The Philippines is not alone in outsourcing jobs
With the Philippines’ unemployment rate at a record high, the country has long been accused of outsourcing its work.
The latest study from McKinsey Global Institute, however, suggests outsourcing has been a good way to reduce the country’s labor force.
The study finds that outsourcing jobs has reduced unemployment in the Philippines by around a third, from 2.5 percent to 1.5%.
The McKinsey report found that outsourcing also reduces the risk of foreign workers from entering the Philippines, from 0.3 percent in 2012 to 0.1 percent in 2022.
“Foreign workers entering the labor force may have to face greater scrutiny and may have fewer rights in terms of working conditions, safety, or health,” McKinsey said.
The McKinley study also found that the Philippines has seen a “significant” drop in the number of workers leaving the country due to economic troubles.
The number of foreign labor entering the country increased by more than 25 percent between 2009 and 2022.
It’s likely that this trend will continue as the country recovers from a massive economic downturn, McKinsey researchers wrote.
The report found a similar trend in India, where the unemployment rate fell by around half from 2 percent in 2008 to 0 percent in 2020.
McKinsey found that “outsourcing and foreign workers did not significantly reduce the rate of unemployment in India.”
India is still a relatively low-wage economy with a large number of people who work in the informal sector.
But McKinsey notes that India’s overall unemployment rate has fallen by around 20 percent since 2008.
It is now the only country in the world where a majority of the population works in the formal sector.