A Puzzling Economy

Published by rudy Date posted on December 20, 2008

by Cielito Habito
from Philippine Daily Inquirer

MANILA, Philippines – Ever notice how our economy has been behaving strangely lately? The latest strange (but welcome) behavior is how job generation based on the last two quarterly Labor Force Surveys (July and October 2008) appeared healthy even in the face of the world economic slowdown that has taken a definite toll on our economy.

In July, it was reported that about 1.3 million new jobs were created in our economy within the preceding 12 months. That was very good, given our need to create at least a million new jobs a year to keep pace with growth in the working age population.

In stark contrast, the same figure a year ago was only 392,000 jobs, and yet this was the period that our economy was recorded to have grown at a 30-year high of 7.2 percent. The latest October jobs figure, while a bit lower at 861,000 new jobs year-on-year, was nonetheless again better than the previous year’s job generation (786,000).

And yet, economic growth had already slowed down significantly to the 4 percent level this year. We had, in short, less job creation last year when we had much faster (even record) production growth, and strangely enough, more job creation this year when economic growth has been much slower.

More puzzles
You’d think looking more closely at the data would help explain the puzzle. But the puzzle deepens even more when you check the breakdown of output growth and job generation across major sectors of the economy.

The services sector has significantly slowed down from its brisk growth in past years, with last year’s growth rate (7.2 percent) cut down to just about half this year (3.7 percent). And yet, services provided 44 percent more jobs this year (699,000) compared to last year (485,000).

The industry sector posted a healthy 7.1 percent growth in the third quarter, surpassing last year’s performance (6.6 percent). And yet it had created only a thousand new jobs in the 12 months preceding last October; the same figure last year was 182,000.

Agriculture is no less a puzzle. Last year, it posted an impressive growth of 5.6 percent in the third quarter, but lost 11,000 jobs. This year its growth has slowed down to less than half of last year’s pace (2.5 percent)–and yet generated 161,000 new jobs.

Job-killing growth?
These seeming contradictions puzzle me even more in light of the general impression one gets from experience–not only in the Philippines but elsewhere as well–that the “growth-employment elasticity” is usually lopsided downwards.

In plain English, a 1-percent fall in output (or slowdown in its growth) usually results in much more job losses than the jobs that are gained when the economy grows by 1 percent.

It was in this context that the term “jobless growth” came about. Economists had begun to notice that much of the economic growth in the world’s economies in at least the past decade has not been accompanied by a commensurate growth in jobs.

In many cases in fact, there were hardly any job increases at all even as economies continued growing–hence the term. Worse, there have been episodes when growth actually speeded up, and yet jobs actually fell, as in last year’s experience with our agricultural sector. This is not just jobless growth; it is better described as “job-killing growth!”

But what we’re seeing right now is the exact opposite. As growth slows down, we seem to see more jobs coming about than when the economy grew much faster. This is all welcome of course, but how do we explain such perverse trends?

Job profile
I am not about to question the statistics, even though many would immediately point to that as the possible answer. There are actually answers to be found in the further details of the job numbers. Where have the latest jobs been coming from?

I examined the available tables from the National Statistics Office (NSO) website, made some calculations, and found the following: Of the surprising 699,000 new services sector jobs mentioned above, more than half were in trade. And since I am not seeing an unusual proliferation of retail stores and shopping malls in the past 12 months, I surmise that what this means is that large numbers of Filipinos have taken to the usual informal sector selling/vending activities–”nangangalakal,” as squatters near our neighborhood describe the common occupation in their area.

And this includes selling items scavenged from the neighborhood garbage piles, which they systematically pore over and collect usable items from before the municipal garbage collection trucks come to collect them.

It would seem, then, that much of the puzzles I’ve been describing simply reflect the resilience of the average Filipino. When our poor compatriots find themselves against the wall, they will find a way. Clearly, the kind of growth we have been experiencing gives us little to be happy with or gloat about even if the posted GDP growth rate is faster than that of our neighbors. What continues to elude us is quality growth, one whose benefits permeate throughout the economy such that as the saying goes, “the rising tide lifts all boats.”

The best of the holiday season to all–and here’s wishing us all a joyous new year (”prosperous” may not be quite realistic)!

Comments are welcome at chabito@ateneo.edu

April – Month of Planet Earth

“Full speed to renewables!”


Solidarity with CTU Myanmar,
trade unions around the world,
for democracy in Myanmar,
with the daily protests of
people in Myanmar against
the military coup and
continuing oppression.


Accept National Unity Government
(NUG) of Myanmar.
Reject Military!

#WearMask #WashHands

Time to support & empower survivors.
Time to spark a global conversation.
Time for #GenerationEquality to #orangetheworld!
Trade Union Solidarity Campaigns
Get Email from NTUC
Article Categories