More jobs in Jan., but quality erodes

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construction worker
Inflation, which has been expected to pierce the ceiling of the government's 2-4% full-year target range, has been eating into workers’ wages. -- BW FILE PHOTO

By Mark T. Amoguis

THE LATEST labor data in January bared a mixed picture as unemployment dipped, but those wanting more work increased as prices spiked.

Preliminary results of the January 2018 round of Labor Force Survey (LFS) conducted by the Philippine Statistics Authority (PSA) and released on Wednesday put the unemployment rate at 5.3% compared to the 6.6% in the same survey round last year. That was equivalent to 2.320 million Filipinos looking for work, down from 2.761 million in January 2017.

At the same time, the quality of available jobs deteriorated as the underemployment rate — the proportion of those already working but still looking for more work or longer working hours — increased to 18% from 16.3% in the same comparative periods, equivalent to 7.498 million Filipinos, from 6.398 million a year ago.

Labor Force Survey

Among the January LFS rounds in the LFS, January 2016’s underemployment rate was worse at 19.6%.

The employment rate was 94.7% in January, slightly up from the year-ago 93.4%.

The labor force participation rate rose to 62.2% in January, higher than the year-ago 60.7%.

Average working hours per week was 40.6 hours, down from 41.3 hours.

Full-time workers — those who worked for up to 40 hours or more in a week — in proportion to total employed decreased to 63.6% from 64.8% in 2017.

The proportion of part-time workers (those who worked for less than 40 hours in a week) went up to 35.2% from 34.2%.

By sector, services — which has the largest share to the employed population — went down to 55.9% from 57.1%.

The agriculture and industry sectors saw their share of employment go up to 26% (from 25.5%) and 18.1% (from 17.4%), respectively.

On the other hand, much of the increasing underemployment was seen in agriculture, with a 36.2% rate in January that was worse than last year’s 32.8%.

Industry and services, meanwhile, saw underemployment rates decline to 19.2% (from 20.3%) and 44.6% (from 46.9%).

The National Economic and Development Authority (NEDA) noted in a statement that January’s unemployment reading was the lowest recorded for all January rounds in the past decade. This also puts the unemployment rate within the 4.7-5.3% target for 2018 under the Philippine Development Plan 2017-2022.

Socioeconomic Planning Secretary Ernesto M. Pernia was quoted in the NEDA statement as saying that the lower unemployment rate “signals that the economy is responding positively to the economic reforms and programs that the government has been laying down.”

Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines (UnionBank), shared this assessment: “Increasing economic activity means more economic opportunities for all.”

He said, however, that the quality of jobs available is “a whole other issue.”

Angelo B. Taningco, economist at Security Bank Corp., said “the increase in underemployment was induced by rising inflation, which tends to lower workers’ real income and, therefore, raise the number of workers who want to augment their income by preferring to work more.”

For UnionBank’s Mr. Asuncion, this is a major issue.

“Note that in spite of the increase in jobs, real wages are not growing along as it should,” he said.

“So, although it seems that unemployment is decreasing due to job creation brought about by continued economic expansion, the quality of the jobs being created may have contributed to the underemployment. However, this must be further investigated.”

Last Tuesday, the PSA reported a year-to-date inflation rate of 3.7% based on the new rebased index under 2012 prices, near the top end of the central bank’s 2-4% target range for the year.

Analysts placed the blame on inflationary effects brought by Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion (TRAIN) law that cut personal income tax rates, but added levies on items like cars, fuel and sugar-sweetened drinks, among others, when it took effect in January.

Mr. Pernia, who is NEDA’s director-general, underscored the need to help move the labor force in agriculture out of low-productivity jobs. In the statement, he suggested initiatives like shifting from rice-farming to high-value crops, improving farm-to-market roads and training farmers in technological advancements.

“More jobs are expected to be created during the country’s infrastructure build up which will not only ease traffic and promote regional development but also generate more quality jobs,” Mr. Pernia said.

Budget Secretary Benjamin E. Diokno concurred in an ambush interview yesterday, noting the lower unemployment rate amid a higher labor force participation rate. “It means things are turning well and in fact, that’s only for January,” he said.

“When March or April comes, the government’s infrastructure project will go at full blast, so we expect unemployment to go down…”

For UnionBank’s Mr. Asuncion, “One would expect with the decline in unemployment comes the increase in employment.”

“The services sector’s decline may have come from the observed expansion slump of the BPO sector,” he said of business process outsourcing.

Meanwhile, Security Bank’s Mr. Taningco cited “favorable” weather conditions and “ample supply” of inputs which led to agriculture sector’s job growth.

“In industry, the increase in its employment rate could be linked to a robust manufacturing sector, which faced strong external demand for its exportable items,” Mr. Taningco said.

Looking forward, the economists expect unemployment to trim this year but underemployment to remain in double-digit proportion.

Security Bank’s Mr. Taningco pegged unemployment rate at 5.5% for the year. “With regard to the underemployment rate, I expect it to remain in double-digits and to rise further given that inflation is likely to accelerate this year,” he said.

For UnionBank’s Mr. Asuncion, unemployment might decline as well as underemployment.

“With the push for fiscal expansion via tax cuts and increased government spending, underemployment is one that may decrease due to the creation of quality jobs in the market,” he said.

“Underemployment… is a critical variable because this would dictate the type of economic growth that the Philippines have.” — with Melissa Luz T. Lopez