EVERY quarter of 2018 posted net employment gains, with the labor turnover rate peaking in the second quarter, the Philippine Statistics Authority (PSA) said Friday.
According to the PSA’s Labor Turnover Survey, the labor turnover rate, or the difference between the rates of accession and separation, was highest at 1.7% in the second quarter, followed by 1.6% in the first quarter, and 0.8% in both the third and fourth quarters.
The second-quarter result indicates that for every 1,000 workers, 17 people were added to the work force on a net basis.
“Positive labor turnover rates in the country were at the highest levels in 1Q 2018 and in 2Q 2018 when both inflation and local interest rates were still much lower and before both inflation and interest rates sharply increased in the latter part of 2018 that resulted in lower positive labor turnover rate of 0.8 for both 3Q 2018 and 4Q 2018,” said Michael L. Ricafort, economist at Rizal Commercial Banking Corp. (RCBC), in an e-mail yesterday.
He noted that lower inflation and key policy rates had attracted more investment that led to job creation.
“When both inflation and interest rates were on a riding trend some businesses frontloaded investment and production in the earlier part of 2018 (and) able to save on costs before prices and interest rate/borrowing costs go up further, leading the creation of more jobs/employment earlier in 2018,” Mr. Ricafort said.
Inflation had been mostly kept below 5% in the first half of 2018 before peaking at 6.7% in September and October. The rate of increase in the prices of widely used goods slowed to 6.0% in November and had continued to ease until May’s 3.2%.
To quell beyond-target inflation rates, the Bangko Sentral ng Pilipinas (BSP) resorted to a cumulative 175-basis-point (bps)hike in 2018. In its May meeting, the BSP’s Monetary Board slashed benchmark interest rates by 25 bps to a range of 4-5% amid easing inflation.
The accession rate — which represents hiring by employers to either replace former employees or expand the work force — was 9.5% in the third quarter and 8% in the fourth quarter. On the other hand, the separation rate — which includes terminations and resignations — was higher in the third quarter at 8.7% compared to 7.2% in the fourth quarter.
The accession rate during the year was highest in the second quarter at 11%. However, the quarter also saw the highest separation rate compared to other quarters at 9.3%.
For most of the quarter, more people were hired due to business expansion with the figure peaking in the second quarter at 5.5%. The sole exception was in the first quarter where hiring to replace separated workers was higher at 5.5% compared to the 3.8% hiring rate due to expansion.
On the other hand, the PSA noted that terminations initiated by employees, known in the report as “job quitters,” were the primary cause of employment loss last year.
For every 1,000 workers around 40 to 60 workers voluntary separated against the 13 to 38 workers that were laid off.
For services, the labor turnover rate ranged to as low as one percent in the first quarter to as high as 1.9% in the fourth quarter.
Labor turnover rates in the industry sector were 3.5% and 3.9% in the first and second quarter, respectively. However, net employment losses were observed in the third quarter (-0.1%) and the fourth quarter (-2.9%).
Meanwhile, agriculture’s labor turnover rate was highest at 2% in the first quarter but saw a decline of 1.3% and 1.5% in the next two quarters. It rebounded in the fourth quarter with a 1.3% turnover rate.
Looking forward, Mr. Ricafort still expects an improvement in job creation this year. He said that he has a “positive outlook for 2019 net jobs creation” from slowing inflation and lower local benchmark rates that could spur more investments and expansion projects.
“Increased infrastructure projects and catch up on some government spending (after the underspending in 1Q 2019 due to the delay in the 2019 national budget, which was already signed into law on April 15, 2019) especially on infrastructure will also lead to the creation of more job/employment opportunities in the local economy,” he added. — Marissa Mae M. Ramos
