Driving the Philippines' Next Phase of Growth
Business Journal

Driving the Philippines' Next Phase of Growth

The country's GDP is skyrocketing. But to create much-needed new jobs, Filipino businesses must build more capable, engaged, and empowered workplaces.

Filipino managers have traditionally been strong in giving direction and ensuring compliance with goals, but they must do much more.

The Philippines is in the midst of the most significant economic turnaround in its history. For years, this nation of 105 million has suffered through major economic hardships -- rampant corruption and cronyism, failed economic policies, high unemployment and poverty, and unstable governments. As a result, its economic growth has always lagged behind that of the Asian tiger economies: Hong Kong, Singapore, South Korea, and Taiwan.

But things are changing dramatically for this "tiger cub" economy. Its GDP growth skyrocketed to 7.6% in the first half of 2013, outstripping many of its regional rivals, including more established economies like Thailand and Malaysia. Though growth slowed somewhat in the second half of the year, in part because of the devastating typhoon that struck the country in November, preliminary United Nations estimates suggest that overall growth for the year will be 6.7%.

Many factors have contributed to this remarkable growth. They include strong investment in building infrastructure and growth in the manufacturing and construction sector, as well as the progressive economic and social policies of the Aquino government since its establishment in 2010.

However, job creation has failed to keep pace with the Philippines' rapid growth; a recent report by the International Labour Organization notes that the country's unemployment rate hovered around 7% throughout 2012 and 2013. If Filipino companies are to expand and hire at the rates necessary to keep driving the economy forward, they must first create capable, engaged, and empowered workplaces.

Filipino workforce more engaged than others in Southeast Asia

There is good news too. In Gallup's latest survey, conducted in 2012, the Philippines had the most engaged workforce of all countries in Southeast Asia. Almost three in 10 Filipino employees (29%) are engaged at work, while only 8% are actively disengaged -- compared with just 12% engaged and 14% actively disengaged region-wide. Engaged employees are invaluable to the Philippines. They are likely to be more productive, have greater confidence in what they do, and, importantly, actively influence innovation -- and all these factors are critical to driving breakthrough growth for the nation.

Three in 10 Filipino Employees Are Engaged at Work This all bodes well, but there is ample opportunity to build on the country's employee engagement levels and to ensure that engagement translates directly into increased workforce productivity. What must Filipino companies do to sustain and improve employee engagement levels?

For a start, though the country is investing tremendously in modernizing its infrastructure, it also must create a more educated, skilled, and talented labor force to remain competitive in the region. Managers and leaders at all levels in private and public organizations should fully support building engagement.

Filipino managers have traditionally been strong in giving direction and ensuring compliance with goals, but they must do much more. Companies must invest in equipping their managers to help individual employees discover what they do well, then set them up for success with the right coaching, support, and guidance. Filipino managers must consider employees as equal and important contributors instead of just cogs in a machine. In many companies, this will take a significant -- but critical -- shift in mindset.

Filipino companies must look toward building global competence while promoting the country as a knowledge-based economy. The Philippines is one of the few countries in the region where English is widely spoken. This strength has been used to good effect, spinning off a burgeoning business processing outsource (BPO) industry. Engaging call center agents at the workplace will be an important task because the industry is rife with high turnover. In addition to the BPO industry, the rapidly expanding service economy also must prioritize employee engagement.

Shedding the "laggard" label

The Philippines is at a crucial juncture in its development and emergence as an economic force in the region. Job creation is a fundamental challenge because without new jobs, poverty will remain the nation's biggest barrier to inclusive growth. To remain competitive, Filipino leaders and managers from all sectors must continue to build a workforce that is engaged and committed. This will ultimately set the Philippines apart from its regional rivals and will help it shed the label of the "laggard" economy. With one of the highest growth rates among all Southeast Asian nations as well as the highest levels of employee engagement in the region, that seems like a strong possibility.

Vibhas Ratanjee, a Senior Practice Expert, is based in Gallup's Singapore office.
Chee Tung, Leong is Manager, Singapore and Southeast Asia, at Gallup. He is based in Gallup's Singapore office.
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