-2022, which emphasizes the need for a sustained universal health care program and reproductive health policies to reduce mortality and fertility rates.

The Responsible Parenthood & Reproductive Health (RPRH) Law that is already in place is very much in line with the PDP. However, the law passed in December 2012 –- after being stalled for five years with court TROs — must be fully implemented, along with adequate investment in human capital, particularly health and education for children and the youth.

The Philippines is expected to be the last major Asian economy to benefit from the demographic dividend between the years 2025-2070. If not properly addressed, the country would need to wait until at least 2050 to benefit from the demographic dividend, or possibly miss it all together.

“We need to fully implement the RPRH Law to speed up the demographic transition. If fully implemented now, we should get there by 2025. When people are able to care for their reproductive health and plan for their families, they can save more and invest in their children better. This will lead to a population that is healthier and well educated,” Pernia said.

Other reform agenda set by the government include Executive Order No. 12, series 2017, on “Zero Unmet Need for Modern Family Planning.”

For reproductive health and family planning interventions, the promotion of birth spacing of three to five years will be integrated to help couples and individuals achieve their desired family size. With low birth rates and small family sizes, it is more likely for women to be employed and to invest more time in personal development activities such as education and training.

On the education front, the current K to 12 curriculum integrates lessons on sexuality education aimed at helping students make informed choices about issues that affect their well-being. This will help address population issues by improving the education of the younger population, especially girls, to delay marriage and prevent early pregnancy.

Also, the Pantawid Pamilyang Pilipino Program (4Ps), which has been implemented since 2008, upholds children’s rights and aims to ensure that their basic needs concerning education, healthcare, and responsible parenting are met.

“The time is ripe to lay down the foundation for the Philippines to harness its demographic dividend. It is imperative for both the public and private sectors to work together toward this goal today,” Pernia said.