The Role of the Service Sector in the Economy

The Service Sector

• It consists of transportation, communications and storage, domestic trade, finance, housing, government and private services.

• It is a sector which produces services instead of just an end product which is tangible

The Service Sector

• Its primary role is to serve as facilitator in the entire process of production, distribution and consumption.

• Statistics show that the growth of the service sector has been pushed onward by :

1. Telecommunications2. Wholesale and retail trade3. Private services

The Service Sector

Telecommunications

• It provides necessary resources for or prerequisites to other industries in terms of information being delivered.

• National Telecommunications System It is an agency of the Philippine government under the

Commission on Information and Communications Technology responsible for the supervision, adjudication and control over all telecommunications services throughout the Philippines.

Telecommunications

Transportation • It may be regarded as “

place utility” to manufacturing, it takes the raw materials to the factory and converted goods to consumers.

• It is the artery for the free-flow of people, goods, and information.

Transportation • Rail transportation • Land transportation

DPWH- is in charge of building roads and bridges to ease transportation in the country • Water Transportation • Air Transportation

Finance Industry • Includes banks and

insurance companies. It is based on the principle of efficiency for it eliminates the need for barter in the trading of goods and services.

• It serves as intermediary or bridge between the fund sources and fund users

(See list of top banks in the Phils)

Wholesale and Retail Trade

• Marketing function is performed by any business that is a necessary mediator between the production or purchase of goods and services and their sale or consumption.

• Wholesaling is the sale of commodities in large quantities

• Retailing is the sale of goods in small quantities direct to the consumers for personal or household consumption.

Wholesale and Retail Trade

Wholesale and Retail Trade

• Distribution is performed by wholesalers and retailers. Each wholesaler buys from several hundred manufacturers and sells to several thousand retailers. Each retailer buys thousand of products from 10 to 20 wholesalers and sells them to thousand consumers.

Types of Retail Stores

• Specialty Store• Department Store• Supermarket• Convenience Store• Superstore

Housing

• Barriers to housing: 1. Housing finance2. High transaction and

production costs in the housing market

3. Escalating land prices

Private Services

• Consists of educational, medical, entrepreneurial, recreational, hotel, restaurant, and other services.

Significance of the Service Sector

• Source of Livelihood

• Source of Services

• Source of national income and output

Qualities of Filipino Workers in the Service Sector

1. Highly skilled workforce with strong work ethic

2. World-class proficiency in English

3. Improved methods and system

4. Intercultural skills5. Self-reliance

Institutions that help the Service SectorInstitution Functions

National Telecommunications Commission

Exercises jurisdiction over supervision and control of all telecommunications services throughout the country.

National Housing Authority Tasked to develop and implement a comprehensive and integrated housing program

Department of Trade and Industry Assigned to promote growth of enterprises and strengthen trade in the domestic and international markets.

Technical Education and Skills Development Authority

Assigned to develop the skills of middle class workers

Philippine Ports Authority Tasked to construct and modernize the different ports and modernize water transport

Institutions that help the Service SectorInstitution Functions

Department of Transportation and Communications

Tasked with the maintenance, expansion and modernization of an efficient and dependable transportation and communication system as an effective mean for economic recovery and progress

Local Water Utilities Administration Tasked with accelerating countryside water supply through service coverage, lending assistance and water infrastructure development.

Government Service Insurance System and Social Security System

Tasked with implementing programs for the protection of workers in the government and private sectors, respectively.

Challenges faced by the Service Sector

• Maintaining a sufficient pool of efficient workers

• Stiff competition from neighboring Asian countries

• Thinking small • Security risk and instability

Group Activity

• Why are Filipinos considered by many as among the most hard working, efficient, and loyal workers in the world?

• Why is it important to maintain these qualities?• Do you believe that lack of global awareness on the

advantages that Philippines can offer in the service sector affects the economy? Why or why not?

Journal Reflection

“ The highest destiny of the individual is to serve rather than to rule”