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Official unemployment figures understate historic jobs crisis

by IBON Media & Communications

IBON said that the unemployment crisis is actually even worse than official figures show.

The group estimates that the real unemployment rate is likely around 22% and the real number of unemployed around 14 million.

The 20.4 million real unemployed and underemployed today is the worst crisis of mass unemployment in the country’s history.

The Philippine Statistics Authority (PSA) reported 7.3 million unemployed and 6.4 million underemployed in April 2020.

As it is, this is the worst government-recorded unemployment (7.3 million) and combined unemployment and underemployment (13.7 million) in the country’s history.

IBON pointed out, however, that the technical definition of unemployment does not count as much as 4.1 million Filipinos who did not formally enter the labor force because of the ECQ and another 2.6 million that the revised unemployment definition since April 2005 stopped counting.

The drastic drop in the labor force participation rate (LFPR) to 55.6% is most of all due to the ECQ, said the group.

The jobless Filipinos who did not enter the labor force will not be counted as unemployed because the technical definition of unemployed requires them to be in the labor force to begin with.

If the LFPR had stayed the same at 61.3% in April 2019, there would be an additional 4.1 million in the labor force.

The methodology for counting the unemployed was revised in April 2005. Since then, jobless Filipinos who did not look for work in the last six months or are unable to immediately take up work are no longer considered unemployed and removed from the labor force.

This lowered officially reported unemployed Filipinos and stopped comparability with data from previous years.

The revised unemployment definition tends to underestimate the magnitude of unemployment by 35% and the unemployment rate by 3.3 percentage points.

An initial correction for this would mean an additional 2.6 million jobless Filipinos who should be counted as unemployed according to the previous definition, said the group.

IBON said that it is important to see historical trends in the country’s unemployment situation to get an accurate picture of the long-term implications of economic policies. Having data that is comparable over time will give a much clearer indication of the structural economic changes the economy is undergoing which will enable better policymaking. #

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Kodao publishes IBON reports as part of a content-sharing agreement.

Duterte administration being dishonest about economic ‘gains’

Research group IBON said that the Duterte administration is being dishonest in its recent pronouncements about high growth, reducing unemployment, and reducing poverty. The group said that the government is taking liberties with statistics as part of its propaganda campaign that President Duterte is keeping his promise of real change.

In its pre-State of the Nation Address (SONA) forum, the Department of Finance (DOF) hailed the Duterte administration for its achievements during its first three years in terms of “rapid economic expansion”, “the lowest [unemployment] in 40 years”, “alleviating poverty”, and Tax Reform for Acceleration and Inclusion (TRAIN) law “benefiting 99 percent of taxpayers”.

According to IBON executive director Sonny Africa however, growth has actually been slowing since the start of the Duterte administration. Philippine Statistics Authority (PSA) data show that gross domestic product (GDP) growth has been slowing in the 11 quarters since the start of the Duterte administration from 7.1% in the third quarter of 2016 to 5.6% in the first quarter of 2019. There was a momentary increase to 7.2% in the third quarter of 2017 but growth fell rapidly after this. IBON also pointed out that the growth was slowing even before the budget impasse and election ban on infrastructure spending.

Africa added that the economic managers are being deceitful in claiming that the 5.1% unemployment rate in April 2019 is the lowest unemployment in four decades. He pointed out that the DOF is well aware that the change in the official definition of unemployment in 2005 drastically reduced the reported unemployment rate and number of unemployed which makes the April 2019 figure incomparable with the 25 years of data before 2005.

On the contrary, IBON said, computing according to the original definition of unemployment for comparability would show that the real unemployment rate in 2018 is 10.1% and the real number of unemployed is 4.6 million. These are much worse than the already high 9.0% unemployment rate and 4 million unemployed in 2016, again computed according to the original definition. In contrast, officially released figures for 2018 were a grossly underreported 5.3% and 2.3 million, respectively.

The high unemployment is a direct result of how only an annual average of 81,000 new jobs have been created since the start of the Duterte administration, from 41 million employed in 2016 to 41.2 million in 2018. This is the worst job generation in the post-Marcos period.

Poverty statistics meanwhile show seemingly less poor Filipinos only because of government’s very low poverty threshold, said Africa. The government’s Php69.50 daily per capita poverty threshold and only Php48.60 subsistence or food threshold in the first semester of 2018 are absurdly low and not conceivably enough to meet decent minimum standards for food, shelter, transportation, health care, and education, stressed Africa. He said that this leads to a gross underestimation of the real number of poor Filipinos.

Finally, Africa clarified that it is very deceitful to claim that TRAIN benefited 99% of taxpayers. The Duterte administration wants to make it appear that 99% of Filipinos benefited from TRAIN but the truth is that only 5.5 million personal income taxpayers with tax cuts out of 23 million Filipino families gain from TRAIN. The poorest 17.2 million or eight out of 10 Filipino families will pay TRAIN’s higher consumption taxes but without any personal income tax gains to offset these. The government is trying to distract the public from how a disproportionate part of TRAIN revenues come from the poorest majority of Filipinos due to additional levies on consumption goods including petroleum products and sugar-sweetened beverages, said Africa.

