Manufacturing comprises more than half of the Philippines's industrial sector and accounts for almost a quarter of the country's Gross Domestic Product (GDP). From an annual growth rate of 5.4% in 2012, the manufacturing sector grew by 10.5% in 2013 and 8.1% in 2014.
Manufacturing industries have higher employment, income and output multipliers relative to the agriculture and services sectors. Manufacturing also promotes stronger inter-industry and inter-sectoral linkages, firm productivity, technological development and innovation. As such, the growth of the manufacturing industry improves the upgrading and diversification in the agricultural sector, as well as drives demand for higher value-added services. Taking all these into consideration, the Philippines is accelerating the manufacturing sector's competitiveness towards the achievement of sustainable and inclusive development in the country.
The vision is to create a globally competitive manufacturing industry with strong forward and backward linkages to serve as hubs in the regional and international production networks of automotive, electronics, garments and food and supported by well-managed supply chains.
Targets: manufacturing contribution of 30% of total value added and 15% of total employment
Short-run (2014-2017) Goals:
Medium-run (2018-2021) Goals:
Long-run (2022-2025) Goals:
To achieve the above goals, the following strategic actions are pursued:
The average growth of the manufacturing sector, in terms of gross value added, has been steadily increasing since the 1990s. From 1991 until 2000, the sector grew on the average by 2.5%. Average growth picked up to 4.1% from 2001 to 2010. This further increased to 7.1% in recent years (2011 to 2014), which is higher than the average growth rates of GDP and the entire industry sector amounting to 6.0% and 6.4%, respectively.
At the sub-sectoral level of the manufacturing industry, all segments- consumer goods, intermediate goods and capital goods – have manifested positive average value added growth rates in the 1990s, the 2000s and the early 2010s. In the 1990s and 2000s, the capital goods segment had seen the most rapid average value added growth rate, driven primarily by the double-digit growth rates of the electrical machinery products during the 90s and of the basic metal industries in the 2000s. Meanwhile, from 2011 to 2014, the intermediate goods segment has shown the strongest average value added growth rate driven by the double digit growth rates of the print and publishing sector and the chemical industry.
Value Added Growth Performance of Manufacturing and its Sub-sectors (in percent; at constant 2000 prices)
|Gross Domestic Product||3.0||4.7||3.9||6.6||7.2||6.1||6.0|
|Footwear, wearing apparel||1.5||-2.0||3.9||39.0||11.9||-3.4||8.5|
|Furniture and fixtures||2.0||6.2||94.8||38.7||41.8||24.8||34.7|
|Wood and cork products||-4.0||-2.7||-8.7||18.1||-9.2||0.6||-1.0|
|Paper and paper products||-0.7||0.6||14.6||-4.5||-8.2||6.3||1.4|
|Publishing and printing||1.4||0.6||-5.6||1.8||-5.9||88.7||13.5|
|Leather and leather prod.||5.3||-4.8||nd||nd||nd||nd||nd|
|Chemical & chemical prod.||2.5||4.4||18.1||4.0||97.8||3.3||21.7|
|Prod.of petroleum & coal||3.7||2.6||-9.1||-3.9||-14.7||14.3||-1.2|
|Non-metallic mineral prod.||2.1||5.0||2.9||15.1||10.1||-2.8||5.4|
|Basic metal industries||-1.8||13.1||-0.6||-18.1||51.1||-0.2||7.3|
|Machinery except electrical||5.9||-0.5||2.7||8.6||6.2||22.3||7.5|
*nd= no data | Source of basic data: National Accounts of the Philippines, Philippine Statistics Authority.
The manufacturing value added contribution has been quite steady since the 1990s. From an average share of 24.3% from 1991 to 2000, the sector’s average value added share from 2001 to 2010 slightly decreased to 23.7%. From 2011 to 2014, the average manufacturing value added contribution further decreased to 23%.This decline is also shared by the overall industry sector, given that the manufacturing sector accounts for almost 70% of the entire industrial sector’s gross value added. Meanwhile, the agriculture sector has experienced a diminished value added contribution over the years, whereas the services sector has seen a tremendous increase in its value added share over time.
