THE latest unemployment data unveiled by government statisticians on Thursday showed a slight improvement but reflected risks confronting the Philippines in renewing consumer confidence, according to local economists.
The preliminary Labor Force Survey (LFS) results released by the Philippine Statistics Authority (PSA) showed 3.8 million Filipinos or 8.7 percent of the labor force unemployed in October 2020.
With this, National Statistician Claire Dennis S. Mapa said this year, 4.5 million Filipinos were jobless —translating 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 earlier at 10.4 percent, it means 104 [Filipinos] for every 1,000 persons in the labor force [are jobless],” PSA Assistant National Statistician Wilma Guillen told the BusinessMirror on Thursday.
Guillen said this means 104 Filipinos out of 1,000 persons in the labor force also had no income this year.
“The number of people without jobs can definitely lower confidence and consumer spending. It is one of the main culprits behind low household consumption spending because joblessness can severely cut purchasing power,” University of Asia and the Pacific School of Economics Dean Cid L. Terosa told this newspaper.
Ateneo de Manila School of Social Sciences Dean Fernando T. Aldaba and Ateneo Center for Economic Research and Development (Acerd) Director Alvin P. Ang agreed, and said the uncertainty of the times has also affected Filipino spending this year.
Ang said such uncertainty is also highlighted by the World Bank estimate that globally, about 20 percent of the labor force cannot be accommodated in other jobs.
While the number could be lower in the Philippines, the data speaks of the need for “massive retraining and immediate digital adoption.”
Consumer spending sips
On top of this, De La Salle University economist Maria Ella Oplas told the BusinessMirror the high uncertainty this year also affected the confidence, even of the employed, to spend.
“It is the uncertainty aggravated by unemployment and depletion of savings that are making consumer spending go down,” Oplas said.
Apart from the low confidence, Aldaba said reduced remittances impacted Filipino’s spending this year.
Ang and Institute for Migration and Development Issues (IMDI) Executive Director Jeremaiah M. Opiniano earlier projected remittances from overseas Filipinos could decline to as much as $6 billion, the steepest decline in the country’s migration history.
However, with the unemployment rate improving to 8.7 percent in October, Aldaba said the jobs data could improve in the coming months.
“We may still see some improvements as we are able to manage the virus better and as people get accustomed to the various health protocols. We also hope to see more firms restarting and new ones opening up,” Aldaba said.
Still, a few 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 tepid response of businessmen and investors to stimulus measures, a fresh wave of Covid-19 infections, and weak recovery rate of businesses across interrelated industries.”
Discouraged workers
Ang also cited a need to monitor discouraged workers. Based on the PSA data, the labor force participation rate (LFPR) was at 58.7 percent in October.
Mapa said this is the second lowest LFPR recorded after 55.7 percent in April 2020. Last year, LFPR was at 61.4 percent while in July 2020, it was at 61.9 percent.
“The signs aren’t crystal clear yet that we will see better days ahead in 2021. Some heavy clouds hover over the horizon such as the increasing number of Covid-19 cases in leading economies of the world and the uncertainty behind the actual—not clinical—effectivity of approved vaccines. Of course, any gradual improvement in macroeconomic data will augur well for the economy moving forward,” Terosa said.
Oplas, meanwhile, said there may already be more employed Filipinos given the upcoming Christmas celebrations, despite the pandemic.
She added that the gradual lifting of the Enhanced Community Quarantine (ECQ) classifications also encouraged more businesses to open up to clients and workers alike.
The De La Salle economist said spending patterns of Filipinos have changed in the past few months and this has also altered the employment options of workers.
“We will find ways to get together with families because that is a tradition that we cannot let go of. Of course it will be a modest celebration but the point is, these celebrations will translate to economic activity therefore increase in demand for labor,” Oplas said.
Government take
THE National Economic and Development Authority (Neda) said earlier on Thursday 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 less unemployed workers in this round compared with July 2020. However, Neda said lower labor force participation more than offset this, resulting in a net employment reduction of 1.5 million from July to October.
Neda said typhoons Nika, Ofel, Pepito and Quinta in the latter half of October further reduced agriculture 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 difficulty returning to work given inter-province transport restrictions, and contributed to the 0.5 million loss in the industry sector.
“This improvement in the unemployment rate was driven by the reopening of the economy and it could have been lower if the economy were opened further, coupled with the provision of safe and sufficient public transport. On the other hand, the country was also hit by a succession of four typhoons in October alongside the monsoon and La Niña, resulting in significant employment loss in agriculture,” said Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua.
The employment loss was tempered by the services sector, which recorded a 0.3-million gain in employment relative to July 2020, as it benefited from the increased operational capacity and further relaxation of quarantine restrictions.
Lower labor force participation also contributed to the decline in employment. Certain factors were cited for this, including higher remittances and the opening of schools, that had parents shifting from going to work to helping younger children in blended learning from home.
Underemployment
Meanwhile, the underemployment rate notably improved 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 normalcy means that the informal sector is performing and the impact on poverty may be less severe than initially estimated,” he said.
Overall, the Labor Force Survey results support the need to manage risks more and further open the economy safely to restore jobs and economic activities.
Chua also cited the Senate’s recent approval of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill, which will provide relief especially for MSMEs which comprise 99 percent of firms in the Philippines and employ about 60 percent of working Filipinos.
“The swift passage and implementation of CREATE, together with the 2021 General Appropriations Act, the Financial Institutions Strategic Transfer [FIST] Act, and the Government Financial Institutions Unified Initiative to Distressed Enterprises for Economic Recovery [GUIDE] Act will all contribute to rebuilding the economy and helping Filipinos and businesses get back on their feet,” Chua said.
Labor: Illusory gain
The slowdown in the spiking unemployment rate is a mere “illusion” that the country’s economy is finally recovering from the effects of the pandemic, according to labor groups.
Labor coalition Nagkaisa expressed concern over the trend indicating that millions of workers who left the labor market are no longer actively looking for a job.
“Compared to the same quarter last year, the number of employed workers is lower by 2.7 million. The current employment level is also less than the number of employed workers in July by almost 1.5 million. That does not resemble recovery at all,” Nagkaisa said in a statement.
It noted that not even preparations for the Christmas season, wherein companies traditionally employ more workers, did not make a significant improvement in the country’s labor force.
“If October and July labor indicators were any indication of the performance of the government’s current approach to the pandemic and the crisis, then it is as if economic managers were not working at all,” Nagkaisa said.
It demanded a bigger stimulus and more effective response to the pandemic from the government.
With a report by Samuel P. Medenilla
Image credits: Bernard Testa