Fewer Filipinos working in informal sector

THE number of Filipinos working in the informal sector fell over the past decades but poverty reductions remained stagnant because of low wages of employed workers, according to an Asian Development Bank (ADB) study.

“Despite the shift of people from informal to formal employment, wage growth in the formal sector has lagged substantially behind productivity growth and reductions in poverty have largely stagnated,” the Manila-based lender said.

The ADB added that the proportion of regular employees in the labor force has risen substantially since 2000, while the shares of self-employed and casual workers have decreased, indicating that the Philippine labor market has done well in shifting people away from informal employment.

“People who remain as informal workers are shown to be mostly agricultural and unskilled workers, usually males in their prime ages, with low levels of formal education, and more likely residing in the Autonomous Region in Muslim Mindanao and the Cordillera Administrative Region than in other provinces,” the lender said.

The Philippines’ informal sector is smaller than those of many countries in the region at 43.5 percent in 2008, from 53.1 percent in 1990.

The ADB said that the Philippine labor market was also characterized by a stubbornness or relative rigidity of unemployment and underemployment, whose rates are higher than those of its Association of Southeast Asian Nations (Asean) neighbors.

Since 1980, the country’s incidence of unemployment has remained higher than that in other Asean countries, such as Malaysia, Singapore, Thailand and Vietnam.

The ADB said that based on the latest figures, more than 7 percent of the labor force in the Philippines were unemployed.

The under-employment rate is also high.

In 1987, one in four employed people was underemployed, and in 2009, the rate was 19.1 percent.

This trend may explain why efforts to significantly trim the country’s poverty rate and raise average wages substantially have largely failed, the ADB said.

Changyong Rhee, ADB chief economist, said that the percentage of workers in informal employment in Asia remained sharply higher than in most other regions.

“Quality jobs are important for reducing poverty and income inequality, and for promoting social cohesion and political stability,” Rhee added.

The ADB report said that the pattern and rate of job creation across the region have been sharply mixed, and growth was not enough on its own to guarantee quality jobs with decent wages and conditions. –DARWIN G. AMOJELAR SENIOR REPORTER, Manila Times