Of policy makers and joblessness

THE PHILIPPINE government is committed to strong, sustainable and inclusive growth. The latter means that the poor should not be left behind in the development process. Since the government does not collect annual poverty incidence data, the measure that comes nearest to individual welfare is employment. A decent job gives an individual a more than even change that he won’t be left behind in the development process.

Thus far, the Aquino III administration is losing the war against unemployment. Employment growth which averaged 2.8% in 2010, when Aquino took power, was significantly down, to 1.2% in 2012.

In 2010, the number of new jobs generated was 974,000. This was down to 430,000 in 2011. Since 1.1 million new workers join the labor force every year, and rising, such rate of employment generation is simply inadequate.

In general, a strong economic growth leads to the creation of a lot of decent jobs. But not always. Last year’s economic growth was job-losing: the economy expanded by 6.6%, yet some 882,000 jobs disappeared. Clearly the unexpectedly strong economic expansion did not benefit a lot of Filipino workers and their families.

In comparison with its ASEAN-5 peers, the Philippines has the worst unemployment rate: 7.0% compared with Indonesia’s 6.4%, Vietnam’s 4.5%, Malaysia’s 3.1%, and Thailand’s near full-employment at 0.7%. Thailand which grew the least in 2012, managed to keep unemployment low at 0.7%.

Moreover, having a job does not necessarily guarantee a good life. The quality of the job matters. “With the significant proportion of working poor in the country… having a job is not a guarantee of being spared from poverty, particularly if [those] employed are ‘underemployed,’” the Bureau of Labor and Employment Statistics (BLES) said. (see table)

Indeed a large chunk of the employed work force is considered underemployed — working less hours, looking for a job that would provide more hours, and, in many cases, looking for a better job. The underemployment rate has worsened: 18.8% in 2010, 19.3% in 2011 and 20.0% in 2012.

The sum of the unemployment rate and underemployment has deteriorated since Aquino took over. It was 26.2% in 2010, 26.3% in 2011 and 27.0% in 2012. Translation: Now, close to three out of 10 who are in the labor force, are either unemployed or underemployed.

One can’t argue that less are being employed because those who are employed are working longer hours. On the contrary, the mean hours worked has edged down: 41.7 hours in 2010, to 41.1 hours in 2011 and 2012.

The quality of employment needs to improve to ensure that economic growth is felt by the marginalized workers.

Joblessness is especially harsh for the young. Among the unemployed, workers 15 to 34 years old account for 45.7% in 2010, 44.5% in 2011, and 43.8% in 2012. A slight improvement is noticeable, but still close to half of the unemployed are below 34 years old. Young workers who can’t find a job, especially after completing their high school or college education, could be permanently scarred in their lifetime.

Unemployment among the educated is rampant. Some 41.3% of the unemployed have either post-secondary education or college undergraduate or college graduate.

The challenge for providing jobs for Filipino workers is enormous. It is estimated that some 14.6 million new jobs have to created between now and 2016 in order to solve the unemployment problem in the Philippines.

The measures needed to create a lot of jobs are well known. The puzzle is why they are not pursued vigorously. The government has to accelerate the implementation of its stalled public-private partnership programs and public works projects provided for in the national budget. The Executive Department has to submit to Congress a higher budget request for public infrastructure, somewhere in the neighborhood of 5% of GDP.

The government should adopt the necessary reform measures in order to attract more foreign direct investments (FDIs) into the country. Some of these measures — relaxation of the 60:40 foreign equity rule for several vital industries and land ownership — may require amendments to the Philippine Constitution. FDIs will be the key to massive job generation.

Thus far, the Aquino administration is not focused on job creation. And because unemployment and underemployment continue to worsen, I won’t be surprised if the 2012 Family Income and Expenditures Survey results would show that there has been no improvement in the standard of living of most Filipinos.

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