500,000 Pinoys to lose jobs

Infra spending to ease demand woes–Citigroup
 
Nearly half-a-million Filipinos could lose their jobs, according to Citigroup.

In a report, the US financial services giant said Philippine gross domestic product (GDP) is projected to grow 3 percent this year and recover to 4.6 percent next year. A proxy for a country’s economic output, GDP measures the amount of goods and services produced locally.

Based on its estimate, Citigroup said a 1-percent drop in real GDP can raise the jobless rate by 1.4 percent or equivalent to about 470,000 workers. Last year, the Philippine economy grew 4.6 percent. Its estimated Philippine GDP growth of 3 percent for this year means the global crisis would shave 1.6 percent off domestic economic expansion, resulting in a higher number of lost jobs.

To fuel economic growth, Citigroup said the government has to increase its spending not only on infrastructure but also create more jobs that would offset the declining employment in the manufacturing sector, which would be hit the most by job losses this year.

It, however, added that it expects no new jobs in the construction sector from increased infrastructure spending, adding these would only offset the jobs lost in manufacturing.

Intel recently closed its plant in Cavite, shedding 1,800 jobs. A growing number of other multinational corporations with domestic operations had announced job cuts worldwide, but their local units have yet to disclose the number of Filipino jobs affected.

The jobless rate is expected to reach 9 percent to 9.5 percent this year, higher than the ave­rage unemployment rate of 7 percent to 8 percent in the previous years, due to sustained increase in labor force, at a pace higher than the population growth rate.

“With downbeat private investment prospects this year, it’s urgent for public investments to take the lead, not just in ushering fiscal stimulus but in creating jobs as well,” Citigroup said.

The fiscal stimulus would cushion the downturn in terms of lost jobs particularly the implementation of quick-disbursing funds and budget deployment for new infrastructure projects.

The manufacturing sector accounts for 58 percent of total industrial employment while construction follows with a 36-percent contribution.

Private construction jobs, largely from the residential side, supported construction employment and accounted for 67 percent of the total construction output.

Based on its estimates, Citigroup said every 1-percent growth in construction output is equivalent to roughly 0.2 percent growth of employment in this sector.

The US financial giant added that remittances from overseas Filipino workers (OFWs) are projected to grow by 3 percent this year, lower than the central bank’s forecast of 6 percent to 9 percent, because of massive job losses of Filipinos based abroad. Also, OFW wages would be cut to save job opportunities, it said.

But the likelihood of labor absorption from the Middle East would lower the risks of weaker remittance flows, Citigroup said.

The risk of higher jobless rate from export slack and returning OFWs pose a greater policy challenge, it added.

The total global deployment of OFWs rose to more than 1.376 million in more than 190 destinations worldwide in the first 11 months of 2008, according to a report released by the Department of Labor and Employment on Thursday.

Labor Secretary Marianito Roque cited the preliminary report of the Philippine Overseas Employment Administration that an average of more than 3,700 OFWs were deployed daily, bringing to 1,376,823 the total number of Filipino migrant workers deployed from January-November 2008.

Roque said that OFW remittances reached $15 billion also in the first 11 months of 2008.

According to him, ill effects of the global economic crisis on the Philippines could be eased by “strong labor demands” from Canada, Bulgaria, Australia, United Arab Emirates and Qatar.
–Maricel E. Burgonio, Reporter with Bernice Camille V. Bauzon, Manila Times