The building industry and employment creation in Manila, the Philippines

Abstract

This study examines the building industry in Manila, The Philippines, and the contribution the industry has made to economic development. Attention is focused on the effect of the industry on the eradication of urban poverty through the creation of productive employment. Because of the importance of the industry's output to economic growth and the possible labour-intensive nature of building activity, an expansion of the industry is often cited as offering a partial solution to the urban employment problem. By analysing data on the size, composition and characteristics of the work force on different types of building sites, as well as information on the determinants of these variables, the study may assist authorities concerned with the problems of maximising employment in conjunction with high economic growth. The study provides a detailed analysis of the importance of the output mix on the level of employment generated. After discussing the structure of the building industry, we analyse the rise in average labour productivity since 1955. It is concluded that the change in the industry's output mix towards projects requiring more capital-intensive techniques has been the main cause of this trend. Data on the labour-output ratio associated with the construction of different types of building are used to calculate the effects of the change in the output mix on employment. We discuss the reasons for the change in the output mix, including the influence which government policies can have on this variable. Employment in the industry is also examined from the point of view of the individual labourer. Because of the fluctuations in the level of building activity and the short term variations in the size and composition of the work force required on each building site, labourers are employed on a casual basis. It has been argued that because of the precarious employment experienced by building industry labourers, they remain in the industry for only a short period; a transitional phase between agricultural and modern industrial sector employment. However, the results of this study suggest an alternative pattern in which a large section of the work force are committed to employment in the industry. The manner in which these labourers adjust to the low and uncertain income on a long term basis involves an employment-migration pattern not previously associated with the industry. The implications of the employment-migration patterns for the individual labourer, the industry and the urban economy are discussed. This analysis presents a quite different view of the effect of the industry on the urban employment problem from that generally found in the literature. The experience of the building industry can also be used to examine a number of problems facing the Philippine economy as a whole. In particular, the study may provide some insight into why the modern industrial sector has failed to absorb the expanding urban work force, and secondly, how members of the urban informal sector have adjusted to the difficult environment created by this slow growth in modern sector employment.