Workers brace up

The bloodbath at the Philippine stock market continues. After a spectacular fall last Friday, local stocks plummeted further Monday, giving up 165 points, or 4.2%, to end up at 3,721 The optimists who, a few months ago, were predicting that the Philippine Stock Exchange index (PSEi) will hit 5,000 by yearend are now disheartened.

The PSEi has now given up 18.2%, or 828.8 points, since its peak of 4,550 in August. The likelihood that the PSEi will hit 5,000 by Christmas 2011 is now fading fast. The turbulence is not over yet.

But it’s not Blue Christmas for everyone. Some who exited during the early hours of trading last Friday were rewarded. Those who came in late in the upsurge and are still in waiting for further recovery were punished.

Those who are still in the market hoping for a quick rebound before the end of the year, or those hoping for the yearend window dressing binge, may be in for a long, disappointing, wait.

The plunge in the stock markets is deep and widespread — London, Germany, United States, Japan, Hong Kong, Jakarta, and so on.

Workers: fasten your seat belts

But I worry less about the equity investors. Many, if not most, have made a lot of money during the recent stock market run-up. Some lost but they will recover. Some, of course, will be totally wiped out. But they’re big boys.

I pity the workers — those who live by their sweat. The recent collapse of the stock markets all over the world is the result of some fears that there’s something terrible wrong in the world economy and that the waning confidence that world and national leaders are capable of making hard decisions. There are problems all over — the worsening debt problem of several European countries, the policy gridlock in the US, the triple tragedy in Japan, the ongoing political turmoil in the Middle East and North African territories.

These fears and the uncertainty of how leaders in various capitals of the world will deal with their respective problems point to harsher, slower, and riskier world economy.

Another recession following close to the one in 2008 and 2009 cannot be ruled out. When that occurs, it is the workers who will carry the brunt of adjustment. Even before they have recovered from the previous crisis, many remained jobless or engaged in low-paying jobs, they will be faced with a new one.

I have argued before that in an economic rebound, it is the jobs market that will recover the last. First, the financial market, then the real economy, and finally the jobs market.

During the recovery phase, employers will make do with their reduced staff to meet demand, making them work longer hours. It is only when there is certainty that the recovery has firmly gained traction that employers will start hiring.

Look at the world’s biggest economy. The US economy has recovered, but its economic rebound appears weak, uncertainty persists, and those are reflected in the jobs market. Unemployment remains high at 9.1% in August, not much different than what is was in April. Net jobs created in August was zero and some 14 million Americans remain jobless.

But the situation in the Philippines is equally worrisome. Even before the Great Recession, joblessness has pestered our national consciousness. Leaders who were in denial point to a rosy jobs prospect abroad. But at home, some 10 million workers were unemployed or underemployed.

The most recent July labor survey results show that the problem has worsened. Some 2.8 million Filipino workers are unemployed while another 9.1 million workers are underemployed.

In the past, Filipino workers, especially the educated ones, look up to the overseas markets as safety valve for employment. But that window is narrowing if not closing fast. Governments faced with rising unemployment among their nationals are under increasing pressure to create jobs for them.

In the meantime, unskilled Filipino overseas workers are facing stiff competition from other nationalities such as the Bangladeshi, Indians, Indonesians, and others. Where will they go now that the global demand for overseas workers is slowing?

But there is an additional internal pressure at home. Every year, some 1.5 million Filipinos turn 15, of which two-thirds join the labor force. A conservative estimate is that close to a million new workers join the labor force every year.

Combined with the stock of unemployed and underemployed (those with jobs some paid, some unpaid, mostly part-timers and looking for better jobs) and those returning from abroad, and you have a huge army of workers looking for decent work.

I think policymakers should recognize unemployment as the country’s number one problem. But they should prioritize. They should focus on those idle workers who have invested in education — the jobless college graduates and undergraduates.

Being in a state of joblessness for these trained workers is an unacceptable waste of human capital. Extended periods of unemployment will render their learned and acquired skills useless.

Those who have been involuntarily idle for a long time should be given opportunities for retraining or retooling — at government expense if necessary or through some public-private funded apprenticeship programs.

In the overall scheme of things, the idle college graduates and undergraduates — some 1.2 million of them — deserve to be helped because they have already invested a lot of time, money and effort for their education. –Benjamin E. Diokno, Businessworld