At the sub-sectoral level, the consumer products segment has been the largest contributor to the total manufacturing value added since the 1990s. The food manufacturing industry has been consistently the single biggest component of this segment, with a contribution of more than 35% from the 1990s until the early 2010s. With regard to the consumer goods and capital goods segments, the former had a bigger share in the total value added as compared to the latter, during the 1990s and 2000s. However, during the 2011 to 2014 period, the latter has started to overtake the former in terms of value added share percentage. Within the intermediate goods segment, the chemical industry has manifested significant increases in its share, while the petroleum products sector has shown significant decreases over time. For capital goods, the electrical machinery sector has shown consistent increases in its value added share and it has been the biggest component of the capital goods segment since the 1990s until 2014.
Value Added Contribution (in percent)
|Agriculture, Fishery, Forestry||20.8||18.9||11.5||11.1||10.4||10.0||11.0|
|Footwear, wearing apparel||6.0||4.0||3.0||3.0||2.6||2.3||2.7|
|Furniture and fixtures||1.0||1.0||3.0||4.0||5.0||5.8||4.5|
|Wood and cork products||2.0||1.0||1.0||1.0||0.9||0.8||0.9|
|Paper and paper products||1.0||1.0||1.0||1.0||0.8||0.8||0.9|
|Publishing and printing||2.0||1.0||1.0||1.0||0.5||0.9||0.9|
|Chemical & chemical prod.||6.0||6.0||7.0||7.0||12.0||11.4||9.4|
|Products of petroleum & coal||17.0||14.0||4.0||4.0||2.8||3.0||3.5|
|Non-metallic mineral prod.||3.0||2.0||2.0||3.0||2.7||2.4||2.5|
|Basic metal industries||2.0||3.0||2.0||2.0||2.0||1.9||2.0|
|Machinery except electrical||1.0||1.0||3.0||3.0||1.4||1.6||2.3|
Source of basic data: National Accounts of the Philippines, Philippine Statistics Authority.
Total manufacturing employment has grown on the average by 0.8% from 2001 to 2013. Of the manufacturing sub-sectors, the food and beverages sector, electrical machinery manufacturing sector, and transport equipment manufacturing industry have the highest average employment growth rates of more than 2%. Meanwhile, the sub-sectors whose total employment has contracted, on the average, from 2001 to 2013 are the tobacco, textile, publishing and printing, basic metal, fabricated metal, and non-electrical machinery manufacturing industries. Employment in miscellaneous manufactures has also decreased over the years.
Employment Figures (in ‘000)
|Year||2001-08||2009||2010||2011||2012||2013||2011-13||Average Growth, 2001-13|
|Food and Beverage||691||740||779||784||840||880||805||2.4%|
|Footwear, wearing apparel||553||470||488||479||504||533||495||0.1%|
|Furniture and fixtures||130||116||119||122||139||118||123||0.0%|
|Wood and cork products||289||334||357||365||317||293||333||2.0%|
|Paper and paper products||48||45||45||49||50||49||48||1.8%|
|Publishing and printing||80||73||78||82||55||56||69||-2.2%|
|Chemical & chemical prod.||79||85||83||80||82||93||85||1.1%|
|Products of petroleum & coal||6||4||5||5||6||5||5||0.3%|
|Non-metallic mineral prod.||90||94||90||89||91||89||91||1.7%|
|Basic metal industries||52||47||42||44||45||56||47||-0.3%|
|Machinery except electrical||73||69||68||64||19||16||47||-8.5%|
Notes: *Sub-sectoral classification used reconciles the 1994 and 2009 PSIC to ensure data compatibility and continuity from 2001 to 2013. No data available for pre-2000 years and for 2014. | Sources: Yearbook of Labor Statistics (1980-2000) and Current Labor Statistics (2001-2002), Bureau of Labor and Employment Statistics, Department of Labor and Employment. Labor Force Survey, Philippine Statistics Authority.
The manufacturing employment contribution to total employment has been declining since the 1990s. From an average share of 10% from 1991 to 2000, the sector’s average share from 2001 to 2010 slightly decreased to 9.1%. From 2011 to 2014, the average manufacturing employment contribution further decreased to 8%. This trend in the manufacturing sector is shared by the overall industry sector, given that manufacturing accounts for more than half of the entire industrial sector’s total employment. Meanwhile, the agriculture sector has experienced a diminished employment contribution over the years, whereas the service sector has seen a tremendous increase in its employment share over time.
At the sub-sectoral level, since the 2000s, the consumer goods segment has been the largest contributor to total manufacturing employment. Its share of more than 45% has been fairly steady from 2001 to 2013. The food manufacturing industry has been consistently the single biggest component of this segment, with an average contribution of more than 20% (from 2001 to 2010) and and 25% (from 2011 to 2013). The second biggest contributor to manufacturing employment is the intermediate goods segment, with an average share of 28.8% (from 2001 to 2010) and 27.1% (from 2011 to 2013). It is followed by the capital goods segment, with an average share of 24.8% (from 2001 to 2010) and 22.8% (from 2011 to 2013), and by the miscellaneous manufactures sector with a 3.7% average share for both time periods.
