Slow growth of earnings alarms ADB

The Asian Development Bank (ADB) said the sluggish growth in earnings of Filipino workers over the last decade is “alarming,” particularly because the figures did not expand faster than the economic growth rate.

In a report titled, “Quality of Jobs in the Philippines: Comparing self-employment with wage employment,” the Manila-based lender said the growth of wages in the Philippines has been “remarkably lackluster.”

“Despite average gross domestic product [GDP] growth of 4 percent between 1994 and 2006, real wages have grown on average by only 1.12 percent,” the ADB said. GDP is the total cost of all goods and services produced in the country in a year.

Because of the sluggish growth, most Filipino workers are opting to be self-employed rather than salaried workers.

Data from the National Statistics Office showed that there were about 10.5 million informal sector operators last year. Informal sector operators are either self-employed people who do not have any paid employee or an employer in a family-owned and operated farm or business. The number of self-employed Filipinos is about 9.1 million, while the small employers are about 1.3 million.

“Better educated workers are more likely to be engaged in self-employment, as opposed to casual employment,” according to the study. “Older workers are also more likely to be self-employed. When there are other self-employed workers in the household, the likelihood of the worker choosing self employment also increases.”

The ADB said wages of permanent workers grew by only 1.2 percent; for casual workers, 1 percent; wages of those with a college education, 0.94 percent; those less educated, 0.27 percent; and those with just primary education, 0.46 percent.

Entrepreneurial activity

But poor Filipino households’ reliance on entrepreneurial activity also went down from 1994 to 2006.

“A little above 40 percent of household income of such households was sourced from entrepreneurial activities,” the study reported. “This reliance seemed to decline in 2006 when only the bottom 30 percent of households had entrepreneurial activity as the single largest component of income.”

The bank reported the share of wage earnings in household income has increased by an average of 3 percentage points for those belonging to the bottom half of the distribution of household per capita income. And household income from entrepreneurial activities declined by an average of nearly 6 percentage points.

“This highlights the shift of these poorer households from mainly relying on self-employed entrepreneurial activities toward wage employment,” according to the ADB.

Joblessness in the Philippines has risen to 7.7 percent with more than nine million people—about one in 10—out of work or underemployed, the government said Tuesday, blaming the global downturn.

The unemployment rate rose from 7.4 percent a year earlier, with another 180,000 people without jobs pushing the total to 2.855 million, the National Statistics Office reported.
–Darwin G Amojelar With AFP