How high is unemployment?

Researching a recent column, I couldn’t help noting how anomalous the figures in the quarterly Labor Force Survey (LFS) appear to be, as are some of the categories. An example of the latter is that “unpaid family workers”0 are counted as employed. (This is, it should be noted, also the case in other countries.) There might be a number of reasons people might work for their families without pay, but topping the list must surely be the fact that they are unable to find a proper paying job.

So shouldn’t they really be considered unemployed? According to the LFS for April this year, “unpaid family workers” constitute no less than 13.1 percent of the labor force.

To be counted as unemployed, you first of all have to be deemed to be a member of the labor force. According to the National Statistics Office (NSO), excluded from the labor force “are those persons who are not looking for work because of reasons such as housekeeping, schooling, etc. Examples are housewives, students, disabled or retired persons.”

But can such categories possibly account for over 20 million members of the population aged 15 and above? The April LFS estimated the latter population as being 59.074 million, while the labor force population was a mere 37.8 million — a difference of some 21.1 million — resulting in a “labor force participation rate” of 64 percent.

To be honest, if we look at Singapore, a more developed neighbor, its labor force participation rate is, at 65.6 percent, quite comparable.

But there the similarities end. In 2008, for example, of the 2,939 million in the labor force, Singapore’s “contributing family workers” numbered 120,000 — a mere 4..08 percent. Even if we take the figure as a percentage of the employed residents aged 15 and over, it comes to only 6.48 percent — still less than half the Philippine figure.

Moreover, only 173,000 of Singapore’s employed population were own-account workers — 9.3 percent of employed residents, as opposed to the Philippines’ 34.9 percent. Employees, meanwhile, account for 84.8 percent of employed residents, compared to the Philippines’ 51.9 percent “wage and salary workers.”

One suspects, however, that the most telling difference lies in the composition of that percentage of the population that is not considered part of the workforce — 34.4 percent in Singapore, 36 percent in the Philippines. This may well be impossible to assess precisely, so the best this outsider can do is take a shot in the dark by looking at the figures for tertiary education and express these as a percentage of the population between 15 and 24.

We already know the result is going to be fairly grim, don’t we? The NSO tells us, for example, that in 2003 there were 11.64 million children and young adults between the ages of 6 and 24 not attending school or college. Nearly 20 percent cited the high cost of education, 11.8 percent blamed “housekeeping,” 30.5 percent said they were working or looking for work, and 22 percent indicated that they were not interested.

In 2007, Singapore had a tertiary education (everything above secondary level, including pre-university education) population of 179,036. That’s 37.63 percent of the resident population between the ages of 15 and 24 in that year.

The only figure for the total number of Philippine higher education students I have been able to find comes from the Medium-Term Development Program for Higher Education — 2.4 million for academic year 2004-2005. According to the 2000 census, the population between the ages of 15 and 24 in that year was 15,086,701. Multiply that by 102.04 percent per annum (2.04 percent being the claimed annual population growth rate) and you get a total of 16,413,666 for 2004. Thus, according to these figures, 14.62 percent of the population between the ages of 15 and 24 was in higher education in 2004.

By this admittedly rough and ready method, we see that, as a percentage of 15 to 24-year-olds, the higher education rate in Singapore is 257 percent that of the Philippines, although account must be taken of the fact that the Singaporean figures are confined to residents.

So what is this telling us? First of all, it’s telling us something we already knew — that Singapore is more developed than the Philippines. But it’s also telling us that while Singapore may well be able to convincingly account for the fact that 34.4 percent of its population over 15 is not considered part of the workforce, the Philippines is less convincing in explaining that its 36 percent is comprised of “housewives, students, disabled or retired persons.”

For example, we saw above that 22 percent of the 11.64 million kids and youngsters not in education in 2003 said they were not interested. Now, as they were not working or looking for work they would obviously be excluded from the labor force. Doesn’t this mean that these 2.56 million youngsters — or those 15 and above — should be included in the unemployment figures?

Put together just a few of the pieces — the high number of “unpaid family workers” and “self-employed” and the low rate of higher education — and you can see why a Social Weather Stations survey can come up with a figure of 10 million unemployed while the LFS figure is a “mere” 2.8 million.

Does it really matter? Well, if a group of people (and wouldn’t it be a fine thing if they were in government!) wanted to hammer out a development strategy, they would need to know where help was needed most and, for example, where there was spare labor capacity (likely to be the same place).

Thus it is probably not helpful that the LFS figures show, by some miracle, that the region with the lowest average annual income — the Autonomous Region in Muslim Mindanao — has the lowest unemployment!

Feedback to: outsiders.view@yahoo.com –Ken Fuller, Daily Tribune