Employment Contribution (in percent)
|Agriculture, Fishery, Forestry||43.2||36.1||33.0||32.1||31.1||30.8||32.0|
|Food and Beverage||23.6||25.5||27.0||27.9||26.8|
|Footwear, wearing apparel||18.1||15.6||16.2||16.9||16.2|
|Furniture and fixtures||4.3||4.0||4.5||3.7||4.1|
|Wood and cork products||10.1||11.9||10.2||9.3||10.4|
|Paper and paper products||1.6||1.6||1.6||1.6||1.6|
|Publishing and printing||2.6||2.7||1.8||1.8||2.1|
|Chemical & chemical prod.||2.7||2.6||2.6||2.9||2.7|
|Products of petroleum & coal||0.2||0.2||0.2||0.2||0.2|
|Non-metallic mineral prod.||3.0||2.9||2.9||2.8||2.9|
|Basic metal industries||1.7||1.4||1.5||1.8||1.6|
|Machinery except electrical||2.4||2.1||0.6||0.5||1.1|
Note: *Sub-sectoral classification used reconciles the 1994 and 2009 PSIC to ensure data compatibility and continuity from 2001 to 2013. No data available for pre-2000 years and for 2014. | Sources: Yearbook of Labor Statistics (1980-2000) and Current Labor Statistics (2001-2002), Bureau of Labor and Employment Statistics, Department of Labor and Employment. Labor Force Survey, Philippine Statistics Authority.
Labor productivity has increased significantly for all major industries of the country from the 1990s until the early 2010s. From the 1990s until the 2000s, labor productivity for the agriculture, services, and industry sectors has grown by an average of 24.1%, 8.2%, and 16.8%, respectively. Meanwhile, from the 2000s until the early 2010s, labor productivity for the sectors has respectively grown by an average of 10.4%, 15.6%, and 18.2%. From 1991 until 2013, the industry sector has the highest labor productivity. It is followed by the services sector and then by the agriculture sector, which has the lowest labor productivity among the three.
The labor productivity for the manufacturing sector has grown by an average of 25.5% from the 2000s until the early 2010s. At the sub-sector level, the labor productivity for the various manufacturing segments- consumer goods, intermediate goods, and capital goods – have also grown consistently over the years. Across all years, the capital goods segment has the highest labor productivity, followed by the intermediate goods segment and then by the consumer goods segment. The miscellaneous manufacturing segment meanwhile has the lowest labor productivity. Furthermore, the petroleum and coal sector has the highest labor productivity among all sub-sectors across the years on the average, while the wood and cork products sector has the lowest.
Labor Productivity Measured in Terms of Gross Value Added (in Philippine pesos; constant 2000 prices)
|Agriculture, Fishery, Forestry||42,086||52,221||55,420||57,799||59,706||57,642|
|Food and Beverage||60,200||70,500||70,200||69,900||70,200|
|Footwear, wearing apparel||7,800||70,00||9,200||7,600||7,900|
|Furniture and fixtures||12,400||32,200||39,300||64,100||45,200|
|Wood and cork products||5,400||3,500||4,800||4,400||4,200|
|Paper and paper products||23,100||28,900||27,000||25,500||27,100|
|Publishing and printing||11,800||9,900||15,100||14,300||13,100|
|Chemical & chemical prod.||81,700||114,300||115,900||202,600||144,200|
|Products of petroleum & coal||1,055,400||1,016,100||813,500||855,400||895,000|
|Non-metallic mineral prod.||26,400||37,100||41,700||47,000||41,900|
|Basic metal industries||45,800||58,800||47,100||56,600||54,200|
|Machinery except electrical||28,100||31,100||105,400||134,500||90,300|
Notes: *nd= no data / *Sub-sectoral classification used reconciles the 1994 and 2009 PSIC to ensure data compatibility and continuity from 2001 to 2013. No data available for pre-2000 years and for 2014. | Sources: Yearbook of Labor Statistics (1980-2000) and Current Labor Statistics (2001-2002), Bureau of Labor and Employment Statistics, Department of Labor and Employment. Labor Force Survey, Philippine Statistics Authority.