Based on their analysis of the Labor Force Survey results for the period 2012-2018, PIDS Senior Research Fellow Ramonette Serafica and Research Analyst Jean Colleen Vergara found that employment in the services sector leaped by 21.4 percent, which was significantly higher than the 11.13 percent increase in the country’s total employment.
“Services are embodied in goods production, either as inputs (such as design, marketing, or distribution costs included in the value of a good) or as trade enablers (such as logistics services or ecommerce platforms),” the authors said.
According to the 2019 Philippine Standard Industrial Classification, the services sector includes wholesale and retail trade; repair of motor vehicles and motorcycles; transportation and storage; accommodation and food service activities; information and communication; financial and insurance activities; real estate activities; professional, scientific and technical activities; administrative and support service activities; public administration and defense; compulsory social security; education; human health and social work activities; arts, entertainment and recreation; and other service activities.
Serafica and Vergara noted that the share of services to total employment was higher in 2018 than in 2012, which was “observed in the aggregate and across all regions”.
In the National Capital Region where services already accounted for 79.2 percent of total employment, the increase was marginal. Meanwhile, regional employment in the services sector increased across the board with CALABARZON or Region IVA having the highest growth rate of 37 percent.
However, the authors pointed out that the results are mixed across industries and regions, adding that the expansion of employment in all service industries occurred only in Region IVA.
Except for education services which experienced a decrease of -0.28 percent in employment, the study noted an expansion in all sectors, with administrative and support service activities topping the list, with an increase of 69 percent from 2012 to 2018.
One reason for the high employment in services, according to the study, is “the shift in the structure of final demand from goods to services due to higher incomes or other drivers that influence changes in the structure of household expenditure such as urbanization, the increase in labor force participation of women, and demographic changes.” In the Philippines, 3 out of every 4 female workers are absorbed in the services sector.
Another factor that causes employment growth is the inter-industrial demand of services by manufacturing which is linked to outsourcing processes.
Moreover, the study mentioned that the expansion of employment in the services sector can also be attributed to “the inter-industry productivity differentials between manufacturing and services”, with the manufacturing industry “enjoying higher productivity in terms of both level and growth”.
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