The main report is organized into threeparts: part one provides the overall context by describingthe level and evolution of poverty and inequality in thePhilippines and by analyzing the factors that could beweakening the link between economic growth and povertyreduction. It also provides a brief profile of the poor.Part two addresses the first strategic component forfostering inclusive growth, which refers to the enhancementof income opportunities and ensuring greater labor mobilityfor the poor. It begins by reviewing recent economicdevelopments, with particular attention to employmentgeneration, and evaluates the potential of key economicsectors to generate growth and productive employment. Parttwo then turns to the related challenge of ensuring labormobility, identifying signs of labor market segmentation andfactors that may be responsible for labor market rigiditieswhich inhibit the fluid movement of workers toward the mostproductive activities. Part three discusses the other maincomponent of fostering inclusive growth, which is to ensurethat workers and households are well-equipped to takeadvantage of productive employment opportunities. It reviewsthe current state of health, education, and socialprotection in the Philippines and proposes measures forstrengthening social service delivery.