THE unemployment rate is likely to average 14.5% in 2020 with the next labor force survey expected to reflect a more dismal picture of the job market than the April findings and a grimmer outlook for the economy, according to Nomura Global Markets Research.
“Taking into account the outturn in April, we raise our 2020 unemployment rate forecast to an average 14.5% from 7.1% earlier, up more sharply from 5.1% in 2019,” it said in a note Monday.
The Philippine Statistics Authority’s April had unemployment at 17.7% in April from 5.1% a year earlier. This translates to 7.25 million jobless Filipinos during the month, more than three times the 2.27 million in April 2019.
Nomura Global noted that double-digit unemployment was seen across all regions. Metro Manila, where the restrictions were first implemented, saw unemployment rise to 12.3% from 6.2%, milder than the gains in other areas such as Central Luzon (27.3% from 6%) and Ilocos region (22.3% from 8.8%).
“We think the relatively low pickup in the unemployment rate in Metro Manila (one of the lowest across the regions) is only temporary as the city has been placed under strict lockdown measures for a more extended period than other areas,” it said.
Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua hopes that the job market will somehow be better this month with restrictions eased in many regions.
“Starting June and when we capture the June outcome in the July survey that we will be conducting, we can see a significant improvement because the economy has actually started quite a lot,” he said in an online forum.
Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno has said that the increase in unemployment was the result of a policy decision weighted towards saving lives amid the pandemic.
Nomura Global said the “low level of fiscal support” during the lockdown compared to other countries has added to the uncertainty of the job market outlook. It said the government should work to give more support for the small and medium enterprises given that they generate more than half of the country’s employment and are now on the brink of insolvency.
“The administration’s economic team is also more in favour of a longer-term reform measure that, in our view, does not necessarily address the immediate need of job preservation measures particularly for SMEs, as its proposal seeks to build on the earlier package of corporate tax cuts combined with fiscal incentive rationalization,” it said.
On Thursday, ARISE (the Accelerated Recovery and Investments Stimulus for the Economy bill) was approved on third and final reading at the House of Representatives. It is a P1.3-trillion stimulus package that includes P110 billion in wage subsidies and a P10 billion allocated for support to small businesses.
Meanwhile, the CREATE bill (the proposed Corporate Recovery and Tax Incentives for Enterprises Act) was still pending at the Senate as Congress adjourned. The bill proposes to reduce corporate income tax by an outright 5% from the current level of 30%. — Luz Wendy T. Noble