IBON warned the public to be more discerning about the government claims and not to take these at face value. Yet the country can only start to take steps to real solutions when there is more candor and honesty, rather than self-serving propaganda, about the real problems the economy and the people face. #

295,000 jobs lost since Duterte assumed office, IBON maintains

Research group IBON stood by its estimates that close to 300,000 jobs were lost since the start of the Duterte administration after Employers’ Confederation of the Philippines (ECOP) honorary chair Sergio Ortiz-Luis said the group’s description of jobs lost is “deceiving”.

Ortiz-Luis reportedly said that it is deceiving to claim that the number of employed decreased by 300,000 just because there is data showing that employment dropped, even if there are new entrants to the labor market.

But Philippine Statistics Authority (PSA) data reports net employment generation, said IBON executive director Sonny Africa. “Net employment generation means employment created net of employment lost,” he explained.

“Ortiz-Luis’ argument about the number of entrants into the labor force is meanwhile puzzling because this is actually irrelevant in the PSA’s measurement of employed Filipinos,” Africa added.

“The number of employed reflects the number of jobs the economy generates, while the labor force measures those who have to compete with each other for whatever jobs the economy generates,” he explained.

PSA figures show that the number of employed fell from 40.954 million in July 2016 to 40.659 million July 2018.

IBON attributed the drop in the number of employed Filipinos to a huge 1.8 million reduction in agricultural employment over the same period.

Job losses and expensive food characterize the crisis in the agricultural sector, the group said.

IBON further said that job creation in the rest of the economy was not enough to compensate for the big agriculture job losses.

Gross job losses counted 2.2 million while gross job creation was only 1.9 million, hence the 295,000 drop in the number of employed.

The biggest job generation is in sectors that do not necessarily indicate a strong economy, IBON said, such as in the public sector and construction.

The group added that net job creation from July 2017 to July 2018 is feeble at 488,000 additional jobs compared to the 701,000 jobs created on average annually in the decade prior to the Duterte administration.

This failed to offset the 783,000 jobs lost in July 2017 from July 2016.

IBON said that Ortiz-Luis joins the administration’s economic managers in being dismissive of the jobs crisis becoming more severe under the Duterte administration.

“They have on the contrary hyped latest employment statistics as the highest among July rounds in the last 10 years, deflecting the issue of massive job losses,” the group said.

“It’s the economic managers that have been deceiving us, apparently Mr. Ortiz-Luis included,” Africa said. #

Jobs crisis intensifying under Duterte – IBON

Research group IBON said that despite recently hyped growth of 6.8 percent in first quarter 2018 the country’s jobs situation continues to worsen under the Rodrigo Duterte administration.

The Philippine Statistics Authority (PSA) reported that the employment rate grew slightly to 94.5 percent in April 2018, while the unemployment rate was lower at 5.5 percent.

The jobs situation seemed to improve as the number of employed Filipinos rose by 625,000 and the number of unemployed declined by 83,000.

The government largely attributed this to increased infrastructure spending.

According to IBON estimates correcting for government underestimation, however, the number of unemployed actually grew by 82,000 to 4.1 million in April 2018 from 4 million in April 2017.

Official unemployment figures do not reflect discouraged workers or those who have dropped out of the labor force after failing to find work after six months.

The agriculture sector, which is the second largest source of employment among the country’s sectors, had the most job losses, said the group.

Official data shows that the number of employed in agriculture fell by 723,000 to 9.8 million in April 2018 from 10.5 million in April 2017.

The sector has been plagued with job losses for the past four consecutive rounds of the labor force survey.

IBON also noted that the agriculture, hunting and forestry subsector lost 558,000 jobs, while fisheries lost 134,000.

The fisheries subsector had notable job losses for all labor force survey rounds under the Duterte government.

Poor quality work or jobs that are insecure, lack benefits and have low wages persists, said the group.

The number of underemployed or those looking for additional work increased by 466,000 from around 6.5 million in April 2017 to 6.9 million in April 2018.

IBON noted that among underemployed persons, those who worked 40 hours and over in a week grew by 758,000 from 2.4 million last year to 3.2 million this year.

The growing underemployment despite the increase in full-time work may indicate that much of reported full-time work still does not give enough income for the employed to meet their basic needs.

The number of part-time workers who worked less than 40 hours in a week decreased but still comprised 52.5 percent of total underemployed in April 2018.

The group also noted that nearly half or 47.1% of underemployed for this round were in the services sector, 32.4 percent in agriculture, and 20.5 percent in the industry sector.

Both services and industry sectors registered increases in underemployed persons from April last year.

IBON said that government has been content with minimal job generation in the non-productive sectors such as the kind offered during job fairs.

According to the group, government should instead ensure sustainable and decent jobs and livelihoods for Filipinos.

This can be done by embarking on a solid economic program that genuinely boosts the agriculture and fisheries sectors and develops the country’s vastly rural economy to build strong and vibrant domestic industries. #