Disturbing, puzzling news on jobs

GOOD news: despite the global economic downturn, the number of jobs generated by the economy grew in the past year (from October 2008 to October 2009). Bad news: the number of jobs did not grow fast enough to catch up with the growth in the labor force. Based on the October 2009 Labor Force Survey released last week, the former grew by 2.7 percent, while the latter had grown by 3.1 percent. The net result was an increase in the unemployment rate to 7.1 percent, up from last year’s 6.8 percent.

All this need not be surprising, of course—after all, the economy has been affected by the global economic downturn. And we all know that as a result of this, the overall growth of the economy (less than one percent as of the third quarter) has fallen behind the growth of the Philippine population. As President Ramos used to put it, the bibingka has not grown fast enough to catch up with the growth in the number of people who must eat it—so people would have to settle for a smaller slice.

Driven to work

In the case of job growth, that is not actually the case. Examining the labor data more closely, one finds that the overall job growth actually outpaced growth in the number of working age Filipinos (i.e., those age 15 and above), which grew by 2.6 percent—although still a rather high growth rate compared to most of our Asian neighbors. The number more or less reflects how fast new Filipinos were being born 15 years ago, and this rate hasn’t fallen by much since then.

So how come the rate of unemployment rose if jobs grew faster than the number of working age Filipinos did? The answer lies in the labor force participation rate. To be counted in the labor force, a 15-year-old or older person must have actually been working, or if not, was actively seeking and available to work. Thus, if a working age Filipino is in school, or if not studying is not seeking work, he/she does not count as part of the labor force and is not considered by the statistics as “unemployed.”

What made the difference, then, was that a greater percentage of working-age Filipinos actively sought work—but couldn’t find any—in the past year. One can surmise that hard times have driven more Filipinos who would otherwise not be seeking work to join the ranks of workers and job-seekers. This would include young people who are forced to leave school in order to help with the family income.

Hard times

That times are hard could be further gleaned from the nature of the jobs that came about in the third quarter. While a little over one million jobs were generated in the past year overall, close to 200,000 jobs were actually lost in agriculture. This tells us that the overall job growth had largely failed to benefit the rural areas, where the jobs are needed most given that 70 percent of the country’s poor live in the countryside. It is highly likely, then, that rural poverty has worsened significantly in the past year. This further underscores an observation I have made in this space a number of times, i.e., that government poverty interventions have tended to have an urban bias, especially for Metro Manila. This has especially been manifested in the way the inflation rate for basic commodities has consistently been lower in Metro Manila than in the countryside. Given the past year’s unemployment experience, there needs to be a more deliberate affirmative action for the rural poor.

What kinds of jobs have come about in the past year? The services sector, as always, has provided the bulk (over a million) of the new jobs last year, along with some 70,000 jobs in the industry sector (more on this below). One finds from the disaggregated data that the bulk (close to 70 percent) of the new service jobs were in trading, private household employment, and transport. Translation: More people were driven to work as vendors, domestic helpers and pedicab or jeepney drivers.

Disconnect

The third quarter jobs data are as puzzling as they are disturbing. The industry sector is reported to have created roughly 70,000 new jobs over the past year. And yet, this was the sector that weighed the whole economy down with a -4.4 percent contraction over the same period, especially with a steep drop (-7.6 percent) in manufacturing. In fact, most of the new jobs reported in the sector came from the two sub-sectors that actually declined, namely manufacturing and utilities (electricity, water and gas). There is a clear puzzle in these numbers that begs for explanation.

Meanwhile, agriculture (crops and livestock) saw about 270,000 jobs disappearing—and yet had grown by 2 percent! Fisheries reportedly contracted (-0.5 percent) in the third quarter, and yet generated some 75,000 new jobs. If all these mean that efficiency and productivity in agriculture and fisheries have improved dramatically, then the news wouldn’t be all that bad. But I find such dramatic change in productivity within a year rather unlikely.

I did start with good news, and so will end with good news, or what appears to be so. There was also a substantial increase in wage and salary workers, while the numbers of self-employed and unpaid family workers declined. Are Filipinos getting better quality jobs, then? Given all the above, I’m afraid I can’t be sure enough to celebrate. –Cielito Habito, Philippine Daily Inquirer

Comments welcome at chabito@ateneo.edu