For the Record 

On unemployment

This article seeks to clarify some issues on unemployment statistics, which were mentioned in the news feature entitled Gov’t window-dressing labor data, says TUCP that came out in the 21 March 2006 issue of The Daily Tribune (http://www.tribune.net.ph/business/ 20060321bus1.html). In the opening paragraph of the news feature, it was reported that:

A major labor group accused the government yesterday of window-dressing its labor force data saying that 1.1 million Filipinos were intentionally excluded from the computation of the jobless

The facts

Results of the Labor Force Survey (LFS), which placed total unemployment at about 2.8 million in January 2006, used the new unemployment definition per NSCB Resolution No. 15, Series of 2004, issued on 20 October 2004. The Resolution prescribed the adoption of the availability criterion in the definition of unemployment in addition to the two criteria included in the old definition. All three have to be satisfied simultaneously for a person to be classified as unemployed. The Resolution set an extended availability period and allowed the partial relaxation of the seeking work criterion to be retained for persons without work and currently available for work, but not seeking work due to five specific reasons. Further, the Resolution laid down the qualification on the length of the job search period of the discouraged workers. Thus, the unemployed now includes all persons who are 15 years old and over as of their last birthday and are reported as

  1. without work, i.e., had no job or business during the basic survey reference period, and
  2. currently available for work , i.e., were available and willing to take up work in paid employment or self employment during the basic survey reference period, and/or would be available and willing to take up work in paid employment or self employment within two weeks after the interview date, and
  3. seeking work, i.e., had taken specific steps to look for a job or establish a business during the basic survey reference period; or not seeking work due to the following reasons: (a) tired/believe no work available, i.e., the discouraged workers who looked for work within the last six months prior to the interview date; (b) awaiting results of previous job application; (c) temporary illness/disability; (d) bad weather; and (e) waiting for rehire/job recall.

The basic survey reference period for the LFS is the past week or the week before the interview date. These three criteria have to be satisfied simultaneously for one to be considered unemployed. The revised concept of unemployment was implemented starting with the April 2005 round of the LFS.

The adoption of the availability criterion was actually based on the international standards as laid down in Resolution No. 1 adopted by the 13th International Conference of Labor Statisticians (ICLS) in October 1982 and expounded in the 1990 publication of the International Labor Organization (ILO), Surveys of Economically Active Population, Employment, Unemployment, and Underemployment: An ILO Manual on Concepts and Methods. According to these standards, persons should be available for work before they can be considered as unemployed. Availability for work means that, given a work opportunity, a person should be able and ready to work. One purpose of this criterion is to exclude from the labor force persons who are seeking work but can begin work only at a later date (e.g., students who, at the time of the survey, are seeking work to be taken up after completion of the academic year) and those who cannot take up work due to certain impediments, such as family responsibilities, illness, or commitment to volunteer community services. It should be noted that out of 88 countries regularly conducting labor force surveys, only 10 countries did not include the availability criterion. Moreover, the Philippines is the only country in Asia which did not use the availability criterion.

The cut-off period of six months in the job search of the discouraged workers from the date of interview was meant to exclude those who were currently not interested to work or no longer desire to work from the real discouraged workers. Probing on their answer would reveal to some extent, the discouraged workers previous job search efforts. Thus, in the new definition of the unemployed, persons who have tried to look for work within 6 months, and yet he or she was unable to find work for valid reasons, were counted among the unemployed.

As provided for in NSCB Resolution No. 15, Series of 2004, parallel series on unemployment based on the old and the revised definitions were generated by the National Statistics Office (NSO) for a period of one year, starting with the April 2005 LFS round until the January 2006 round, in accordance with the best practices in statistical information dissemination. The NSO is even planning to continue the old and new series for yet another year. This ensures greater transparency and allows the smooth transition from the old to the new series of unemployment statistics.

