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World Bank Says RP's BPO Boom doesn't Reduce Poverty

by: Karen Cayamanda

Monday, November 9, 2009 | Outsourcing News |

Business process outsourcing, considered as one of the largest elements of the services sector, plays a major role in improving the Philippine economy. However, the country fails to boost economic growth by developing the sectors that directly contribute in poverty reduction.

Chief Economist Eric LeBorgne from World Bank-Philippines said that since the country fails to focus more on improving sectors such as industry or agriculture, Filipino workers tend to apply for jobs in the services sector. “Industry was unable to absorb the rapidly growing labor force, including migrants from the rural areas, leaving the service sector as the safety valve. Services account for 65 percent of the gross domestic product and nearly half of employment, but anecdotal evidence suggests that the bulk of the service sector simply masks severe urban underemployment with very low productivity,” the World Bank said.

LeBorgne added that the BPO sector hires individuals who are educated, skilled, and are not considered poor or near-poor. These workers are able to help reduce poverty in the country only through tax collection that enables the government to conduct social-spending programs.

Despite the success of the outsourcing sector, LeBorgne said improving the education system in the country will greatly help the economy. He added that even applicants in BPO companies still need to hone their technical skills and undergo English training. “The education level of these applicants does not make them readily trained for BPO sectors. The government needs to improve the quality of the education system.”


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