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Monday, October 23, 2017 | MANILA, PHILIPPINES
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   economic indicators

Date posted: Wednesday, December 14, 2016 | Manila, Philippines

BY Ranier Olson R. Reusora Researcher

Unemployment rate lowest in 11 years

THE RANKS of jobless Filipinos in October thinned to the lowest level in 11 years, as growth in construction and services fueled job generation.

According to the October 2016 round of the Labor Force Survey (LFS) of the Philippine Statistics Authority (PSA), jobless Filipinos totaled 2.04 million, comprising 4.7% of the country’s labor force.

This was the lowest since April 2005 when the government adopted the International Labor Organization’s (ILO) definitions on employment and unemployment.

The country’s employment rate -- proportion of the employed to the total labor force -- climbed to 95.3% from 94.4% recorded in October last year, while the labor force participation rate slightly increased to 63.6% from 63.3%.

The fact the latest results coincided with the Philippines’ three-year-high 7.1% gross domestic product (GDP) expansion last quarter -- among Asia’s fastest in those three months -- has prompted observations that growth is becoming inclusive.

But increased underemployment signaled that quality of growth and job generation remains a key challenge.

“This means that the growth of our economy is becoming more inclusive as it engages more and more Filipinos to participate in the labor market,” the National Economic and Development Authority (NEDA) quoted its director-general, Ernesto M. Pernia, as saying in a statement.

“With the decrease of unemployment in October 2016, our implied full-year unemployment rate will be 5.5%, exceeding the government target for 2016 of 6.5-6.7%.”

In a separate statement e-mailed to media, the Associated Labor Unions (ALU) attributed the increased employment rate to optimism spurred by President Rodrigo R. Duterte’s repeated promise to address peace-and-order problems as well as graft and corruption in government, to cut red tape in the setting up of new business, and to ramp up infrastructure spending.

“We are also seeing [that] Mr. Duterte’s aggressive pro-China diplomacy initiatives, peace-talking with the communist movement… separatist entities and personalities in Mindanao and his leadership sincerity helped magnify the optimism for local and foreign investors to put up jobs-creating investments,” the statement quoted Alan A. Tanjusay, ALU’s Policy Advocacy officer and spokesman of the Trade Union Congress of the Philippines (TUCP), as saying.

Services remained the biggest contributor to job generation, as this sector accounted for more than half of total employed population, edging up to 54.9% from 54.5% recorded in the same period a year ago.

The share of industry sector jobs went up last quarter to 17.2% from the 15.9% recorded in the same period last year. This was driven by the growth in construction employment, which increased to 47.5% of industry jobs from the 43.7% last year.

The current administration has planned a 13.79% increase in its infrastructure budget to P860.7 billion equivalent to 5.4% of GDP in 2017 from P756.4 billion, or 5.1% of GDP, this year in a bid to boost prospects for sustained economic growth and, in turn, job-generation.

“If Mr. Duterte’s leadership momentum is not interrupted, construction allied services would emerge and help create jobs,” said TUCP’s Mr. Tanjusay.

However, the agriculture sector, which is the second largest employer, saw contraction in the number of workers to 27.9% from 29.6%.

According to Mr. Pernia, more than a third of employed are still vulnerable -- particularly those in the agriculture sector which otherwise contributes just a tenth to GDP -- susceptible to external shocks and economic downturns.

“We must accelerate the improvement of local infrastructure and facilitate the linkaging of the sectors, primarily between the agriculture and industry sectors, to help raise the productivity of farmers and increase the value of their products,” Mr. Pernia said.

Despite improvement in the country’s employment situation, underemployment remains a nagging concern.

Underemployment rate worsened slightly to 18% from 17.6%, equivalent to 7.5 million workers who were already working but still looking for additional income. This brought the full-year 2016 underemployment rate to around 18.4%.

“Underemployment was prevalent among those working in private households and those employed in family business,” NEDA noted.

Sought for comment, Bank of the Philippine Islands (BPI) lead economist Emilio S. Neri, Jr. said in an e-mail that underemployment is actually a bigger issue for the country.

“While we are able to cut unemployment, many of our workers are forced to either work part- time or end up in jobs that put a cap on their earning capacity,” he said. “This is the reason why a sizeable portion of our huge pool of human capital end up working abroad.”

TUCP’s Mr. Tanjusay said underemployment could also mean that there are jobs available but that wages and benefits are not enough to cope with the rising cost of living and increasing prices of basic goods and costs of services.

“Government and employers should act simultaneously in addressing this underemployment rate,”Mr. Tanjusay said.

“Employers should raise their wages and improve direct and indirect benefits to workers to help mitigate the rising rate of underemployment,” he added.

“Government should improve social protection benefits and insurance, enforce labor laws and safeguard predatory increase of prices of basic commodities.”

Sought for his outlook on the labor market, BPI’s Mr. Neri said that if more big-ticket public infrastructure projects will be approved by first quarter next year, coupled with those already given the green light by NEDA in the last five months, “we can expect more construction projects in [the second half of 2017] that can help ramp up our already improving employment figures.”

According to TUCP’s Mr. Tanjusay: “With all of these, we see an unprecedented increase in domestic employment.”

“But if employers and government ignore underemployment solutions, economic growth will continue to be non-inclusive and inequitable with the very few upper class people racing to the top while the working people are racing to the bottom.”

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