For decades, IS has kept expanding as joblessness grows, formal sector shrinks

The informal sector expands as more Filipinos become jobless and companies close down or downsize and the National Economic and Development Authority (NEDA) sees more of this happening.

Even granting that the new, watered down definition of “jobless” is valid, something funny happened on the way to the National Statistics Office (NSO).

The recent years of unprecedented growth, gross domestic product (GDP)-wise, that the Philippines has experienced were also the years of the highest rates of unemployment.

National Statistics Office figures collated by Dr. Mahar Mangahas of the Social Weather Stations show that from 1993 to 2004, unemployment was in single digit figures or in the teens—1993 13.6 percent, 1994 10.3 percent, 1995 10.1 percent, 1996 8.7 percent, 1997 8.7 percent, 1998 8.7 percent, 1999 8.3 percent, 2000 10.7 percent, 2001 9.8 percent, 2002 8.0 percent, 2003 10.8 percent and 2004 15.8 percent.

The surge that began in 2004 (15.8 percent) became an increasingly dismal situation in the next five years including the present.

In 2005, unemployment rose to 22.6 percent, in 2006 to 26.4 percent, in 2007 to 25.3 percent, in 2008 to 28.6 percent and today in 2009 30.0 percent.

But these years are when the Arroyo administration has been praised for its success in making the Philippines reach heights of GDP growth never achieved before.

This success, including the present escape from recession while the rest of the world including our richer neighbors are suffering, has been so impressive that even in these times of global hardship a Malacañang deputy spokesman, Gary Olivar, can correctly claim credit for President Gloria Arroyo’s having given the Philippines “eight years of continued growth.”

But one can say “giving the Philippines” and “giving the Filipinos” are two different things.

For the steady growth of unemployment numbers and the accompanying expansion of the informal sector during these years can only mean one thing. That the fantastic successes attributed to Mrs. Arroyo’s sound economic policies and to her and her economic team’s management skills have not benefited the small people and businesses.

Small people have lost their jobs and have had to make do by working in the informal economy. Small businesses have had to close down.

Some 1.5 million jobs, the Arroyo administration claims, were created since last year.
But the IBON research group has made a case for describing 1.3 million or the overwhelming majority of these jobs as “non-earning, poorly earning or otherwise insecure jobs including part-time work.”

IBON says, “In April 2009, 540,000 of the jobs created were either unpaid family work [394,000] or domestic household help [146,000] . . . jobs that notoriously earn far below minimum wage, if at all.”

Continues IBON: “Another 803,000 jobs were created in the own-account category ‘self-employed.’ This is an extraordinary increase in an employment category that has only seen increases of 45,000 [2007], 74,000 [2008] and 87,000 [2006] in the last three years. This may be taken as a kind of disguised unemployment and could indicate that many Filipinos are being driven into the informal sector or, for some, buying into the entrepreneurship hype. But while government has been aggressive in promoting entrepreneurship and small businesses many of these informal sector workers and budding entrepreneurs will be faced with disappointment. Domestic consumption is weakening further and demand for common entrepreneurial goods will likely be low.

“There has also been a drastic 2.4 million-increase in part-time work which, at 14.3 million out of total employed of 35 million, now accounts for a massive 41 percent of jobs. The number of those in full-time work in turn fell by 925,000. This reflects how workers are facing greater work flexibilization arrangements alongside lower wages, salaries and benefits.

“Job creation figures actually show that 1.3 million Filipinos are crowding into sectors that are stagnating or even shrinking according to first quarter economic growth figures, which implies that average incomes in these sectors are falling if not already low. The largest number of jobs created was in the agriculture sector which registered a 408,000-increase in jobs but saw year-on-year growth in production falling 0.7 percentage points in the first quarter of 2009 from the same period last year.

IBON insists that “the seeming improvement in the labor market situation is illusory: there were still at least 4.2 million unemployed in April 2009 [correcting for the misleading change in the NSO definition of unemployment in 2005], and 6.6 million underemployed—or at least 10.8 million Filipinos looking for work or additional work.

“Poor job creation and deteriorating quality of jobs are a significant factor in explaining why household incomes and consumption are starting to fall. Seasonally adjusted personal consumption expenditure actually fell 3.1 percent in the first quarter of 2009, turning negative for the first time after about a decade-and-a-half of positive growth.

“Clearly, even the surprisingly large job creation in April 2009 from the year before was not enough to increase household incomes and corresponding consumption—highlighting the need for genuine policies that will create sufficient and quality jobs, beyond government’s token measures like supposed emergency programs and job fairs.”

There was every reason for the Opposition’s Sen. Francis “Chiz” Escudero last week to urge the government to “use most of the P330-billion stimulus funds to create new jobs, noting that the number of unemployed Filipinos in July increased to 2.9 million from 2.7 million in the same month last year.
“We should realign the spending plan and focus on job creation. Dole-outs should be the least of our priorities,” he said.

“Until now, the government has not disclosed how the stimulus funds are being spent and how much has been spent. I hope these funds will not be used mainly to stimulate the chances of the ruling party’s bets in the 2010 elections,” Senator Escudero said. –Rene Q. Bas, Manila Times