Comparative estimates of the unemployment figures are provided in Table 1 below. The table shows quarterly estimates of total unemployed persons in the Philippines using both the old and the new definitions of unemployment. Figures were derived from the Index of Labor Force Statistics available at the NSO website (http://www.census.gov.ph/data/sectordata/ datalfs.html)

TABLE 1: TOTAL UNEMPLOYED PERSONS

Survey Period

Total Unemployed Persons

Unemployment Rate

(In thousands)

(In percent)

 

Old Definition

New Definition

Old Definition

New Definition

April '05

4,708

2,909

12.7

8.3

July '05

3,990

2,715

10.9

7.7

October '05

3,766

2,620

10.3

7.4

January '06

3,864

2,840

10.7

8.1

With the adoption of the revised definition of unemployment, results of the January 2006 LFS round showed that 1.024 million persons (not 1.1 million as reported in the article) had been counted out from the unemployed (the 3.864 million unemployed under the old definition went down to 2.840 million under the new definition). This resulted in a corresponding drop of 2.6 percentage points in the unemployment rate, from 10.7 percent to 8.1 percent in the same period.

The effect of the revision in the definition of unemployment was indeed a reduction in the number of unemployed, but it must be stressed that the decrease actually consisted of people who had no work but could not have taken up work even if work opportunities had been available for them. The 1.024 million persons were excluded because they did not meet the three criteria for measuring the unemployed.

The quarterly estimates of unemployment based on the old and the new definitions illustrate that unemployment in the last four survey rounds, as shown in Graph 1, is following relatively the same pattern. Highest unemployment is in April, while the lowest is in October. The fluctuations in the unemployment rate pattern for the old and the new series also follow a similar pattern as shown in Graph 2.

Towards enhancing and widening the participation of the private sector in the statistical development of the country, the TUCP is now a member of the NSCB Executive Board. The Board is chaired by the Director General of the National Economic and Development Authority, and composed by Undersecretary-level members from various government agencies. The Board promotes and maintains an efficient statistical system in the government through the formulation of policies on all matters relating to government statistical operations. The NSCB in its 24 January 2005 meeting, approved NSCB Resolution No 2, designating the TUCP as its new private sector representative in the Board. TUCP replaced the Philippine Chamber of Commerce and Industry (PCCI), whose term expired in 2004. The private sector representative has a term limit of three years. TUCP, however, was not yet a member when the NSCB Executive Board was deliberating on the revisions of the unemployment definition.

It should be noted that the Bureau of Labor and Employment Statistics (BLES), as a member of the Interagency Committee on Labor, Income and Productivity Statistics (IACLIPS), has been advocating for the change in the definition of unemployment since 1987. The proposal to consider the new definition of unemployment was actually first presented to the NSCB Executive Board in 1992, through the then Technical Working Group on Labor Force Concepts (TWGLFC) in recognition of statistical practices in other parts of the world and of the International Conference of Labor Statisticians (ICLS) Resolution No. 1 adopted in October 1982. The Board’s decision then was to defer action on the matter in view of the next ICLS scheduled in January 1993, as this could also have implications on the recommendations. It was only in 2003 that the matter was again addressed. The review took about one and a half years and this period was highlighted by a series of IACLIPS consultation meetings, repeated review and revision of the LFS questionnaire, and finally, the pretest of the instrument. The Committee also went over the TWGLFC report in its review process. It is also worth noting that in most of the fora conducted, there was a general acceptance of the revised definition of unemployment.

Please refer to the detailed documentation of the unemployment definition in NSCB Resolution No. 15, Series of 2004, on the Adoption of a New Official Definition of Unemployment (http://www.nscb.gov.ph/resolutions/2004/15.asp).

The NSCB would like to thank The Daily Tribune for its interest in statistics. For inquiries, please contact Ms. Redencion M. Ignacio of the NSCB Social Sectors B Division at telephone numbered (632) 890-5390 or at e-mail address rm.ignacio@nscb.gov.ph.

 

 

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