Some jeepney drivers remain jobless as public transportation remains limited amid a general community quarantine in Metro Manila. — PHILIPPINE STAR/MICHAEL VARCAS

THE COUNTRY’S unemployment and underemployment rates declined in July compared with those seen in April as lockdown restrictions were gradually eased.

The July rates, however, were still higher when compared with those in the same month a year ago.

Preliminary results of the Philippine Statistics Authority’s July 2020 round of the Labor Force Survey (LFS) put the unemployment rate at 10%. This was lower compared with the record jobless rate of 17.7% in April 2020 and 5.4% in July 2019.

PHL labor force situation

In absolute terms, this is equivalent to 4.571 million jobless Filipinos, lower than 7.254 million in April, but higher than 2.437 million in July last year.

Likewise, the underemployment rate — the proportion of those already working but still looking for more work or longer working hours — was 17.3%, down from 18.9% in April but worse than the 13.6% in July 2019.

This is equivalent to 7.137 million underemployed Filipinos, higher than 6.388 million and 5.799 million in April 2020 and July 2019, respectively.

The size of the labor force was approximately 45.877 million out of the 74.061 million Filipinos aged at least 15 years old, yielding a labor force participation rate (LFPR) of 61.9%. This was higher than the 55.6% in April, but lower than 62.1% in the same survey round last year.

The employment rate, which is the proportion of the employed to the total labor force, registered at 90%. This was higher than the 82.3% in the previous survey round, but lower than last year’s 94.6%. The actual number of employed Filipinos reached 41.306 million as compared with April’s 33.764 million and July 2019’s 42.521 million.

Services accounted for 54.8% of employed Filipinos in July, down from 57.1% in April.

Meanwhile, the employment shares in agriculture and industry jumped to 26.3% and 18.8%, respectively, from 25.9% and 17%.

Working hours averaged 38.2 per week in July, more than the average of 35 hours in April. This, however, remained lower than the 41.8-hour average in July 2019.

Full-time workers, or those who worked for at least 40 hours in a week, made up 56.1% of the total employed in July. This was significantly higher than 29.2% in April 2020, but remained below the 67.9% in July last year.

Part-time workers accounted for 40.6%, up from the 32.4% and 31.3% in April 2020 and July 2019, respectively.

Unemployment rates in July varied widely across regions, ranging from as low as 3.8% in the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) to as high as 15.8% in the National Capital Region.

For underemployment, BARMM recorded the lowest rate at nine percent while the Mimaropa — the region that includes the provinces of Occidental and Oriental Mindoro, Marinduque, Romblon, and Palawan — posted the highest underemployment rate at 27.2%.

In a statement, Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua said the results in July “show a direct link between the level of quarantine restriction and labor market outcomes.”

“In the first half of May 2020, 78.8% of the economy was placed under ECQ (extended community quarantine). As a result, GDP (gross domestic product) and unemployment worsened to record levels. In contrast, in the first half of July 2020, only 2.1% of the economy was placed under ECQ. The result is a significant reduction in the unemployment rate and the return of some 7.5 million jobs,” Mr. Chua said.

ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said overall labor trends will take their cue from the pace of economic recovery.

“In July, we did see an improvement in underemployment as a number of workers were able to find work on a limited basis. This may be a move by some employers to provide employment for former workers but on a limited basis. The shift of labor to underemployed from unemployed may also be reflective of the partial lockdowns with some companies operating at half capacity or with restricted hours of operation,” he said in an e-mail to BusinessWorld.

Employers Confederation of the Philippines (ECoP) President Sergio R. Ortiz-Luis, Jr. said that despite the easing of restrictions, recovery may have been dragged by companies choosing not to rehire workers due to lack of mass transportation.

“If the government is able to solve the problem of mass transportation, it would help. Unfortunately, many of our MSMEs (micro, small, and medium enterprises) are closed and we cannot expect that it will be replaced,” he said in a phone interview.

So far, the unemployment rate averaged 11% in the three survey rounds this year.

Mr. Chua said the unemployment rate is expected to go down to 6-8% next year, assuming 2.4-2.8 million new jobs will be generated next year.

The 2021 forecast also assumes the coronavirus disease 2019 (COVID-19) is contained, quarantine restrictions are eased further, and the government’s recovery programs are implemented quickly.

Mr. Chua also sees the jobless rate to fall to 4-5% in 2022 if the vaccine for COVID-19 will be made available next year. If realized, this would mark the return to pre-pandemic levels when the unemployment rate hit 5.1% in 2019.

The latest projections on the jobless rate are lower than the Development Budget Coordination Committee’s July 28 estimates of 7-8% for 2021 and 8.5%-9.5% for 2022.

“The trend is actually a recovery. We do not expect a U-turn at any time and our assumption lies in the vaccine being available sometime in the middle or third quarter of next year. So we expect by 2022, we would have gone back to our trajectory which is around 4-5% unemployment rate which is also in our planned target,” Mr. Chua told reporters during the briefing.

In the same briefing, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Francisco G. Dakila, Jr. said the July result could reduce uncertainty and prompt banks to ease lending standards.

“Although [the unemployment rate] is still elevated… this is a positive signal that should… reduce the uncertainty facing the business sector and… in bank lending,” Mr. Dakila told reporters.

A BSP study earlier showed the majority of banks tightened overall lending standards in the second quarter — the first following 44 consecutive quarters of broadly unchanged credit standards — when most parts of the country were under strict lockdown.

In an e-mail, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said employment will remain “tepid” as the economy reopens and domestic demand tries to recover.

“[T]he discovery and delivery of an effective vaccine will be key for further improvement of the unemployment rate,” Mr. Asuncion said.

Asian Institute of Management economist John Paolo R. Rivera said full recovery of the country’s labor market may take some time.

“[The second quarter] might have been the worst since it was the period of strictest community quarantine protocols. It cannot be rushed. It will depend on our collective action to contain the pandemic,” he said in a separate e-mail. – Michelle Anne P. Soliman with inputs from Beatrice M. Laforga and Luz Wendy T. Noble