By Mark T. Amoguis
LABOR turnover at large firms eased in the third quarter as hiring slowed, according to a report by the Philippine Statistics Authority (PSA).
Results of the PSA’s Labor Turnover Survey showed that the labor turnover rate — the difference between the rates of accession and separation within firms — settled at 0.9% during the three months to September, slower than the downwardly-revised 1.7% in the second quarter of 2018.
This means that for every 1,000 persons employed, large firms were hiring some nine additional workers on a net basis during the third quarter.
The rate of accession — which represents hiring by employers to either replace former employees or expand their workforce — stood at 9.5% in the third quarter, slipping from 11% in the previous three-month period.
The rate of separation — which covers terminations and resignations – stood at 8.6%, also down from 9.3% in the previous survey period.
Breaking down the accession rate, more people were hired in the third quarter due to business expansion at 5% compared to those who were employed as replacements for former employees at 4.5%.
For the separation rate, employee-initiated separation or resignations stood at 5.9% while the rate of employer-initiated separation or layoffs was 2.8%.
Michael L. Ricafort, an economist at Rizal Commercial Banking Corp. (RCBC), said “[H]igher inflation and interest rates, as well as the US-China trade war that slowed global trade and economic growth, may have adversely affected the labor turnover rate in the export/industry/manufacturing sector, leading to lower creation of jobs.”
The agriculture, forestry and fishing sector’s separation rate of 4.7% outpaced its accession rate of 4.3%, resulting in a labor turnover rate of -0.4%.
“Agriculture experienced the second-biggest damage in the third quarter of 2018 (after Supertyphoon Yolanda in late 2013)… after Typhoon Ompong hit Northern Luzon provinces that are the top producers of rice, corn, vegetables,” RCBC’s Mr. Ricafort said.
The industry sector also saw a negative net job creation rate (-0.1%) with a 12.2% separation rate and a 12.1% accession rate. Sectors that were net positives include mining and quarrying (0.6%) and electricity, gas, steam and air conditioning supply (1.1%).
Pulling down the Industry sector were negative turnover rates in construction (-0.8%); manufacturing (-0.04%); and water supply, sewage waste management and remediation activities (-0.03%).
“Slower exports growth and the proposed rationalization of fiscal incentives could have adversely affected employment prospects and the overall growth in the industry sector,” Mr. Ricafort said.
On the other hand, the services sector posted job growth as the 8.9% accession rate outpaced the sector’s separation rate of 7.5% — leading to a 1.3% turnover rate.
“The positive labor turnover rate for services in the third quarter 2018 may reflect the creation… as well as the continued shift to more, higher-paying jobs in the services sector (from the agriculture and industry sectors),” he said.
With the exception of negative turnover rates in real estate activities (-0.2%) and professional, scientific and technical activities (-4.5%), all areas were net positive. Leading performers were education (3.3%); wholesale and retail trade (2.5%); and financial and insurance activities (1.6%).
RCBC’s Mr. Ricafort expects 2019 to create more jobs in the country spurred by election-related spending and the proposed exemption of major government infrastructure spending from the election ban and the continued rollout of more big-ticket infrastructure projects.
“Easing inflation and lower local interest rates in the coming months of 2019 to fundamentally increase the disposable income of consumers, businesses, and the government, thereby enabling the creation of more jobs, as lower inflation entails lower financing costs for new investments and expansion projects that entail more job opportunities,” he added.