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The latest unemployment data released by government statisticians on Thursday showed a slight improvement, but reflected the risks the Philippines faces to renew consumer confidence, according to local economists.
Preliminary results from the Workforce Survey (LFS) released by the Philippine Statistics Authority (PSA) showed that 3.8 million Filipinos or 8.7 percent of the workforce were unemployed in October 2020.
With this, National Statistician Claire Dennis S. Map said that this year, 4.5 million Filipinos were unemployed, which translates to an annual unemployment rate of 10.4 percent this year.
“The 4.5 million is the actual count. But if we use the annual average given above at 10.4 percent, it means 104 [Filipinos] per 1,000 people in the workforce [are jobless]”Wilma Guillén, PSA’s assistant national statistics, told BusinessMirror on Thursday.
Guillén said this means that 104 Filipinos out of every 1,000 people in the workforce also had no income this year.
“The number of people out of work can definitely reduce consumer confidence and spending. It is one of the main culprits for low household consumption spending because unemployment can drastically reduce purchasing power, ”Cid L. Terosa, dean of the Faculty of Economics at the University of Asia and the Pacific, told this newspaper.
The dean of the Faculty of Social Sciences of the Ateneo de Manila, Fernando T. Aldaba, and the director of the Center for Research and Economic Development of the Ateneo (Acerd), Alvin P. Ang, agreed and said that the uncertainty of the times it has also affected Philippine spending this year.
Ang said that uncertainty is also highlighted by the World Bank’s estimate that, globally, about 20 percent of the workforce cannot be accommodated in other jobs.
While the number could be lower in the Philippines, the data speaks to the need for “massive retraining and immediate digital adoption.”
Consumer spending sips
In addition to this, De La Salle University economist Maria Ella Oplas told BusinessMirror that this year’s high uncertainty also affected the confidence, even of employees, to spend.
“It is the uncertainty compounded by unemployment and the depletion of savings that is driving consumer spending down,” Oplas said.
Aside from low confidence, Aldaba said that the reduction in remittances affected Philippine spending this year.
The executive director of Ang and the Institute for Migration and Development Affairs (IMDI), Jeremaiah M. Opiniano, previously projected that remittances from Filipinos abroad could decline by as much as $ 6 billion, the steepest drop in the country’s migration history. country.
However, with the unemployment rate improving to 8.7 percent in October, Aldaba said that employment data could improve in the coming months.
“We may still see some improvement as we are able to better manage the virus and as people get used to the different health protocols. We also expect to see the restart of more companies and the opening of new ones, ”Aldaba said.
Still, some threats, including trade tensions between the United States and China, could affect the economy’s ability to generate more jobs, Aldaba said.
Terosa listed other threats as “the lukewarm response of businessmen and investors to the stimulus measures, a new wave of Covid-19 infections, and a weak recovery rate of companies in interrelated industries.”
Discouraged workers
Ang also cited the need to monitor discouraged workers. According to PSA data, the labor force participation rate (LFPR) was 58.7 percent in October.
Map said this is the second lowest LFPR on record after 55.7 percent in April 2020. Last year, the LFPR was at 61.4 percent, while in July 2020, it was at 61, 9 percent.
“The signs are not yet crystal clear that we will see better days ahead in 2021. Some heavy clouds are looming over the horizon, such as the growing number of Covid-19 cases in the world’s major economies and the uncertainty behind the real, not clinical: efficacy of approved vaccines. Of course, any gradual improvement in macroeconomic data will bode well for the economy’s progress, ”Terosa said.
Meanwhile, Oplas said there may already be more Filipinos employed due to the upcoming Christmas celebrations, despite the pandemic.
He added that the gradual lifting of the Enhanced Community Quarantine (ECQ) classifications also encouraged more companies to open up to customers and workers alike.
The De La Salle economist said Filipinos’ spending patterns have changed in recent months and this has altered the employment options of workers as well.
“We will find ways to get together with families because that is a tradition that we cannot put aside. Of course it will be a modest celebration, but the point is that these celebrations will translate into economic activity and therefore increase the demand for labor, ”said Oplas.
Government takeover
The National Economic and Development Authority (Neda) said on Thursday that the country’s unemployment rate improved to 8.7 percent in October 2020 from 10.0 percent in July and 17.6 percent in April.
This translated to 0.8 million fewer unemployed workers in this round compared to July 2020. However, Neda said that lower labor force participation more than offset this, resulting in a net reduction in employment of 1.5 million from July to October.
Neda said typhoons Nika, Ofel, Pepito and Quinta in the second half of October further reduced agricultural employment by 1.1 million, or about 70 percent of the 1.5 million jobs lost between July and October. 2020.
Neda said workers in the provinces also faced difficulties returning to work due to transport restrictions between provinces and contributed to the loss of 0.5 million in the industrial sector.
“This improvement in the unemployment rate was driven by the reopening of the economy and could have been less if the economy had opened more, along with the provision of safe and sufficient public transportation. On the other hand, the country was also hit by a succession of four typhoons in October along with the monsoon and La Niña, which resulted in a significant loss of jobs in agriculture, ”said Acting Secretary for Socio-Economic Planning Karl Kendrick T Chua.
The job loss was tempered by the services sector, which posted a 0.3 million job gain from July 2020, as it benefited from increased operational capacity and further relaxation of quarantine restrictions.
Lower participation in the labor force also contributed to the decline in employment. Certain factors were cited for this, including increased remittances and the opening of schools, which caused parents to switch from going to work to helping younger children with blended learning from home.
Underemployment
Meanwhile, the underemployment rate improved markedly to 14.4 percent in October 2020 from 17.3 percent and 18.9 percent in July and April 2020, respectively.
“Decreasing underemployment means that the quality of jobs is improving. This proximity to normality means that the informal sector is working and the impact on poverty may be less severe than initially estimated, ”he said.
Overall, the results of the Labor Force Survey support the need to better manage risks and open the economy more safely to restore jobs and economic activities.
Chua also cited the recent passage by the Senate of the Corporate Recovery and Tax Incentives for Businesses (CREATE) bill, which will provide relief especially for MSMEs that comprise 99 percent of businesses in the Philippines and employ around 60 percent of Filipinos working.
“The rapid approval and implementation of CREATE, together with the General Law of Allocations of 2021, the Strategic Transfer of Financial Institutions [FIST] And the Unified Government Finance Institutions Initiative for Troubled Businesses for Economic Recovery [GUIDE] Act will help rebuild the economy and help Filipinos and businesses recover, ”Chua said.
Labor: illusory gain
The slowdown in the rise in the unemployment rate is a mere “illusion” that the country’s economy is finally recovering from the effects of the pandemic, according to labor groups.
The Nagkaisa labor coalition expressed concern about the trend that millions of workers who left the labor market are no longer actively seeking work.
“Compared to the same quarter last year, the number of employed workers is 2.7 million less. The current employment level is also lower than the number of workers employed in July by almost 1.5 million. That is nothing like recovery, “Nagkaisa said in a statement.
He noted that even preparations for the Christmas season, where companies traditionally employ more workers, failed to achieve a significant improvement in the country’s workforce.
“If the October and July labor indicators were an indication of the performance of the government’s current approach to the pandemic and crisis, then it is as if the economic managers are not working at all,” Nagkaisa said.
He demanded greater stimulus and a more effective response to the pandemic from the government.
With a report by Samuel P. Medenilla
