Philippine unemployment falls to lowest since January 2020

 Philippine unemployment falls to lowest since January 2020
People flock to the Markina public market, March 1. — Photo by Michael Varcas, The Philippine Star

By Mariedel Irish U. Catilogo

The Philippines’ unemployment rate fell to a two-year low in January as the size of the workforce shrank due to stricter mobility curbs in the capital region, the government said.

Preliminary results of the Philippine Statistics Authority’s (PSA) January round of the Labor Force Survey showed the jobless rate stood at 6.4%, slightly easing from 6.6% in December and 8.8% in January 2021.

This was the lowest share of the jobless to the total labor force in two years or since the 5.3% in January 2020 before the pandemic began.

In absolute terms, the number of unemployed Filipinos decreased by 347,000 to 2.925 million in January, from 3.272 million in December. It went down by 1.038 million to 3.964 million from a year ago.

“However, due to the Omicron surge in January, the labor force participation rate fell from 65.1% to 60.5%,” the National Economic and Development Authority (NEDA) said in a statement. “Another reason for lower employment levels is the end of the holiday season which sheds off seasonal jobs. Despite this, net employment remains at 0.5 million above the pre-pandemic level.”

Metro Manila and other parts of the country were once again placed under Alert Level 3 in January to contain the Omicron-driven surge in new coronavirus disease 2019 (COVID-19) cases.

The size of the labor force in January fell month on month by 3.603 million to 45.943 million. On a year-on-year basis, the size of the workforce rose by 732,000 from 45.212 million.

This translated to a labor force participation rate — the total labor stock to the working age population of 15 years old and over — of 60.5%. This was the lowest level in six months or since a workforce size of 44.740 million and an LFPR of 59.8% in July last year.

With the lower level of labor force that month, the employment rate — the share of the employed to the total working force — increased to 93.6%, higher than December’s 93.4% and January’s 91.2%.

In absolute terms, employed Filipinos reached 43.018 million in January, lower by 3.256 million from previous month’s 46.274 million. However, it was higher by 1.770 million from 41.248 million employed a year ago.

“The Omicron surge caused a temporary decline in our employment levels. Now that we have contained the spread of the virus and shifted to Alert Level 1 in most parts of the country, we look forward to an improvement in employment outcomes in the coming months,” Socioeconomic Planning Secretary Karl Kendrick T. Chua said in a statement.

However, the quality of available jobs slightly worsened as the underemployment rate — the proportion of those already working, but still looking for more work or longer working hours to the total employed — rose to a six-month high of 14.9% in January from 14.7% in December.

This was equivalent to 6.397 million underemployed Filipinos, down by 414,000 from December’s 6.811 million.

A Filipino worker clocked in an average of 41.8 hours per week in January, 2.1 hours more than 39.7 hours in a week in December.

More than half were employed in the services sector in January (58.9% from 56.6% in December), while agriculture accounted for 19.3% (from 17.8%) and industry’s 19.3% (from 17.8%).

The reopening of the economy resulted in the creation of more jobs, but job quality has remained in the doldrums, University of Asia and the Pacific Senior Economist Cid L. Terosa said in an e-mail interview.

“This means that the jobs that were created were either transitory or casual jobs,” he said.

In a separate email, Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said stricter quarantine restrictions contributed to the decline in total working force.

“There is also seasonality with lesser people being employed, particularly in agriculture, after the planting and certain harvest months,” he said.

Meanwhile, Sentro ng mga Nagkakaisa at Progresibong Manggagawa (SENTRO) Secretary General Josua T. Mata is expecting a “bullish economy” for the coming months as restrictions ease, but noted a rough recovery in some sectors such as tourism.

“The easing of restrictions and the election spending would have a positive impact on the employment sector. However, inflationary pressures could dampen employment generation especially if oil prices continue to hike,” he said in e-mail interview.

For the first quarter, the effects of the economy’s reopening and the downgrade to Alert Level 1 will be obvious and the return to pre-pandemic levels of employment may be “just around the corner,” Mr. Asuncion said.

“However, the geopolitical risks of late may have to delay the return to pre-pandemic employment because of the downside risk of rising inflation and dampened business projects,” he said.

Mr. Terosa said the labor data in February will most likely be the same as the current month, citing the impact of the Russia-Ukraine crisis on the country’s economic recovery.

“I believe, however, that the negative effects of the geopolitical tension fomented by the Russia-Ukraine war will eventually manifest itself in the labor market. Rising prices and costs of doing business, particularly in March 2022, will thwart early signs of recovery in the labor market,” Mr. Terosa added.

“Without this unfortunate external factor, I would have been optimistic that the labor market would return to normalcy after the first semester of 2022,” Mr. Asuncion said.

In late February, Russia invaded Ukraine in the pretext of demilitarization and “denazification,” sending shockwaves in the global economy. Global commodity prices, particularly oil, surged to multiyear highs.

International benchmark Brent crude, for one, soared past $100 per barrel for the first time since 2014 at the start of the invasion. Local pump prices also skyrocketed, driving up costs of basic goods and services.

NEDA said the government is set to distribute aid amounting to P6.1 billion to transport, agriculture and fisheries workers to lessen the inflationary pressures brought by the Russia-Ukraine conflict.

In addition, cash assistance amounting P2,400 will be given to the bottom 50% of Filipino households affected by the rising prices of basic goods.