Reforms needed to revive PHL labor market

THE GOVERNMENT should introduce reforms to revive the labor market, after the Philippines posted the highest increase in unemployment rate and the second-largest decline in labor force participation rate among its peers last year, the Asian Development Bank (ADB) said.

In its Key Indicators for Asia and the Pacific 2021 published on Tuesday, the multilateral bank noted that the Philippines saw a 5.2-percentage-point rise in its jobless rate in 2020, the steepest increase in unemployment among 21 ADB member countries in the study.

The Philippines also reported a 1.77-percentage-point drop in the labor force participation last year from its pre-crisis level in 2019, the second highest among 18 economies with available data, and just below Vietnam’s 2.17-percentage-point decline.

“It is essential to pursue reforms to recover employment that focus on helping vulnerable populations, low-skilled workers, women, and those in the informal sector transiting to better quality jobs, to ensure that the economic recovery is inclusive,” Ayako Inagaki, ADB director for human and social development for Southeast Asia, said in an e-mailed reply to BusinessWorld’s questions.

The Philippines saw its jobless rate hit an all-time high of 10% last year, from the 5.1% rate in 2019, as the pandemic triggered massive layoffs and business closures. As more Filipinos exited the workforce, the labor force participation rate was also trimmed to 59.5% in 2020 from 61.3% the year prior.

The jobless rate eased to 7.7% in June this year amid the improving economic landscape, although still higher than its pre-crisis level.

The government in June issued Executive Order No. 140 creating a National Employment Recovery Strategy task force that will implement plans to restore jobs until 2022.

“Providing greater access to adequate and quality employment remains a challenge for several of the region’s economies,” the ADB said.

The multilateral bank warned that the pandemic continued to threaten the progress of Asia and the Pacific region’s progress in achieving the 17 Sustainable Development Goals (SDGs) set by the United Nations and participating countries, including the Philippines. 

“The COVID-19 pandemic is indeed threatening progress in SDG attainment, including in the Philippines. The pandemic has exacerbated disparities in access to quality and essential health services as well as access to quality education, particularly in remote areas,” Ms. Inagaki said.

This highlighted the need for the government to ramp up health and education reforms, she added.

Under the 2030 SDG agenda, the eight goals mandate countries to promote sustained and inclusive economic growth, as well as provide productive employment and decent work for all.

The Asia and the Pacific is estimated to have lost up to 8% of work hours in 2020 due to the impact of the coronavirus disease 2019 (COVID-19) pandemic, with poorer households hit harder than the rest, the ADB said.

“This corroborates the hypothesis that disruptions caused by managing the pandemic have the potential to exacerbate inequality. It also emphasizes the importance of enhancing the delivery of social protection programs, particularly for those in the informal economy who do not have adequate financial buffers or access to standard employment entitlements,” the ADB said.

The pandemic has also worsened inequalities across developing member economies since less-developed countries have weaker health systems to deal with the COVID-19 outbreaks and have less capacity to deliver social safety nets, it added.

The Gini coefficient, a metric of inequality, will increase by 1.6% from the level under a no-COVID-19 scenario, the ADB said.

Disruptions caused by the COVID-19 pandemic also pushed more households to below the extreme poverty line of $1.9 a day, as the ADB estimated poverty rate increased by two percentage points for the region last year compared with a scenario without the pandemic.

The ADB also noted that malnutrition in the region remained high at 22% in 2020 for children aged five years and below.

“Compared to other regions, developing Asia is faring slightly better in reducing the prevalence of undernourishment. However, progress is uneven and, with high rates of child stunting and malnutrition, much needs to be done to achieve the 2030 target of ending hunger in the region,” it said.

Providing access to quality education should also help the region achieve its goal of ending extreme poverty by 2030. — Beatrice M. Laforga