Jobless rate eases to 5.7% in April

By Leo Jaymar G. Uy, Senior Researcher, Businessworld, Jun 10, 2017

LATEST data show an improvement in the number and quality of jobs as unemployment and underemployment both eased in April, the government’s statistical agency reported on Friday.

Results of the Labor Force Survey (LFS) conducted by the Philippine Statistics Authority (PSA) put the unemployment rate at 5.7% in April, down from 6.1% recorded in the same month last year. This was equivalent to 2.44 million Filipinos without a job, down from 2.62 million a year earlier.

Underemployment rate — the proportion of those already working but still looking for additional income — improved as well, at 16.1%, down from 18.3% over the same period. The latest report pegs the ranks of the underemployed at 6.46 million Filipinos, fewer than the 7.43 million workers previously, according to a statement by the National Economic and Development Authority (NEDA).

The turnout on underemployment was the lowest since April 2005, when the government adopted new definitions for the LFS. Historically, underemployment rates have been below the government’s target, with rates going as high as above 20% in the past years.

The size of the labor force was approximately 42.7 million out of an estimated 69.6 million population of Filipinos 15 years and older, for a labor force participation rate (LFPR) of 61.4%. This was lower than last year’s 63.5%.

In a statement, NEDA noted that “sustaining employment figures, while improving related services, is crucial to meeting the government’s key targets in the Philippine Development Plan (PDP) 2017-2022.”

The PDP targets unemployment to decrease to a range of 3-5% by 2022, equivalent to between 950,000 and 1.1 million new jobs generated each year “assuming a slight increase in the [LFPR] to 64.1%.”

“A trend also worth noting is the decline in [LFPR] of women to 46.2% from 48.9% last year. This presents a challenge in meeting the PDP target to increase [the LFPR] of women to 51.3% by 2022,” the NEDA statement read.

By industry, employment in the service sector, which has the largest share of the employed population, dipped to 55.4% from 56.3%. Agriculture — which is the second largest — employed more people at 26.1%, up from 25.5%. The portion of those employed in the industry sector inched up to 18.5% from 18.2%.

In absolute terms, agriculture and industry posted net employment gains of 125,000 and 55,000 workers, respectively, while services saw a 557,000 job loss during the period.

“Increased activity confirms the renewed positive outlook of exporting firms that had anticipated increases in the volume of export production,” Socioeconomic Planning Secretary Ernesto M. Pernia was quoted in the NEDA statement as saying.

Likewise, Angelo B. Taningco, economist at Security Bank Corp, noted that the increases seen in the employment of agriculture and industry can result in higher earnings for both sectors and “thereby positively contribute to the overall economic activity and growth of the country.”

For the job losses in the services sector, Mr. Pernia noted that this “could be an effect of the 2016 election spending fully tapering off.”

“It is possible that recent changes in labor policies regarding contractual workers may have had an adverse effect on firms’ hiring decisions,” he added.

Last March, Labor Secretary Silvestre H. Bello III signed Department Order (DO) 174 which spelled out the rights of employers and employees in a contractual hiring arrangement. The order was also signed to impose a ban on “endo,” short for “end-of-contract” which refers to the practice of hiring workers in successive five-month periods, allowing firms to skip the benefits given to permanent workers. DO 174 took effect on April 2.

The order, however, did not completely eliminate job contracting — an arrangement where an employer, known as the principal, farms out jobs to a third-party contractor who then hires workers of its own.

The LFS also showed full-time workers — or those who worked for 40 hours or more in a week — comprise 60.8% of the employed population, down from the 65.3% in the past year. Part-time workers — those who worked for less than 40 hours in a week — make up 37.8%, up from 32.8%.

This consequently puts the average working hours per week at 40.3 hours, compared to April last year’s 42.2.

“The decline in full-time workers and increase in part-time workers is a potential concern as this leads to lower working hours on average which could translate to lower labor productivity,” said Security Bank’s Mr. Taningco.

For Emmanuel J. Lopez, chairman of the Department of Economics at the University of Santo Tomas, the increase in part-time workers is a mixed bag, saying that there are negative connotations to the workers’ lack of tenure but is, at the same time, a “welcome opportunity” since they add to employment figures.

Mr. Lopez also noted that part-time workers include those who are self-employed as well as those looking for extra income.

Going forward, employment figures, specifically the participation rate, could improve at least towards the end of the year until the fifth year when the present administration’s plan to increase spending kicks off, Mr. Lopez said.

Security Bank’s Mr. Taningco agreed: “I believe that employment and the overall labor market of the Philippines will likely improve in the subsequent periods following April on the back of positive business confidence and healthy corporate earnings as well as sustained domestic demand.”